SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SUNBEAM CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions apply:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
Sunbeam Corporation [Logo]
August 30, 1996
Dear Fellow Shareholders:
This is my first opportunity to formally address you as the newly
appointed Chairman and Chief Executive Officer of Sunbeam Corporation. I
believe my record is clear as far as the importance of you, the shareholders,
to Sunbeam Corporation. Your interests are the reason Sunbeam exists, and
this Company owes the highest degree of loyalty to you who have risked your
capital in the expectation that Sunbeam will grow and prosper.
Unfortunately, over the past 18 months, Sunbeam has done anything but grow
and prosper. We have seen quarter after quarter of increasing costs,
declining margins and eroding profitability. The situation we have inherited
will continue to hamper our performance during what is left of 1996, and it
is clear that the Company will have to take a major restructuring charge
later this year.
However, Sunbeam's strengths are many--great brands, customer
relationships and dedicated employees at many levels of the Company. Our
current weaknesses also are many--too many facilities, too many
administrative offices and too many variations of product lines. These will
not be weaknesses for long, however. We are actively reviewing right now all
aspects of our cost structure, our marketing strategies, our product lines
and our overall strategies for future growth. We will roll out a major
restructuring plan in mid Fall, and we expect to implement it decisively and
quickly. We intend to start 1997 as the NEW SUNBEAM!
As the Company's new CEO, I view the Company's past performance as
completely unacceptable. However, I am also confident in the ability of our
new management team to turn around Sunbeam. I have successfully managed eight
major corporate turnarounds, and I do not intend to fail in turning around
the performance of Sunbeam.
Please review carefully the attached Proxy Statement and return the
enclosed proxy card as soon as possible. If you plan to attend the
shareholders' meeting on September 27, 1996, I look forward to seeing you at
that time.
Sincerely,
/s/ Albert J. Dunlap
--------------------
Albert J. Dunlap
Chairman and CEO
SUNBEAM CORPORATION
2100 NEW RIVER CENTER
200 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 27, 1996
To The Shareholders of Sunbeam Corporation:
Notice is hereby given that a Special Meeting of Shareholders of Sunbeam
Corporation (the "Company") will be held at the offices of the Company at
2100 New River Center, 200 East Las Olas Boulevard, Fort Lauderdale, Florida
33301 on Friday, September 27, 1996, at 10:00 a.m. (local time), for the
following purposes:
1. To consider and vote upon the Stock Option Plan for Albert J. Dunlap
(Proposal No. 1);
2. To consider and vote upon the Stock Option Plan for Russell A. Kersh
(Proposal No. 2); and
3. To consider and vote upon the Stock Option Plan for P. Newton White
(Proposal No. 3).
In accordance with the By-Laws of the Company, no other business may be
presented for consideration at the Special Meeting other than that specified
above except such other matters as may be incident to the conduct of the
Special Meeting.
The close of business on August 23, 1996, has been fixed as the record
date for the determination of the shareholders entitled to notice of and to
vote at the meeting, and only shareholders of record at that time will be
entitled to notice of and to vote at the Special Meeting and at any
postponements or adjournments thereof.
Shareholders who do not expect to attend the Special Meeting in person are
urged to sign, date and promptly return the Proxy that is enclosed herewith.
By Order of the Board of Directors.
David C. Fannin
Secretary and General Counsel
August 30, 1996
SUNBEAM CORPORATION
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 27, 1996
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of Sunbeam Corporation, a Delaware
corporation (the "Company" or "Sunbeam"), of proxies for use at a Special
Meeting of Shareholders of the Company (the "Special Meeting") to be held at
the offices of the Company at 2100 New River Center, 200 East Las Olas
Boulevard, Fort Lauderdale, Florida 33301 on Friday, September 27, 1996, at
10:00 a.m. (local time), and at any postponements or adjournments thereof,
for the purposes specified in the accompanying Notice of Special Meeting.
This Proxy Statement, Notice of Special Meeting and accompanying proxy card
are first being mailed to shareholders on or about August 30, 1996.
The date of this Proxy Statement is August 30, 1996.
PURPOSE OF THE SPECIAL MEETING
The Company has entered into employment agreements with Albert J. Dunlap,
Russell A. Kersh and P. Newton White, respectively, each of which provides,
among other things, for a one-time grant to such individuals of options
("Stock Option Plans") to purchase shares of Common Stock (as defined below),
subject to approval by the Company's shareholders of such grants. At the
Special Meeting, the shareholders of the Company will be asked to consider
and vote upon separate proposals to approve the Stock Option Plans for
Messrs. Dunlap, Kersh and White, respectively.
The Board of Directors adopted the Stock Option Plans, subject to approval
by the Company's shareholders, in order to incentivize the Company's new
senior management team which is charged with the responsibility of improving
the Company's performance. The Board of Directors and its Compensation
Committee believe that the incentives represented by the Stock Option Plans
are highly competitive and will align the interests of the Company's senior
managers with those of the Company's shareholders.
Moreover, approval of the Stock Option Plans by the shareholders of the
Company will satisfy the shareholder approval requirement under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), with
the result that the options granted under such Stock Option Plans will
qualify as performance based compensation and will not be subject to the
limitation on the Company's deduction for compensation exceeding $1,000,000
per year to certain executives. See "Certain Federal Income Tax
Consequences." If the shareholders of the Company do not approve one or more
of the Stock Option Plans, the Company and each of Messrs. Dunlap, Kersh and
White have agreed to negotiate in good faith mutually acceptable alternative
compensation arrangements. However, if the shareholders of the Company do not
approve one or more of the Stock Option Plans, the affected individual or
individuals may elect to terminate his or their employment for Good Reason
(as defined below). See "Employment Contracts and Termination of Employment
and Change in Control Arrangements."
RECORD DATE; VOTING RIGHTS; QUORUM; PROXIES
As of the close of business on August 23, 1996, the date fixed by the
Board of Directors as the record date for determining the shareholders to
receive notice of, and to vote at, the Special Meeting, and at any
postponements or adjournments thereof, the Company had outstanding 83,899,373
shares of common stock, par value $.01 per share (the "Common Stock"). Each
share of Common Stock entitles the holder thereof to one vote on each matter
to be considered at the Special Meeting. The presence at
the Special Meeting, in person or by duly executed proxy, of a majority of
the issued and outstanding shares of Common Stock entitled to vote will
constitute a quorum.
If the accompanying proxy card is properly signed and returned to the
Company, the shares of Common Stock represented thereby will be voted as
specified therein, and if no specification is made, such shares will be voted
in accordance with the recommendations of the Board of Directors. The proxy
may, nevertheless, be revoked prior to its exercise by delivering written
notice of revocation to the Secretary of the Company, by executing a later
dated proxy or by attending the Special Meeting and voting in person.
Attendance at the Special Meeting will not in itself constitute a revocation
of a proxy.
VOTE REQUIRED FOR APPROVAL
Under Section 162(m) of the Code, the affirmative vote of the holders of a
majority of the votes cast at the Special Meeting will be required to approve
each of the Stock Option Plans. Abstentions will have the same effect as
votes against these proposals and broker non-votes will not be counted. The
Steinhardt Group (as defined below) and the Funds Group (as defined below),
the beneficial owners of approximately 41% of the outstanding Common Stock,
have indicated their intention to vote in favor of the adoption of each of
the Stock Option Plans.
2
RECENT DEVELOPMENTS
On July 18, 1996, the Company announced the appointment of Albert J.
Dunlap as Chairman of the Board and Chief Executive Officer, succeeding Roger
W. Schipke who resigned in May 1996.
Soon thereafter, Mr. Dunlap formed an Operating Committee to manage the
Company, which consists of Mr. Dunlap, Russell A. Kersh, P. Newton White and
David C. Fannin who were appointed or, with respect to Mr. Fannin,
reappointed, Executive Vice President, Finance and Administration, Executive
Vice President, Consumer Products Worldwide, and Executive Vice President,
General Counsel and Secretary, respectively.
The Company entered into employment agreements with each of Messrs.
Dunlap, Kersh, White and Fannin in July 1996. See "Employment Contracts and
Termination of Employment and Change in Control Arrangements."
The Board of Directors adopted a resolution pursuant to which, effective
as of August 15, 1996, each Outside Director (as defined below) is expected
to acquire (and may purchase from the Company at fair market value on the
date of purchase), and thereafter to maintain ownership of, a minimum of
2,000 shares of Common Stock. Such purchase is expected to be made as soon as
practicable following each Outside Director's first election or appointment
and, with respect to persons who were Outside Directors on August 6, 1996,
within thirty days from such date. In compliance with that resolution, each
of the Company's Outside Directors, Messrs. Kristol, Ravitch and Thayer, has
purchased 5,000, 2,000 and 5,000 shares of Common Stock, respectively.
The following individuals, who served as officers of the Company during
1995 and a portion of 1996, are no longer employed by the Company: (i) Roger
W. Schipke, formerly Chairman of the Board and Chief Executive Officer, as of
May 1996, (ii) James J. Clegg, formerly Executive Vice President and Chief
Operating Officer, North America, as of July 1996, (iii) Paul M. O'Hara,
formerly Executive Vice President and Chief Financial Officer, as of August
1996, and (iv) Richard L. Boynton, formerly Executive Vice President and
President, Household Products, as of August 1996. See "Employment Contracts
and Termination of Employment and Change in Control
Arrangements--Arrangements with Named Executives Concerning Termination of
Employment."
3
PROPOSAL 1--APPROVAL OF STOCK OPTION PLAN
FOR ALBERT J. DUNLAP CONTAINED IN THE EMPLOYMENT
AGREEMENT BETWEEN THE COMPANY AND ALBERT J. DUNLAP
On July 18, 1996, the Company entered into an Employment Agreement (the
"Dunlap Agreement") with Albert J. Dunlap. The Board of Directors is
requesting shareholder approval of the provisions of the Dunlap Agreement
which contain the Stock Option Plan for Albert J. Dunlap. See "Recent
Developments" and "Employment Contracts and Termination of Employment and
Change in Control Arrangements."
The Dunlap Agreement provides that, subject to approval by the Company's
shareholders at the Special Meeting, Mr. Dunlap received a one-time grant
effective as of July 18, 1996 of options to purchase 2,500,000 shares of
Common Stock at a price of $12.25 per share (the "Dunlap Options"), such
price being the closing price of the Company's Common Stock on the New York
Stock Exchange ("NYSE") on July 17, 1996, in accordance with the Dunlap
Agreement. The term of the Dunlap Options is ten years, and they will vest
with respect to one-third of the shares subject thereto on the grant date and
with respect to an additional one-third on each of the first and second
anniversaries of the grant date.
The Dunlap Agreement further provides that (i) upon the occurrence of a
Change in Control, the Dunlap Options will become fully vested, (ii) if the
Company terminates Mr. Dunlap's employment other than for Cause and not due
to his disability, or if he terminates his employment for Good Reason, the
Dunlap Options will become fully vested and he will be entitled to exercise
the Dunlap Options for the balance of the original ten-year term, (iii) if
the Company terminates Mr. Dunlap's employment for Cause, he will be able to
exercise the Dunlap Options which are exercisable on the date of termination
within 90 days of the date of termination and if he terminates his employment
other than for Good Reason, he will be able to exercise the Dunlap Options
which are exercisable on the date of termination within one year of the date
of termination, (iv) if Mr. Dunlap's employment is terminated due to his
death, his estate or legal representative will be entitled to exercise within
one year after the date of death the Dunlap Options which are then
exercisable or which would have become exercisable within one year after the
date of death, and (v) if his employment is terminated due to disability, he
will be entitled to exercise within three years all Dunlap Options which are
then exercisable or which would have become exercisable within one year after
the date of termination. See "Employment Contracts and Termination of
Employment and Change in Control Arrangements" for definitions of all
capitalized terms not otherwise defined herein.
If the shareholders of the Company do not approve the Stock Option Plan
for Albert J. Dunlap, the Company and Mr. Dunlap have agreed to negotiate in
good faith mutually acceptable alternative compensation arrangements. The
terms and conditions of any such alternative compensation arrangements have
not been determined. However, if the shareholders of the Company do not
approve the Stock Option Plan for Albert J. Dunlap, Mr. Dunlap may elect to
terminate his employment for Good Reason.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" APPROVAL OF THE
STOCK OPTION PLAN FOR ALBERT J. DUNLAP
4
PROPOSAL 2--APPROVAL OF STOCK OPTION PLAN
FOR RUSSELL A. KERSH CONTAINED IN THE EMPLOYMENT
AGREEMENT BETWEEN THE COMPANY AND RUSSELL A. KERSH
On July 22, 1996, the Company entered into an Employment Agreement (the
"Kersh Agreement") with Russell A. Kersh. The Board of Directors is
requesting shareholder approval of the provisions of the Kersh Agreement
which contain the description of the Stock Option Plan for Russell A. Kersh.
See "Recent Developments" and "Employment Contracts and Termination of
Employment and Change in Control Arrangements."
The Kersh Agreement provides that, subject to approval by the Company's
shareholders at the Special Meeting, Mr. Kersh received a one-time grant
effective as of July 22, 1996 of options to purchase 250,000 shares of Common
Stock at a price of $14.26 per share (the "Kersh Options"). Although the
Kersh Options were not granted under the Option Plan (as defined below), the
exercise price was established in a manner consistent with the Option Plan
and is the average of the NYSE closing price of the Common Stock on the last
twenty market days prior to the grant date. The term of the Kersh Options is
ten years, and they will vest with respect to one-third of the shares subject
thereto on each of the first, second and third anniversaries of the grant
date.
The Kersh Agreement further provides that (i) upon the occurrence of a
Change in Control, the Kersh Options will become fully vested, (ii) if the
Company terminates Mr. Kersh's employment other than for Cause and not due to
his disability, or if he terminates his employment for Good Reason, the Kersh
Options will become fully vested and he will be entitled to exercise the
Kersh Options for the balance of the original ten-year term, (iii) if the
Company terminates Mr. Kersh's employment for Cause, he will be able to
exercise the Kersh Options which are exercisable on the date of termination
within 90 days of the date of termination and if he terminates his employment
other than for Good Reason, he will be able to exercise the Kersh Options
which are exercisable on the date of termination within one year of the date
of termination, (iv) if Mr. Kersh's employment is terminated due to his
death, his estate or legal representative will be entitled to exercise within
one year after the date of death the Kersh Options which are then exercisable
or which would have become exercisable within one year after the date of
death, and (v) if his employment is terminated due to disability, he will be
entitled to exercise within three years all Kersh Options which are then
exercisable or which would have become exercisable within one year after the
date of termination. See "Employment Contracts and Termination of Employment
and Change in Control Arrangements" for definitions of all capitalized terms
not otherwise defined herein.
If the shareholders of the Company do not approve the Stock Option Plan
for Russell A. Kersh, the Company and Mr. Kersh have agreed to negotiate in
good faith mutually acceptable alternative compensation arrangements. The
terms and conditions of any such alternative compensation arrangements have
not been determined. However, if the shareholders of the Company do not
approve the Stock Option Plan for Russell A. Kersh, Mr. Kersh may elect to
terminate his employment for Good Reason.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" APPROVAL OF THE
STOCK OPTION PLAN FOR RUSSELL A. KERSH
5
PROPOSAL 3--APPROVAL OF STOCK OPTION PLAN FOR
P. NEWTON WHITE CONTAINED IN THE EMPLOYMENT
AGREEMENT BETWEEN THE COMPANY AND P. NEWTON WHITE
On July 26, 1996, the Company entered into an Employment Agreement (the
"White Agreement") with P. Newton White. The Board of Directors is requesting
shareholder approval of the provisions of the White Agreement which contain
the Stock Option Plan for P. Newton White. See "Recent Developments" and
"Employment Contracts and Termination of Employment and Change in Control
Arrangements."
The White Agreement provides that, subject to approval by the Company's
shareholders at the Special Meeting, Mr. White received a one-time grant
effective as of July 26, 1996 of options to purchase 250,000 shares of Common
Stock at a price of $15.07 per share (the "White Options"). Although the
White Options were not granted under the Option Plan, the exercise price was
established in a manner consistent with the Option Plan and is the average of
the NYSE closing price of the Common Stock on the last twenty market days
prior to the grant date. The term of the White Options is ten years, and they
will vest with respect to one-third of the shares subject thereto on each of
the first, second and third anniversaries of the grant date.
The White Agreement further provides that (i) upon the occurrence of a
Change in Control, the White Options will become fully vested, (ii) if the
Company terminates Mr. White's employment other than for Cause and not due to
his disability, or if he terminates his employment for Good Reason, the White
Options will become fully vested and he will be entitled to exercise the
White Options for the balance of the original ten-year term, (iii) if the
Company terminates Mr. White's employment for Cause, he will be able to
exercise the White Options which are exercisable on the date of termination
within 90 days of the date of termination and if he terminates his employment
other than for Good Reason, he will be able to exercise the White Options
which are exercisable on the date of termination within one year of the date
of termination, (iv) if Mr. White's employment is terminated due to his
death, his estate or legal representative will be entitled to exercise within
one year after the date of death the White Options which are then exercisable
or which would have become exercisable within one year after the date of
death, and (v) if his employment is terminated due to disability, he will be
entitled to exercise within three years all White Options which are then
exercisable or which would have become exercisable within one year after the
date of termination. See "Employment Contracts and Termination of Employment
and Change in Control Arrangements" for definitions of all capitalized terms
not otherwise defined herein.
If the shareholders of the Company do not approve the Stock Option Plan
for P. Newton White, the Company and Mr. White have agreed to negotiate in
good faith mutually acceptable alternative compensation arrangements. The
terms and conditions of any such alternative compensation arrangements have
not been determined. However, if the shareholders of the Company do not
approve the Stock Option Plan for P. Newton White, Mr. White may elect to
terminate his employment for Good Reason.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" APPROVAL OF THE
STOCK OPTION PLAN FOR P. NEWTON WHITE
6
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
No income would result to Messrs. Dunlap, Kersh or White upon the grant of
stock options pursuant to the Stock Option Plans. Upon the exercise of such a
stock option, the amount by which the fair market value of the shares on the
date of exercise exceeds the option price would be taxed to the individual
exercising such stock option as ordinary compensation income. Upon a
subsequent sale of any of those shares, the individual selling such shares
would realize capital gain or loss (long-term or short-term, depending on
whether the shares were held for more than twelve months before sale) in an
amount equal to the difference between such individual's tax basis in the
shares and the selling price.
Section 162(m) of the Code disallows a publicly-held company's deductions
for compensation exceeding $1,000,000 per year for certain executives.
However, compensation which constitutes "performance based compensation"
approved by the Company's shareholders is excluded from the above limitation.
The Stock Option Plans have been drafted to enable the stock options
described above to qualify as performance based compensation if the Stock
Option Plans are approved by the Company shareholders. Accordingly, upon the
exercise of a stock option, the Company will be entitled to a deduction in
the amount equal to the compensation income to the employee.
The preceding discussion is based upon the Code as presently in effect,
which is subject to change, and does not purport to be a complete description
of the federal income tax aspects of stock options.
7
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table sets forth information, as of August 22, 1996, with
respect to beneficial ownership of the Company's Common Stock by all persons
known by the Company to be the record or beneficial owner of more than 5% of
the outstanding Common Stock. Except as otherwise noted, all beneficial
owners listed below have sole voting and investment power with respect to the
shares owned by them.
AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS(1) OF BENEFICIAL OWNERSHIP COMMON STOCK
- --------------------- ----------------------- -------------
Steinhardt Partners, L.P 4,736,177(7) 5.7%
Institutional Partners, L.P(2)
I. P. Management Company, Inc. 7,455,094(7) 8.9%
Steinhardt Management Company, Inc. 4,953,406(3)(7) 5.9%
Michael H. Steinhardt 17,144,677(4)(7) 20.5%
Mutual Shares Fund 11,260,174(5)(7) 13.4%
Mutual Beacon Fund 1,480,670(5)(7) 1.8%
Mutual Qualified Fund 4,800,554(5)(7) 5.7%
Heine Securities Corporation 17,541,398(6)(7) 20.9%
Michael F. Price 17,541,398(6)(7) 20.9%
FMR Corp.(8)
Edward C. Johnson 3d
Abigail P. Johnson 6,445,400 7.7%
- ----------
(1) The address of each member of the Steinhardt Group is 605 Third Avenue,
New York, New York 10158. The address of each member of the Funds Group
is 51 John F. Kennedy Parkway, Short Hills, New Jersey 07078. The address
of FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson is 82
Devonshire Street, Boston, Massachusetts 02109.
(2) I.P. Management Company, Inc. ("I.P. Management") may be deemed to be the
beneficial owner of the shares owned by Institutional Partners, L.P.
("Institutional") by virtue of its position as an investment manager of
Institutional.
(3) The shares listed above of which Steinhardt Management Company, Inc.
("Steinhardt Management") may be deemed to be the beneficial owner
consist of 4,916,569 shares owned by SP International S.A., a subsidiary
of Steinhardt Management, and 36,837 shares owned directly by Steinhardt
Management.
(4) Michael H. Steinhardt is a managing general partner of Institutional and
Steinhardt Partners, L.P ("Steinhardt Partners"). Mr. Steinhardt is also
the sole Director and the Chairman and President of each of I. P.
Management and Steinhardt Management. As such, Mr. Steinhardt controls
each of Institutional, Steinhardt Partners, I. P. Management and
Steinhardt Management (collectively, with Michael H. Steinhardt, the
"Steinhardt Group") and has the power to vote (or to direct the vote) and
dispose (or to direct the disposition) of the securities held by the
Steinhardt Group. Shimon Topor, a Director of the Company, is a general
partner of Institutional and Steinhardt Partners.
(5) Mutual Shares Fund, Mutual Beacon Fund and Mutual Qualified Fund
(collectively, the "Mutual Series Funds") are each a series of Mutual
Series Fund Inc. Peter Langerman, a Director of the Company, is the
Executive Vice President and a Director of Mutual Series Fund Inc.
(6) Heine Securities Corporation, a Delaware corporation ("Heine"), is an
investment advisor registered under the Investment Advisors Act of 1940
and is investment advisor to each of the
8
Mutual Series Funds. Michael F. Price is the sole stockholder, President
and sole Director of Heine. As such Mr. Price has the sole power to vote
(or to direct the vote) and dispose (or to direct the disposition) of the
securities held by the Mutual Series Funds (collectively, with Heine and
Michael F. Price, the "Funds Group").
(7) Information reflected in this table and the notes thereto with respect to
the Steinhardt Group and the Funds Group is derived from the Schedule 13D
filed with the Securities and Exchange Commission (the "SEC") on April 8,
1993, and thereafter amended, by the individuals and entities named in
the above table.
(8) Information reflected in this table and the notes thereto with respect to
FMR Corp. is derived from the Schedule 13G dated February 14, 1996 and
delivered to the Company. FMR is the parent of Fidelity Management &
Research Company ("Fidelity") and Fidelity Management Trust Company
("Trust"). Fidelity is the beneficial owner of, and FMR and Edward C.
Johnson 3d have the sole power to dispose of, 6,246,800 of the shares
listed above by virtue of Fidelity's position as investment advisor to
various investment companies. The power to vote such shares is held by
the Boards of Trustees of the investment companies. Trust is the
beneficial owner of, and FMR and Mr. Johnson have the sole power to
dispose of, 198,600 of the shares listed above by virtue of Trust's
position as an investment manager of certain institutional accounts.
Edward C. Johnson 3d, Chairman of FMC, and Abigail P. Johnson, a Director
of FMC, together with members of the Edward C. Johnson family and trusts
for their benefit, may be deemed to be the beneficial owners of such
shares of the Company's stock by virtue of their ownership and control of
FMR.
The Common Stock of the Company listed above as being beneficially owned
by the Steinhardt Group and the Funds Group was previously held by
Sunbeam-Oster Equities, L.P., a Delaware limited partnership ("SOE"). Those
shares have been distributed to the limited partners of SOE, resulting in the
share ownership set forth above. Pursuant to a Stockholders Agreement, dated
as of December 28, 1995, the Steinhardt Group and the Funds Group have agreed
to: (i) use their reasonable efforts to cause the Board of Directors of the
Company to nominate a designee of each of the Funds Group and the Steinhardt
Group and (ii) subsequently vote the shares owned by each of them to elect
such designee. Collectively, the Steinhardt Group and the Funds Group control
34,686,075 shares (or approximately 41%) of the Company's outstanding Common
Stock and therefore have the practical power to significantly influence the
approval of Proposals 1, 2 and 3 at the Special Meeting. The Steinhardt Group
and the Funds Group have indicated that they intend to vote in favor of
Proposals 1, 2 and 3.
9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership, reported to the
Company as of August 22, 1996, of Common Stock, including certain shares as
to which a right to acquire ownership exists, of: (1) each current Director;
(2) those persons who, during 1995, (i) served as chief executive officer
("CEO") of the Company and (ii) were the four most highly compensated
executive officers of the Company, other than the CEO (collectively, the
"Named Executives"); and (3) the current executive officers and directors of
the Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
NAME AND ADDRESS(1) OWNERSHIP(2)(3)(4) COMMON STOCK
- ------------------- ------------------ -------------
DIRECTORS
Albert J. Dunlap .................... 1,244,898(5) 1.50%
Russell A. Kersh .................... 140,817(5) .20%
Howard G. Kristol ................... 6,500 *
Peter A. Langerman .................. 0(6) 0
Richard Ravitch ..................... 9,159 *
Charles J. Thayer ................... 117,659 .14%
Shimon Topor ........................ 12,191,271(7) 14.44%
NAMED EXECUTIVES
Spencer J. Volk ..................... 92,500 *
Roger W. Schipke(8) ............... 0 0
James J. Clegg(8) ................. 67,900 *
Paul M. O'Hara(8) ................. 127,771 .20%
Richard L. Boynton(8) ............. 79,417 *
All executive officers and Directors
as a group (17 persons) ........... 14,159,695(4)(9) 16.8%
- ----------
* Less than one percent.
(1) The address of each executive officer and Director is 2100 New River
Center, 200 East Las Olas Boulevard, Fort Lauderdale, Florida 33301.
(2) Includes shares which Named Executives, executive officers and Directors
have an option to acquire if such option is currently exercisable
(including options which may be exercised or will become exercisable
within the next sixty days). Includes 1,000, 99,500, 92,500, 67,900,
127,771 and 78,667 shares which may be acquired by Messrs. Ravitch,
Thayer, Volk, Clegg, O'Hara and Boynton, respectively, upon the exercise
of options which are currently exercisable. Options which are not
currently exercisable and will not become exercisable within the next
sixty days are not included in the table.
(3) Includes 666,667, 100,000, 5,000 and 4,000 restricted shares held by
Messrs. Dunlap, Kersh, Ravitch and Thayer, respectively, which have not
vested. Such restricted shares held by (i) Mr. Dunlap will vest in two
equal installments on each of the first and second anniversaries of the
grant date of July 18, 1996, (ii) Mr. Kersh will vest in three equal
installments on each of the first, second and third anniversaries of the
grant date of July 22, 1996, (iii) Mr. Ravitch will vest in five equal
installments on the first through fifth anniversaries of his election as
a Director on July 2, 1996 and (iv) Mr. Thayer will vest in four equal
installments on each of December 31, 1996, 1997, 1998 and 1999. Dividends
are payable with respect to all restricted shares, regardless of whether
vested.
(4) All officers and Directors have the sole power to vote and to dispose of
the shares listed above other than restricted shares which have not
vested, for which the holder has no power to dispose.
(5) See "Employment Contracts and Termination of Employment and Change in
Control Arrangements."
(6) Does not include shares owned by the Funds Group as to which Mr.
Langerman disclaims beneficial ownership. See "Security Ownership Of
Certain Shareholders."
10
(7) These shares are owned by Institutional Partners and Steinhardt Partners;
Mr. Topor is a general partner of each of these entities. Mr. Topor does
not directly own any Common Stock but may be considered the beneficial
owner of the securities listed above.
(8) Messrs. Schipke, Clegg, O'Hara and Boynton served as executive officers
of the Company until May, July, August and August, 1996, respectively.
See "Employment Contracts and Termination of Employment and Change in
Control Arrangements - Agreements with Named Executives Concerning
Termination of Employment."
(9) Includes 353,625 shares which all executive officers and Directors have
the right to acquire under options which are currently exercisable
(including options which may be exercised or will become exercisable
within the next sixty days). Includes 895,667 restricted shares held by
all executive officers and Directors, which have not vested.
11
DIRECTORS COMPENSATION
Effective as of August 15, 1996, the Board amended the Sunbeam Corporation
Amended and Restated Equity Term Plan (the "Option Plan") to eliminate
provisions for the automatic grant to Directors who are not employees of the
Company or an affiliate of either the Steinhardt Group or the Funds Group,
the Company's largest shareholders ("Outside Directors"), of 5,000 restricted
shares of Common Stock upon initial election to the Board and of options to
acquire 1,000 shares of Common Stock upon each election and subsequent
re-election to the Board. Effective as of such date, pursuant to the Option
Plan, Outside Directors were and will be automatically granted 1,500 shares
of restricted stock upon their initial election or appointment to the Board
and each subsequent re-election to the Board (prorated in case of an election
or appointment at any time other than at an annual meeting of shareholders,
except that each Outside Director elected or appointed between August 1, 1996
and December 31, 1996 has received or will receive 1,500 shares of restricted
stock on the later of the date of the Director's election or appointment and
August 15, 1996). Such restricted stock vests immediately upon the Director's
acceptance of his or her election or appointment. In addition, effective as
of August 15, 1996, each Outside Director elected or appointed prior to
August 1, 1996 received an initial grant of restricted shares pursuant to the
Company's Option Plan, prorated as though each such Outside Director was
first elected or appointed as of August 6, 1996.
Effective August 15, 1996, Outside Directors do not receive any other
fees, but are reimbursed for all ordinary and necessary out-of-pocket
expenses incurred by them in attending meetings of the Board or its
Committees. Prior to August 15, 1996, each Outside Director received an
annual director's fee of $20,000 plus $1,000 for each meeting of the Board or
any Committee of the Board (of which the Director is a member) attended in
person and $500 for each such meeting participated in by telephone.
The Sunbeam Corporation Deferred Compensation Plan for Outside Directors
(the "Deferred Compensation Plan"), administered by the Board of Directors or
a Committee of the Board, permitted Outside Directors to defer all or a
specified percentage (in multiples of 10%) of a Director's eligible
compensation until a future date specified by the Director, but payable
earlier in the event of the Director's death or termination of service on the
Board. The Deferred Compensation Plan was established to allow Directors to
defer the cash fees which previously were paid to them. Although Directors
will no longer participate in the Deferred Compensation Plan as a result of
the Company's termination of the practice of paying cash fees, the Plan has
not been terminated and amounts which were deferred by Director Thayer
pursuant to the Plan into a phantom stock account (payable based upon the
fair market value of the phantom stock units at the date of payment and
accrued dividends equivalent to those that would be paid on the Company's
Common Stock) will be treated in accordance with his previous direction. No
other Directors participate in the Deferred Compensation Plan.
The Board of Directors adopted a resolution pursuant to which, effective
as of August 15, 1996, each Outside Director is expected to acquire (and may
purchase from the Company at fair market value on the date of purchase), and
thereafter to maintain ownership of, a minimum of 2,000 shares of Common
Stock. Such purchase is expected to be made as soon as practicable following
each Outside Director's first election or appointment and, with respect to
persons who were Outside Directors on August 6, 1996, within thirty days from
such date. In compliance with that resolution, each of the Company's Outside
Directors, Messrs. Kristol, Ravitch and Thayer, has purchased 5,000, 2,000
and 5,000 shares of Common Stock, respectively.
12
EXECUTIVE COMPENSATION -1993 TO 1995
SUMMARY COMPENSATION TABLE
The following table sets forth for the years ended December 31, 1995,
January 1, 1995, and January 2, 1994, the compensation for services rendered
to the Company in all capacities of the Named Executives.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ------------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARD(2) SARS(3) COMPENSATION(4)
- ------------------ ---- ------ ----- --------------- ---------- --------- ---------------
Roger W. Schipke 1995 $1,000,000 $ 0 $ 16,036 $ 0 0 $39,900
Chairman and CEO 1994 1,000,000 500,000 0 0 0 7,620
1993 416,667 209,589 185,526 3,315,002 750,000 1,000
James J. Clegg 1995 391,250 7,825 0 0 70,000 37,703
Executive Vice President 1994 341,667 71,067 0 0 210,000 5,526
and President and Chief 1993 300,000 100,000 0 0 0 4,897
Operating Officer,
North America
Spencer J. Volk 1995 368,750 31,713 9,763 0 110,000 36,617
Executive Vice President 1994 342,147 100,000 0 0 250,000 5,646
and President and Chief 1993 0 0 0 0 0 0
Operating Officer,
International
Paul M. O'Hara 1995 363,333 0 0 0 162,500 36,382
Executive Vice President 1994 291,667 225,000(5) 15,813 0 325,000 5,495
and Chief Financial 1993 0 0 0 0 0 0
Officer
Richard L. Boynton 1995 287,500 10,063 0 0 50,000 33,124
Executive Vice President 1994 216,667 61,967 0 0 150,000 18,471
and President, Household 1993 170,000 75,000 0 0 30,000 23,464
Products
- ----------
(1) Includes the following amounts paid to Mr. Schipke in 1993: (i) imputed
interest income of $109,377 with respect to interest free loans made by
the Company, (ii) a tax gross-up payment on tax on imputed interest of
$74,142 and (iii) a tax gross-up payment of $2,007 for the amount of tax
payable on reimbursement for moving expenses; and the following amounts
paid in 1995: (i) imputed interest income of $9,325 with respect to the
extension of the December 31, 1995 due date of certain interest free
loans made by the Company and (ii) a tax gross-up payment on tax on
imputed interest of $6,711. Also includes tax gross-up payments made to
Mr. O'Hara in 1994 and to Mr. Volk in 1995 for the amount of tax payable
on reimbursement for moving expenses.
(2) Based upon the closing market price of the Common Stock as of the date of
grant of such restricted stock awards. As of December 31, 1995, Mr.
Schipke was the sole officer of the Company with restricted stock
holdings. As of December 31, 1995, his aggregate restricted stock
holdings were 42,500 shares with a value of $648,125 (based on the
December 29, 1995 market price of $15.25 per share), all of which vested
in May 1996. See "Employment Contracts and Termination of Employment and
Change in Control Arrangements."
(3) Includes options awarded in exchange for the cancellation of certain
outstanding options, a portion of which were granted in 1995. Shares
underlying option grants previously made which were cancelled in exchange
for new option awards are also included.
(4) The Company adopted an Executive Benefit Replacement Plan (the
"Replacement Plan") in 1994 to restore the amount of benefits payable to
certain highly compensated employees of the Company
13
who would otherwise be subject to certain limitations on the amount of
benefits payable under the Company's 401(k) Savings and Profit Sharing
Plan. Amounts of All Other Compensation include the following amounts
contributed for Messrs. Clegg and Boynton in 1993 under the Company's
401(k) Savings and Profit Sharing Plan and amounts accrued for all Named
Executives in 1994 and 1995 under the Replacement Plan (including the
Company's profit sharing allocation):
NAME 1995 1994 1993
- ---- ------- ------ -------
Mr. Schipke... $20,760 $4,620 $ 0
Mr. Clegg..... 20,390 4,500 3,997
Mr. Volk...... 19,370 4,620 0
Mr. O'Hara.... 19,153 4,620 0
Mr. Boynton... 16,120 4,620 17,521
In addition, the amount of All Other Compensation includes a profit
sharing allocation in the amount of $16,140 made to the Replacement Plan
in 1995 for 1994 services rendered by each of Messrs. Schipke, Clegg,
Volk, O'Hara and Boynton.
All Other Compensation also includes payments of insurance premiums for
term life insurance on behalf of the Named Executives in each year as
follows:
NAME 1995 1994 1993
- ---- ------ ------ ------
Mr. Schipke... $3,000 $3,000 $1,000
Mr. Clegg..... 1,173 1,026 900
Mr. Volk...... 1,107 1,026 0
Mr. O'Hara.... 1,089 875 0
Mr. Boynton... 864 651 900
(5) Includes a one-time bonus payment of $50,000 in connection with initial
employment.
14
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the options to
purchase shares of the Company's Common Stock granted to Messrs. O'Hara,
Volk, Clegg and Boynton during 1995 pursuant to the Option Plan. All option
grants made in 1995 to these Named Executives were effective upon the
cancellation of outstanding options in an amount equal to the option granted.
No options were granted to Mr. Schipke during 1995.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) IN FISCAL YEAR ($/SH) DATE VALUE(3)
- ---- ------------ -------------- ----------- ---------- ----------
James J. Clegg...... 70,000 4.21 $14.39 2005 $457,000
Spencer J. Volk..... 70,000 4.21 14.39 2005 457,000
40,000(2) 2.41 24.02 2005 463,000
Paul M. O'Hara...... 110,000 6.62 14.39 2005 718,000
52,500 3.16 14.94 2005 358,000
Richard L. Boynton.. 50,000 3.01 14.39 2005 327,000
- ----------
(1) The options held by Mr. Volk have a term of ten years and become
exercisable over five years in equal annual increments. The options held
by Messrs. Clegg, O'Hara and Boynton became exercisable upon the date of
termination of employment with the Company in July, August and August,
1996, respectively, on a pro rata basis, based upon the calendar months
worked in the year preceding the next vesting date for each option grant.
These options have a term of three years from the date of termination of
employment with the Company, except for certain options with a $5.00
exercise price held by Messrs. Clegg and Boynton, which had a term
expiring 45 days after such termination. See "Employment Contracts and
Termination of Employment and Change in Control Arrangements."
(2) All of these options were cancelled in exchange for the grant of options
to purchase 70,000 shares of Common Stock at a lower exercise price, as
set forth above.
(3) Grant date values were calculated using the Black-Scholes options pricing
model which has been adjusted to take dividends into account. USE OF THIS
MODEL SHOULD NOT BE VIEWED IN ANY WAY AS A FORECAST OF THE FUTURE
PERFORMANCE OF THE COMPANY'S COMMON STOCK. The estimated present value of
each stock option as set forth above is based on the following inputs:
GRANT DATE 11/01/95 11/21/95 02/14/95
- ---------- -------- -------- --------
Stock Price at Date of Grant .......... $15.00 $15.63 $25.38
Exercise Price (Fair Market Value,
as defined in the Option Plan) ...... $14.39 $14.94 $24.02
Expected Option Term .................. 6 Years 6 Years 6 Years
Risk Free Interest Rate ............... 5.7828% 5.7410% 7.4182%
Stock Price Volatility ................ 33.06% 32.95% 29.28%
Dividend Yield ........................ .2780% .2677% .1665%
Expected Forfeiture ................... 0% 0% 0%
The model assumes: (a) an Expected Option Term of 6 years which reflects
the actual 10-year life of the option discounted for factors such as the
expected time until exercise; (b) a Risk-Free Interest Rate that represents
the interest rate on a U. S. Treasury Bill with a maturity date corresponding
to that of the Expected Option Term; (c) Stock Price Volatility is calculated
using stock prices for a period selected by the Company and believed to
reflect volatility in the absence of unusual corporate transactions; (d)
Dividend Yield is calculated using the annual dividend rate in effect at date
of grant ($.04 per share); and (e) no forfeitures. Notwithstanding the fact
that these options are, with limited exceptions, non-transferable, no
discount for lack of marketability was taken.
15
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information with respect to the unexercised
options to purchase the Company's Common Stock granted to Roger W. Schipke
pursuant to his employment arrangement and to the Named Executives under the
Option Plan and held by them on December 31, 1995.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD ON IN-THE-MONEY OPTIONS ON
SHARES DECEMBER 31, 1995 DECEMBER 31, 1995(2)
ACQUIRED VALUE ----------------------------- --------------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Roger W. Schipke... 57,500 $419,950 505,000 187,500 $ 0 $ 0
James J. Clegg..... 25,000 465,625 128,979 182,000 1,035,035 60,200
Spencer J. Volk.... 0 0 50,000 240,000 0 60,200
Paul M. O'Hara..... 0 0 65,000 260,000 0 110,875
Richard Boynton.... 0 0 92,993 139,000 532,928 43,000
- ----------
(1) Based on the difference between the exercise price and the price at the
date of actual exercise.
(2) Based on the difference between the exercise price of the options and the
closing price on the New York Stock Exchange of the Company's Common
Stock on December 29, 1995 ($15.25).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEBTEDNESS OF MANAGEMENT
The Company made loans to its former CEO, Mr. Schipke, on August 31, 1993
(the "August Loan") and on December 31, 1993 (the "December Loan"), in the
amounts of $663,749 and $506,663, respectively. The largest aggregate amount
of indebtedness outstanding on these notes at any time during 1995 was
$669,650. The loans were repaid in full by Mr. Schipke in May 1996. See
"Employment Contracts and Termination of Employment and Change in Control
Arrangements - Arrangements with Named Executives Concerning Termination of
Employment."
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENT WITH MR. DUNLAP
On July 18, 1996, the Company entered into the Dunlap Agreement with Mr.
Dunlap, pursuant to which the Company has agreed to employ Mr. Dunlap as
Chairman of the Board and Chief Executive Officer, and Mr. Dunlap has agreed
to serve in such capacities, for an initial period of three years ending July
17, 1999, and for successive one-year renewal periods unless advance notice
of termination is given by either party by no later than April 1 of the
immediately preceding year. The Dunlap Agreement may not be renewed beyond
July 17, 2001.
COMPENSATION
Under the Dunlap Agreement, Mr. Dunlap will be paid a base salary at an
annual rate of $1,000,000. The Company may increase Mr. Dunlap's base salary,
but may not reduce it after any such increase. Mr. Dunlap is eligible to
participate immediately in the other benefit plans available generally to
employees or other senior executives of the Company. However, he is not
eligible to participate in any incentive plan of the Company. The Company
also provides Mr. Dunlap with various perquisites on a grossed up basis.
16
CERTAIN EQUITY PURCHASES AND EQUITY GRANTS
Mr. Dunlap invested $3,000,000 in the Company on July 18, 1996, by
purchasing 244,898 shares of Common Stock from the Company at a price of
$12.25 per share (the closing price of the Company's Common Stock on the NYSE
on July 17, 1996). Mr. Dunlap received a one-time grant on July 18, 1996, of
1,000,000 restricted shares (the "Restricted Shares"). One-third of such
Restricted Shares vested on July 18, 1996 and the remainder will vest in two
equal installments on each of the first and second anniversaries of the grant
date. Subject to approval by the Company's shareholders at the Special
Meeting (see "Proposal 1--Approval of Stock Option Plan for Albert J. Dunlap
contained in the Employment Agreement between the Company and Albert J.
Dunlap"), Mr. Dunlap received a one-time grant effective as of July 18, 1996
of options to purchase 2,500,000 shares of Common Stock at a price of $12.25
per share (the "Dunlap Options"). The term of the Dunlap Options is ten
years, and they will vest with respect to one-third of the shares subject
thereto on the grant date and an additional one-third on each of the first
and second anniversaries of the grant date. If the shareholders do not
approve the stock option provisions of the Dunlap Agreement, the Company and
Mr. Dunlap have agreed to negotiate in good faith mutually acceptable
alternative compensation arrangements. The terms and conditions of any such
alternative compensation arrangements have not been determined. However, if
the shareholders of the Company do not approve Proposal 1, Mr. Dunlap may
elect to terminate his employment for Good Reason (as discussed below). Upon
the occurrence of a Change in Control of the Company (as defined below), the
Dunlap Options and Restricted Shares will vest in full.
TERMINATION AND CHANGE IN CONTROL PROVISIONS
The Company may terminate Mr. Dunlap's employment under the Dunlap
Agreement at any time, or due to his disability, or for Cause. As defined in
the Dunlap Agreement, "Cause" means (i) willful failure substantially to
perform Mr. Dunlap's duties under the Dunlap Agreement, except if such
failure results from disability, or (ii) his conviction for a felony (or a
plea of guilty or nolo contendere thereto). Mr. Dunlap may terminate his
employment under the Dunlap Agreement at any time. In addition, he may
terminate his employment for Good Reason by notifying the Company within 90
days after any of the following events occurring without his consent, unless
remedied by the Company within 30 days after receiving such notice:
(i) any change in Mr. Dunlap's title as Chairman of the Board and
Chief Executive Officer or his removal from, or the failure to re-elect
him to, such positions;
(ii) any assignment of duties materially inconsistent with his
positions or any material limitation of his powers as contemplated by
the Dunlap Agreement;
(iii) any requirement that Mr. Dunlap be based without his consent
anywhere other than at the Company's principal executive office;
(iv) any reduction in Mr. Dunlap's base salary;
(v) any failure to continue in effect any fringe benefit plan in
effect at the date of the Dunlap Agreement or to provide Mr. Dunlap
equivalent benefits;
(vi) the failure of the Company, within 60 days after the date of the
Dunlap Agreement, to have Mr. Dunlap duly elected as a Director and
thereafter to maintain his status as a Director while he serves as Chief
Executive Officer;
(vii) the failure of the Company to have three individuals (or their
successors) designated by Mr. Dunlap to be elected and reelected as
Directors;
(viii) a Change in Control of the Company; or
(ix) any other material breach of the agreement by the Company.
17
As defined in the Dunlap Agreement, a "Change in Control" means the
occurrence of any one of the following events:
(i) any "person" as such term is used in Sections 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934, as amended (the "Act"), becomes a
"beneficial owner," as such term is used in Rule 13d-3 promulgated under
that Act, of 25% or more of the voting stock of the Company;
(ii) the majority of the Board of Directors consists of individuals
other than Incumbent Directors, which term means the members of the
Board on the date of the agreement and any individuals designated by Mr.
Dunlap; provided that any person becoming a Director subsequent to such
date whose election or nomination for election was supported by
two-thirds of the Directors who then comprised the Incumbent Directors
is considered to be an Incumbent Director;
(iii) the Company, without Mr. Dunlap's consent, adopts any plan of
liquidation providing for the distribution of all or substantially all
of its assets; or
(iv) all or substantially all of the assets or business of the Company
are disposed of pursuant to a merger, consolidation or other transaction
(unless the persons who were shareholders of the Company immediately
prior to such merger, consolidation or other transaction beneficially
own, directly or indirectly, in substantially the same proportion as
they owned the voting stock of the Company, all of the voting stock or
other ownership interests of the entity or entities, if any, that
succeed to the business of the Company).
The Dunlap Agreement provides that, if the Company terminates Mr. Dunlap's
employment other than for Cause and not due to his disability, or if he
terminates his employment for Good Reason, (i) he will receive as liquidated
damages a lump sum payment in an amount equal to the base salary that would
have been payable through the period ending June 17, 1999, or any then
applicable renewal period, (ii) the Dunlap Options and Restricted Shares will
become fully vested, and he will be entitled to exercise the Dunlap Options
for the balance of the original ten-year term, and (iii) he will be entitled
to continue participating in the employee benefit plans in which he had been
entitled to participate before termination, for three years after
termination, or to receive substantially equivalent benefits.
The Dunlap Agreement provides that, if the Company terminates Mr. Dunlap's
employment for Cause or if he terminates his employment other than for Good
Reason, all obligations (other than accrued obligations) of the Company will
cease, except that he will be able to exercise the Dunlap Options which are
exercisable on the date of termination within 90 days, if the termination is
for Cause, and within one year, if it is by Mr. Dunlap without Good Reason.
The Dunlap Agreement provides that, if Mr. Dunlap's employment is
terminated due to his death, his estate or legal representative will be
entitled to exercise within one year after the date of death the Dunlap
Options which are then exercisable or which would have become exercisable
within one year after the date of death and, further, the portion of then
unvested Restricted Shares equal to the number of such unvested Restricted
Shares multiplied by a fraction, the numerator of which is 24 minus the
number of months remaining in the first two years of the employment term and
denominator of which is 24, will become vested as of the date of death. If
his employment is terminated due to disability, he will be entitled to
exercise within three years all Dunlap Options which are then exercisable or
which would have become exercisable within one year after the date of
termination and the portion of Restricted Shares determined in accordance
with the procedure described in the immediately preceding sentence will
become vested as of the date of termination.
In addition, the Dunlap Agreement provides that Mr. Dunlap will be
entitled to receive a gross-up with respect to any excise tax applicable
under the Code to "excess parachute payments."
18
EMPLOYMENT AGREEMENTS WITH MESSRS. KERSH, WHITE AND FANNIN
In July 1996, the Company entered into employment agreements with Messrs.
Kersh, White and Fannin (the "Executives"), for an initial period of three
years ending on the third anniversary of the date the applicable agreement
was executed.
COMPENSATION
Under the agreements, Messrs. Kersh, White and Fannin will be paid a base
salary at annual rates of $425,000, $425,000 and $300,000, respectively. The
base salaries will not be increased during the term of the agreements. In
addition, Messrs. Kersh and White have each received an initial signing bonus
of $125,000. The Executives will also be eligible to participate immediately
in the other benefit plans available generally to employees or other senior
executives of the Company. However, they will not be eligible to participate
in any cash incentive plan of the Company.
CERTAIN EQUITY PURCHASES AND EQUITY GRANTS
Messrs. Kersh, White and Fannin have invested approximately $500,000,
$500,000 and $100,000, respectively, in shares of Common Stock of the
Company. Messrs. Kersh, White and Fannin each received a one-time grant of
100,000, 100,000 and 10,000 Restricted Shares, respectively (Mr. Fannin's
grant was under the Option Plan). Such Restricted Shares will vest in three
equal installments on each of the first, second and third anniversaries of
the grant date. Messrs. Kersh, White and Fannin received one-time grants,
effective as of July 22, July 26 and July 29, 1996, respectively, of options
to purchase 250,000, 250,000 and 75,000 shares, respectively, of Common Stock
at a price of $14.26, $15.07 and $15.32 per share, respectively, under the
Option Plan. In addition, subject to approval by the Company's shareholders
at the Special Meeting (see "Proposal 2--Approval of Stock Option Plan for
Russell A. Kersh contained in the Employment Agreement between the Company
and Russell A. Kersh" and "Proposal 3--Approval of Stock Option Plan for P.
Newton White contained in the Employment Agreement between the Company and P.
Newton White"), Messrs. Kersh and White each received, effective as of July
22 and July 26, 1996, respectively, one-time grants of options to purchase
250,000 shares, at a price of $14.26 and $15.07 per share, respectively. The
term of such options is ten years, and they will vest with respect to
one-third of the shares subject thereto on each of the first, second and
third anniversaries of the grant date. If the shareholders do not approve the
stock option provisions of the Kersh Agreement or the White Agreement, the
Company and each such Executive have agreed to negotiate in good faith
mutually acceptable alternative compensation arrangements. The terms and
conditions of any such alternative compensation arrangements have not been
determined. However, if the shareholders of the Company do not approve
Proposal 2, with respect to Mr. Kersh, or Proposal 3, with respect to Mr.
White, such Executive may elect to terminate his employment for Good Reason
(as discussed below).
TERMINATION AND CHANGE IN CONTROL PROVISIONS
The Company may terminate an Executive's employment under the agreements
at any time, or due to the Executive's disability, or for Cause (as defined
above). Each Executive may terminate his employment under the agreement at
any time. In addition, he may terminate his employment for Good Reason by
notifying the Company within 90 days after any of the following events
occurring without his consent, unless remedied by the Company within 30 days
after receiving such notice:
(i) any assignment of duties materially inconsistent with his
positions or any material limitation of his powers as contemplated by
the agreement;
(ii) any removal of the Executive from, or any failure to reelect the
Executive to the executive officer position specified in the agreement;
or
(iii) any other material breach of the agreement by the Company.
19
The agreements provide that, if the Company terminates an Executive's
employment other than for Cause and not due to his disability, or if he
terminates his employment for Good Reason or following a Change in Control
(as defined above), (i) he will receive as liquidated damages a lump sum
payment in an amount equal to the base salary that would have been payable
through the end of the employment term, (ii) the options and Restricted
Shares will become fully vested, and he will be entitled to exercise the
options for the balance of the original ten-year term, and (iii) he will be
entitled to continue participating in the employee benefit plans in which he
had been entitled to participate before termination, through the end of the
employment term, or to receive substantially equivalent benefits.
The agreements provide that, if the Company terminates an Executive's
employment for Cause or if he terminates his employment other than for Good
Reason or following a Change in Control, all obligations (other than accrued
obligations) of the Company will cease, except that he will be able to
exercise the options which are exercisable on the date of termination within
90 days, if the termination is for Cause, and within one year, if it is by
the Executive other than for Good Reason or following a Change in Control.
The agreements provide that, if an Executive's employment is terminated
due to his death, his estate or legal representative will be entitled to
exercise within one year after the date of death the options which are then
exercisable or which would have become exercisable within one year after the
date of death and, further, the portion of then unvested Restricted Shares
equal to the number of such unvested Restricted Shares multiplied by a
fraction, the numerator of which is 36 minus the number of months remaining
in the first three years of the employment term and denominator of which is
36, will become vested as of the date of death. If his employment is
terminated due to disability, he will be entitled to exercise within three
years all options which are then exercisable or which would have become
exercisable within one year after the date of termination and the portion of
Restricted Shares determined in accordance with the procedure described in
the immediately preceding sentence will become vested as of the date of
termination.
In addition, the agreements provide that each Executive will be entitled
to receive a gross-up with respect to any excise tax applicable under the
Code to "excess parachute payments."
EMPLOYMENT AGREEMENT WITH MR. VOLK
The Company is a party to an employment agreement with Mr. Volk for a term
continuing through 1996. The agreement established base annual salary of not
less than $350,000. In addition, Mr. Volk is eligible to receive bonuses, as
determined by the Board of Directors, up to a maximum amount of 60% of his
base salary.
Pursuant to the termination provisions and subject to Mr. Volk's
compliance with certain non-competition provisions contained in the
agreement, in the event of his (i) termination from the Company without cause
or (ii) termination of his employment by Mr. Volk upon a "Change in Control"
(as defined in the agreement), subject to release by Mr. Volk of any damages
incurred because of the Company's actions, he will be entitled to an amount
equal to the product of (A) base salary as of the date of termination and (B)
the number of years, including any partial year, which shall be expressed as
a fraction, remaining in the term of the agreement, but in no event less than
one year's annual base salary. In the event of death, all amounts accrued
through the date of death shall be paid. In the event of disability, Mr. Volk
will continue to receive his base salary for such period until his employment
is terminated, provided that payments made are reduced by any sums payable to
him under the Company's disability benefit plan or the Social Security
disability insurance program. If Mr. Volk's employment with the Company is
terminated for cause (as defined in the agreement), he is entitled only to
accrued obligations of the Company through the date of termination.
ARRANGEMENTS WITH NAMED EXECUTIVES CONCERNING TERMINATION OF EMPLOYMENT
In connection with Mr. Schipke's resignation and the terminations of
employment with the Company of Messrs. Clegg, O'Hara and Boynton, the Company
entered into certain arrangements with
20
each of them, providing that, pursuant to the terms of their respective
employment agreements and in consideration of the execution of the agreements
and of a release and covenant not to sue contained therein, they would
receive payments equal to, in the case of Mr. Schipke, the base salary
remaining under his employment agreement (until December 31, 1996), and, in
the case of each of Messrs. Clegg, O'Hara and Boynton, one year base salary
at their current rate of compensation, less applicable withholding taxes. In
addition, Mr. Schipke will also receive continuation of health, dental and
life insurance coverage, on the same basis as prior to termination of
employment, until December 31, 1997. The agreement with Mr. Schipke also
provides for immediate repayment by him of the balance then outstanding on
the August Loan and the December Loan. See "Certain Relationships and Related
Transactions--Indebtedness of Management." The termination agreement with Mr.
Schipke also provided for immediate vesting of all of his then outstanding
options to purchase shares of Common Stock and Restricted Shares.
CHANGE IN CONTROL PLAN
In December 1995, based on the recommendation of the Compensation
Committee, the Board of Directors adopted a Change in Control Plan with
respect to executive vice presidents of the Company, including Messrs. Kersh,
White, Volk and Fannin. Pursuant to this plan, if there is a "Change in
Control" of the Company prior to December 31, 1996, followed by a "Change in
Status" of any executive vice president of the Company (who holds such office
as of the effective date of the Change in Control and which Change in Status
occurs within two years following Change in Control), the executive vice
president shall be entitled to receive an amount such that the aggregate
value of all payments and benefits to him which are contingent upon a Change
in Control shall be not less than 2.99 times the officer's "base amount" (as
calculated in accordance with Section 280(g) of the Code and applicable
regulations) (the "Change in Control Payment"). The amount of the Change in
Control Payment is inclusive of all amounts to which the executive vice
president may otherwise be entitled by reason of a Change in Control, coupled
with a Change in Status, including (but not limited to) amounts paid pursuant
to the employment agreement between the Company and the executive, as
described above, or pursuant to the Company's Option Plan, which also
provides for accelerated vesting of outstanding options upon a Change in
Control followed by a Change in Status. The Change in Control Plan terminates
as of December 31, 1996.
OTHER MATTERS
In accordance with the By-Laws of the Company, no other business may be
presented for consideration at the Special Meeting other than that specified
in the accompanying Notice of Special Meeting except such other matters as
may be incident to the conduct of the Special Meeting. Proxies in the
enclosed form will be voted in respect of such other matters as may be
incident to the conduct of the Special Meeting in accordance with the
judgment of the person or persons voting the proxies.
The Company is not aware of any substantial interest, direct or indirect,
by holders of Common Stock or otherwise, of any officer, Director or
associate of the foregoing persons in any matter to be acted on, as described
herein, other than the interests of Messrs. Dunlap, Kersh and White in their
respective Stock Option Plans.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying form has been or will
be borne by the Company. In addition to solicitation by mail, arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to their principals, and the
Company may reimburse them for any attendant expenses.
1997 SHAREHOLDER PROPOSALS
Any shareholder wishing to submit a proposal to the Company for
consideration for inclusion in its proxy statement relating to its 1997
Annual Meeting of Shareholders must deliver such proposal to the Secretary of
the Company at the Company's corporate office, 2100 New River Center, 200
East Las Olas Boulevard, Fort Lauderdale, FL 33301, on or before January 31,
1997.
21
SUNBEAM CORPORATION
2100 NEW RIVER CENTER
200 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FL 33301
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Robert Gluck and Rich Goudls as Proxies,
each with the power to appoint his substitute, and hereby authorizes them, and
each of them, to represent and vote, as designated below, all the shares of
Common Stock of Sunbeam Corporation (the "Company") held of record by the
undersigned on August 23, 1996, at the Special Meeting of Shareholders of the
Company to be held on September 27, 1996, and at any postponements or
adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR Proposals No. 1, 2 and 3. Proxies will be voted in respect of such
other matters as may be incident to the conduct of the Special Meeting in
accordance with the judgment of the Proxies appointed hereby.
(Continued and to be dated and signed on the reverse side.)
SUNBEAM CORPORATION
P.O. BOX 11223
NEW YORK, N.Y. 10203-0223
1. To approve the Stock Option Plan for Albert J. Dunlap (Proposal No. 1):
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve the Stock Option Plan for Russell A. Kersh (Proposal No. 2):
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the Stock Option Plan for P. Newton White (Proposal No. 3):
FOR [ ] AGAINST [ ] ABSTAIN [ ]
CHANGE OF ADDRESS AND
OR COMMENTS MARK HERE [ ]
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by the President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Dated:_________________________________, 1996
_____________________________________________
Signature
_____________________________________________
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
VOTES MUST BE INDICATED (X)
IN BLACK OR BLUE INK. [ ]
Appendix A
EMPLOYMENT AGREEMENT
by and between
SUNBEAM CORPORATION
and
ALBERT J. DUNLAP
Effective as of July 18, 1996
EMPLOYMENT AGREEMENT
AGREEMENT, effective as of July 18, 1996 (the "Effective Date"), by
and between Albert J. Dunlap (the "Executive") and Sunbeam Corporation, a
Delaware corporation (the "Company").
WHEREAS, the Board of Directors of the Company (the "Board") desires
to employ the Executive and the Executive desires to furnish services to the
Company on the terms and conditions hereinafter set forth; and
WHEREAS, the parties desire to enter into this agreement setting
forth the terms and conditions of the employment relationship of the Executive
with the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD. The period of employment of the Executive by
the Company hereunder (the "Employment Period") shall commence on the Effective
Date and shall end on July 17, 1999 (or the Date of Termination (as defined in
Section 6 below), if earlier). Commencing on July 18, 1999, the Employment
Period shall be extended for successive one year periods (individually, a
"Renewal Period"), unless a notice not to extend this Agreement shall have been
given by either party hereto to the other not later than April 1 immediately
preceding the commencement of a Renewal Period or unless the Date of Termination
shall have previously occurred; provided, however, that the last such Renewal
Period shall be the Renewal Period ending on July 17, 2001. Unless the context
suggests otherwise, the Employment Period hereunder
2
shall for all purposes of this Agreement be deemed to include any Renewal
Period.
3. POSITION AND DUTIES. The Executive shall serve as Chairman of the
Board and Chief Executive Officer and as a director of the Company and shall
report to directly to the Board. During the Employment Period, subject to the
supervisory powers of the Board, the Executive shall have those powers and
duties consistent with his position as Chairman of the Board and Chief Executive
Officer, which powers shall in all cases include, without limitation, the power
of supervision and control over and responsibility for the general management
and operation of the Company. The Executive agrees to devote substantially all
his working time, attention and energies to the performance of his duties for
the Company. It shall not be a violation of this Agreement for the Executive to
(i) serve on corporate, civic or charitable boards or committees, (ii) give
speeches and make media appearances to discuss matters of public interest and
(iii) manage his personal investments, so long as such activities do not
unreasonably interfere with the performance of the Executive's responsibilities
as an officer of the Company in accordance with this Agreement. It is understood
that the Executive has made a commitment to appear in various cities in the
United States in connection with the forthcoming publication of a book entitled
MEAN BUSINESS, of which he is a co-author, and it shall not be a violation of
this Agreement for the Executive to make such appearances (the expenses relating
to such appearances to be borne by the Executive). The Company shall nominate
the Executive as a director of the Company and shall use its best efforts to
have the Executive elected and reelected to the Board for the duration of the
Employment Period. The Company shall also use its best efforts to cause (i) the
Board to be expanded from six to not more than nine members and (ii) three
individuals, designated by the Executive to be elected and reelected as
directors of the Company for the duration of the Employment Period. In the event
that any of such individuals fails to qualify or be elected (or, having been
elected, resigns, is removed or fails to be re-elected) during the Employment
Period, the Executive shall designate a successor reasonably acceptable to the
Board and the Company shall nominate such person as a
3
director and shall use its best efforts to cause such person to be elected and
reelected.
4. PLACE OF PERFORMANCE. The principal place of employment of the
Executive shall be at the Company's principal executive offices in Fort
Lauderdale, Florida, or such other location as may be agreed to by the Board and
the Executive. In the event that the Company's principal executive offices are
moved from Fort Lauderdale, Florida, the Company shall promptly pay, or
reimburse the Executive for, all reasonable expenses incurred by the Executive
for a period of one year relating to any change of the Executive's residence
from Boca Raton, Florida, in connection with his employment hereunder,
including, without limitation, reasonable expenses for himself and his family of
travel, moving, storage and suitable lodging and maintenance, and the Company
shall reimburse the Executive on a grossed up basis in the event that any tax is
assessed upon him in relation to any such expenses. The Company shall pay or
reimburse the Executive for all reasonable costs and expenses of residential
relocation incurred by him for a period of one year in connection with each and
every additional change, if any, in the location of the principal executive
offices of the Company, and the Executive shall be reimbursed by the Company on
a grossed up basis in the event that any tax is assessed upon him in relation to
any such costs or expenses.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. As compensation for the performance by the
Executive of his duties hereunder, during the Employment Period the Company
shall pay the Executive a base salary at an annual rate of $1,000,000 (the base
salary, at the rate in effect from time to time, is hereinafter referred to as
the "Base Salary"). The Base Salary shall be payable in equal semi-monthly
installments and may be increased from time to time at the discretion of the
Company's Compensation Committee (or any successor thereof) and the Board. Base
Salary shall not be reduced after any increase thereof.
4
(b) EQUITY GRANTS.
(1) PURCHASED SHARES. Effective as of the Effective Date,
the Executive shall purchase from the Company for his own account, and the
Company shall sell to the Executive, for the sum of $3,000,000 that number of
shares of the Company's Common Stock, par value $.01 per share ("Common Stock"),
determined by dividing $3,000,000 by the closing price per share of such shares
on the New York Stock Exchange ("NYSE") on July 17, 1996 ($12.25). Such shares
shall be the sole property of the Executive, shall be unrestricted and shall be
freely tradeable by the Executive, subject to applicable legal restrictions.
Within six (6) months after the Effective Date, the Company shall cause the
shares to be registered or qualified for resale under the Securities Act of 1933
and applicable state laws.
(2) RESTRICTED SHARES. Effective as of the Effective Date, the
Executive is hereby granted, without cost to the Executive, 1,000,000 shares of
the Company's Common Stock, on the terms and conditions set forth herein.
One-third of such shares (the "Unrestricted Shares") shall be vested upon the
Effective Date and the remaining shares (the "Restricted Shares") shall vest and
cease to be restricted in two equal installments on the first and second
anniversaries of the Effective Date (subject to earlier vesting provisions set
forth in Section 5(b)(4) and earlier vesting and forfeiture provisions set forth
in Section 7). All such shares, once vested, shall be the sole property of the
Executive, shall be unrestricted and shall be freely tradeable by the Executive,
subject to applicable legal restrictions. Within six (6) months after the
Effective Date, the Company shall cause all such shares to be registered or
qualified for resale under the Securities Act of 1933 and applicable state laws.
(i) ISSUANCE OF CERTIFICATES. The Unrestricted Shares shall be
registered in the Executive's name, and the certificates therefor shall be
delivered to the Executive within 10 days after the Effective Date. The
Restricted Shares shall be registered in the Executive's name, but the
certificates evidencing the Restricted Shares shall be re-
5
tained by the Company until such shares become vested and the restrictions
thereon lapse. The period prior to the time that any particular Restricted
Shares become vested and the restrictions thereon lapse is hereinafter
referred to as the "Restricted Period" with respect to such shares. The
Executive shall execute a stock power, in blank, with respect to such
Restricted Shares and deliver the same to the Company.
(ii) RIGHTS AS A STOCKHOLDER. Except as provided herein, during the
Restricted Period, the Executive shall have all the rights of a
stockholder with respect to Restricted Shares, including the right to
receive dividends or other distributions and the right to vote such
shares; provided that, in the discretion of the Company any such dividends
or other distributions may be retained by the Company unless and until the
Restricted Shares in respect of which such dividends or other
distributions were paid shall vest.
(iii) NON-TRANSFERABILITY. During the Restricted Period, the
Executive may not sell, transfer, pledge, or otherwise encumber or dispose
of the Restricted Shares, and any attempted sale, transfer, pledge or
other encumbrance or disposition (whether voluntary or involuntary) in
violation of this Section 5(b)(2)(iii) shall be null and void.
(iv) DELIVERY OF SHARE CERTIFICATES. Upon the vesting of any
Restricted Shares, the certificates evidencing such Restricted Shares,
together with any dividends or other distributions retained by the Company
pursuant to Section 5(b)(2)(ii), shall be delivered promptly to the
Executive. In the case of Executive's death, such certificates, dividends
and distributions will be delivered to the beneficiary designated in
writing by the Executive pursuant to a form of designation provided by the
Company, to the Executive's legatee or legatees, or to his personal
representatives or distributees, as the case may be. Unless and until
registered under the Securities Act of 1933, as amended, certificates
evidencing the shares purchased by the Executive pursuant to Sec-
6
tion 5(b)(1) hereof, the Restricted Shares, the Unrestricted Shares, and
shares acquired pursuant to the exercise of the Option (as defined in
Section 5(b)(3) below) shall bear the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS,
IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH REGISTRATION IS NOT
REQUIRED.
(3) STOCK OPTIONS. Effective as of the Effective Date, and subject
to shareholder approval by Company's shareholders at a special meeting to be
held for that purpose prior to September 30, 1996 (the "Special Meeting"), the
Executive is hereby granted a non-qualified stock option (an "Option") to
purchase 2,500,000 shares of Common Stock (the "Option Award"). The Option Award
is subject to the following conditions: (i) the exercise price per share of
Common Stock shall be equal to the closing price per share on the NYSE on July
17, 1996 ($12.25), (ii) the Option Award shall vest and become exercisable with
respect to one-third (1/3) of the shares of Common Stock subject to such award
on the Effective Date and an additional one-third (1/3) of the shares of Common
Stock subject to such award on each of the first and second anniversaries of the
Effective Date (subject to earlier vesting provisions set forth in Section
5(b)(4) and earlier vesting and forfeiture provisions set forth in Section 7),
and (iii) the Option Award shall expire on the tenth anniversary of the
Effective Date, subject to earlier termination as provided herein. Within six
(6) months after the Effective Date the Company shall cause all shares subject
to the Option to be registered or qualified for resale under the Securities Act
of 1933 and applicable state laws. In the event that Company's shareholders fail
to approve the grant of the Option at the Special Meeting, the Company and the
Executive shall negotiate in good faith a mutually acceptable alternative
compensation arrangement; provided, however, that the Executive, in his sole
discretion, may elect to terminate this Agreement, in which event it shall be
deemed to have been terminated pursuant to Section 6(d) hereof and the Executive
shall be entitled to receive the
7
compensation, rights and benefits provided in Section 7(e) hereof (other than in
respect of stock options).
(4) SPECIAL VESTING OF EQUITY GRANTS. Anything herein to the
contrary notwithstanding, if a Change in Control occurs during the Employment
Period and the Executive has remained continually employed by the Company from
the Effective Date to the date of the Change in Control, the Restricted Shares
that have not theretofore vested shall vest and the Option Award, to the extent
not theretofore vested and exercisable, shall become fully vested and
exercisable, upon the occurrence of such Change in Control. For purposes of this
Agreement, a Change in Control shall mean the occurrence of any one of the
following events:
(A) any "person" as such term is used in Sec- tions 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, as amended,
becomes a "beneficial owner," as such term is used in Rule
3d-3 promulgated under that act, of 25% or more of the voting
stock of the company (other than a person that is cur- rently
the beneficial owner of such per- centage of the Company's
voting stock);
(B) the majority of the Board consists of individuals other than
Incumbent Direc- tors, which term means the members of the
Board on the date of this Agreement, the Executive and the
individuals designated as directors by the Executive in accor-
dance with Section 3 hereof; provided that any person becoming
a director sub- sequent to such date whose election or
nomination for election was supported by two-thirds of the
directors who then com- prised the Incumbent Directors shall
be considered to be an Incumbent Director;
(C) the Company, without the Executive's consent, adopts any plan
of liquidation providing for the distribution of all or
substantially all of its assets; or
8
(D) all or substantially all of the assets or business of the
Company are disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company
immediately prior to such merger, consolidation or other
transaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned the voting
stock of the Compa- ny, all of the voting stock or other own-
ership interests of the entity or enti- ties, if any, that
succeed to the business of the Company).
(c) EXPENSES. During the Employment Period, the Company shall
reimburse the Executive for all reasonable business expenses in accordance with
applicable policies and procedures then in force, including, without limitation,
first class travel, lodging and other expenses incurred by him. In light of the
fact that the Executive may be required to travel for extended period of time,
such expenses shall include all reasonable expenses of the Executive's wife for
travel with the Executive in the service of the Company.
(d) VACATION AND OTHER ABSENCES. The Executive shall be
entitled to paid vacation and other paid absences, whether for holidays,
illness, personal time or any similar purposes, during the Employment Period in
accordance with policies applicable generally to senior executives of the
Company; provided, however, that the Executive shall always be entitled to at
least six weeks of paid vacation in each calendar year and pro rata for part of
a year and shall be compensated at the conclusion of each calendar year for any
unused vacation days.
(e) AUTOMOBILE. The Company shall purchase from the Executive
at his cost the Mercedes automobile currently owned by him and shall provide to
the Executive, every two years thereafter, during the Employment Period, a new
automobile, comparable in type and style, for his exclusive use. The Company
shall reimburse the Executive for all reasonable expenses incurred in the use
and maintenance of such automobile, and will
9
also provide the Executive with a driver on a full-time basis for security and
safety reasons. The Company shall reimburse the Executive on a grossed up basis
in the event that any tax is assessed upon him in relation to such driver or
expenses.
(f) CLUB MEMBERSHIP. During the Employment Period, the Company
shall pay any and all initiation fees, monthly membership dues, and
company-related expenses in connection with the continuation of the Executive's
current country club membership and for comparable country club membership in
the event of a relocation of the Company's principal executive office. The
Company shall reimburse the Executive on a grossed up basis in the event that
any tax is assessed upon him in relation to such fees, dues and expenses.
(g) FINANCIAL PLANNING, ETC. During the Employment Period, the
Company shall provide the Executive with financial consulting services,
including taxrelated advice and services, without cost or expense to him and
shall reimburse the Executive on a grossed up basis in the event that any tax is
assessed upon him in relation to such services. The Company shall pay the
reasonable fees and disbursements of legal, accounting and tax advisors incurred
by the Executive in connection with the negotiation, preparation and
implementation of this Agreement and any additional instruments and agreements
related hereto, and any transactions contemplated hereby, and the Company shall
reimburse the Executive on a grossed up basis in the event that any tax is
assessed upon him in relation to any such fees and disbursements.
(h) OTHER BENEFITS. During the Employment Period, the
Executive shall be eligible to participate at no cost or expense to him in
welfare plans and programs (including any tax-deferred savings plan, group life
insurance plan, medical and dental insurance plan, and accident and disability
insurance plan) ("Benefit Plans") applicable generally to employees and/or
senior executives of the Company, but shall not be eligible to participate in
the Company's short-term or long-term incentive plans or in the Company's
employee defined benefit pension plans. The Company will waive, or obtain the
waiver of, any waiting periods for eligibility under
10
the Benefit Plans or will provide comparable benefits to the Executive without
cost to him during the waiting period.
6. TERMINATION. The Executive's employment hereunder, as the case
may be, may be terminated as follows:
(a) DEATH. The Executive's employment shall terminate upon his
death, and the date of his death shall be the Date of Termination.
(b) DISABILITY. If, as a result of the Executive's incapacity due
to physical or mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis for one hundred and twenty (120)
consecutive days and, within thirty (30) days after written Notice of
Termination (as defined in Section 6(f) hereof) is given, shall not have
returned to the performance of his duties hereunder on a full-time basis
("Disability"), the Company may terminate the Executive's employment hereunder.
In this event, the Date of Termination shall be thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period).
(c) CAUSE. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder:
(i) upon the Executive's conviction for the commission of
a felony (or a plea of nolo contendere thereto); or
(ii) willful failure by the Executive substantially to
perform his duties hereunder (other than any such failure resulting from the
Executive's incapacity due to Disability).
For purposes hereof, no act or failure to act by the Executive
shall be considered "willful" unless done or omitted to be done by him not
in good faith or without reasonable belief that his action
11
or omission was in the best interests of the Company or contrary to a
formal resolution of the Board. Cause shall not exist unless and until
there shall have been delivered to the Executive a copy of a resolution,
duly adopted by the affirmative vote of not less than two thirds of the
entire membership of the Board at a meeting of the Board held for the
purpose (after ten (10) days' prior notice to the Executive of such
meeting and the purpose thereof and an opportunity for him, together with
his counsel, to be heard before the Board at such meeting), finding that
in the good faith opinion of the Board, the Executive was guilty of
conduct set forth above in clause (ii) of this Section 6(c) and specifying
the particulars thereof in detail. The Date of Termination shall be the
date specified in the Notice of Termination; provided, however, that, in
the case of a termination for Cause under clause (ii) above, the Date of
Termination shall not be earlier than 30 days after delivery of the Notice
of Termination. Anything herein to the contrary notwithstanding, if,
following a termination of the Executive's employment by the Company for
Cause based upon the conviction of the Executive for a felony, such
conviction is overturned in a final determination on appeal, the Executive
shall be entitled to the payments and the economic equivalent of the
benefits the Executive would have received if his employment had been
terminated by the Company without Cause.
(d) GOOD REASON. The Executive may terminate his employment
hereunder for Good Reason, provided that the Executive shall have delivered a
Notice of Termination (as defined in Section 6(f) hereof) within ninety (90)
days after the occurrence of the event of Good Reason giving rise to such
termination. For purposes of this Agreement, "Good Reason" shall mean the
occurrence of one or more of the following circumstances, without the
Executive's express written consent, which are not remedied by the Company
within thirty (30) days of receipt of the Executive's Notice of Termination:
(i) an assignment to the Executive of any duties
materially inconsistent with his positions,
12
duties, responsibilities and status with the Company or any material limitation
of the powers of the Executive not consistent with the powers of the Executive
contemplated by Section 3 hereof;
(ii) any removal of the Executive from, or any failure to
re-elect the Executive to, the positions specified in Section 3 of this
Agreement;
(iii) the change of the Executive's title as specified by
Section 3 of this Agreement;
(iv) the Company's requiring the Executive without his
consent to be based at any office or location other than as described in Section
4 of this Agreement;
(v) a reduction in the Executive's Base Salary as in
effect from time to time;
(vi) the failure of the Company to continue in effect any
Benefit Plan that was in effect on the date hereof or provide the Executive with
equivalent benefits;
(vii) the failure of the Company, within not more than
sixty (60) days after the Effective Date, to have the Executive duly elected as
a member of its Board of Directors and to maintain the Executive in such
position at all times thereafter for so long as he shall serve as Chief
Executive Officer of the Company;
(viii) the failure of the Company to cause three
individuals (or their successors) designated by the Executive to be elected and
reelected as directors of the Company in accordance with Section 3 hereof;
(ix) any other material breach by the Company of this
Agreement; or
(x) a Change in Control.
13
In the event of a termination for Good Reason, the Date of
Termination shall be the date specified in the Notice of Termination, which
shall be no more than thirty (30) days after the Notice of Termination.
(e) OTHER TERMINATIONS. Notwithstanding the foregoing, the
Company may terminate the Executive's employment hereunder at any time and the
Executive may terminate his employment at any time, in each case subject to the
provisions of Sections 7(d) and (e) hereof. If the Executive's employment is
terminated hereunder for any reason other than as set forth in Sections 6(a)
through 6(d) hereof, the date on which a Notice of Termination is given or any
later date (within 30 days) set forth in such Notice of Termination shall be the
Date of Termination.
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment hereunder by the Company or by the Executive (other than termination
pursuant to Section 6(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. If any dispute concerning a Notice of Termination of the
Executive's employment under Section 6(b), 6(c) or 6(d) hereof results in a
determination that a proper basis for such termination did not exist under such
section, the Executive's employment under this Agreement shall be treated, with
respect to a Notice of Termination pursuant to Section 6(b) or 6(c) hereof, as
having been terminated pursuant to Section 6(e) hereof or, with respect to a
Notice of Termination pursuant to Section 6(d) hereof, as having not been
terminated.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY PERIOD. During any period
during the Employment Period that the Executive fails to
14
perform his duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), the Executive shall continue to (i) receive his
full Base Salary and (ii) participate in the Benefit Plans. Such payments made
to the Executive during the Disability Period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the time of any such
payment under disability benefit plans of the Company or under the Social
Security disability insurance program, and which amounts were not previously
applied to reduce any such payment.
(b) DEATH. If the Executive's employment hereunder is
terminated as a result of death, then:
(i) the Company shall pay the Executive's estate or
designated beneficiary, as soon as practicable after the Date of
Termination, any Base Salary installments due in the month of death and
any reimbursable expenses, accrued or owing the Executive hereunder as of
the Date of Termination;
(ii) the Options granted to the Executive pursuant to
the Option Award shall become vested and exercisable, as of the Date of
Termination, to the extent such Option Award would have otherwise become
vested on or before the first anniversary of the Date of Termination, and
all vested Options shall remain exercisable for a period of one year
following such Date of Termination and shall thereafter be completely
forfeited and cancelled; any Options that would not have become vested and
exercisable on or before the first anniversary of the Date of Termination
shall terminate and be forfeited as of the Date of Termination; and
(iii) the portion of the Restricted Shares that have not
vested as the Date of Termination equal to the number of such unvested
Restricted Shares multiplied by a fraction, the numerator of which is 24
minus the number of full months remaining in the first two years of the
Employment Period (disregarding the earlier termination thereof) after the
Date of Termination and denominator of
15
which is 24, shall become vested as of the Date of Termination and the
restrictions imposed thereon shall lapse. The balance of such unvested
Restricted Shares shall be forfeited to the Company (without further
action on the part of the Company or the Executive) as of the Date of
Termination, and the Executive shall have no further rights with respect
to such balance.
(c) DISABILITY. If the Executive's employment hereunder is
terminated as a result of Disability, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Options granted to the Executive pursuant to
the Option Award shall become vested and exercisable, as of the Date of
Termination, to the extent such Option Award would have otherwise become
vested on or before the first anniversary of the Date of Termination, and
all vested Options shall remain exercisable for a period of three years
following such Date of Termination and shall thereafter be completely
forfeited and cancelled; any Options that would not have become vested and
exercisable on or before the first anniversary of the Date of Termination
shall terminate and be forfeited as of the Date of Termination; and
(iii) the portion of the Restricted Shares that have not
vested as the Date of Termination equal to the number of such unvested
Restricted Shares multiplied by a fraction, the numerator of which is 24
minus the number of full months remaining in the first two years of the
Employment Period (disregarding the earlier termination thereof) after the
Date of Termination and denominator of which is 24, shall become vested,
and the restrictions imposed thereon shall lapse. The balance of such
unvested Restricted Shares shall be forfeited to the Company (without
further action on the part of the
16
Company or the Executive) as of the Date of Termination, and the Executive
shall have no further rights with respect to such balance.
(d) CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive's employment hereunder is terminated by the Company for Cause or by
the Executive (other than for Good Reason), then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses accrued or owing the Executive hereunder for
services as of the Date of Termination; and
(ii) the Executive shall immediately forfeit any
unvested Restricted Shares and any unvested portion of the Option Award.
In the event of termination by the Company for Cause, the Executive shall
have the right to exercise the vested unexercised portion of the Option
Award for a period of ninety (90) days after the Date of Termination, and
the unexercised portion of such Option Award shall be forfeited
thereafter. In the event of termination by the Executive other than for
Good Reason, the Executive shall have the right to exercise the vested
unexercised portion of the Option Award for a period of one year following
the Date of Termination and the unexercised portion of such Option Award
shall be forfeited thereafter.
(e) TERMINATION BY COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE
WITH GOOD REASON. If the Executive's employment hereunder is terminated by the
Company (other than for Cause or Disability) or by the Executive for Good
Reason, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Company shall immediately pay to the Executive
as liquidated damages and not
17
as a penalty a lump sum amount equal to the total Base Salary that would
have otherwise been payable to the Executive with respect to the period
commencing immediately following the Date of Termination and ending on
July 17, 1999, or, if applicable, the expiration of the Renewal Period
(the "Salary Continuation Period") at the annualized rate in effect at the
time Notice of Termination is given;
(iii) the Options granted to the Executive pursuant to
the Option Award shall become fully vested and exercisable, and the
Restricted Shares shall become fully vested, as of the Date of
Termination. The Option Award shall remain exercisable for the balance of
its original 10-year term; and
(iv) for a period of three years immediately following
the Date of Termination, the Executive shall continue to participate in
all employee benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of Termination in
accordance with the terms of such plans and programs as in effect from
time to time; provided that the Executive's continued participation is
permitted under the general terms and provisions of such plans and
programs. In the event that the Executive's participation in any such plan
or program is barred, the Company shall arrange to provide the Executive
and his dependents with benefits substantially the same as those which the
Executive and his dependents would otherwise have been entitled to receive
under such plans and programs from which their continued participation is
barred or provide their economic equivalent.
8. GROSS-UP FOR EXCISE TAX. In the event that the Executive receives
any payment or benefit (including but not limited to the payments or benefits
pursuant to Section 7 of this Agreement) (a "Payment") that is subject to the
excise tax (the "Excise Tax") under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the Company shall pay to the Executive, as soon
thereafter as practicable, an additional amount (a
18
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax imposed upon the Payment and any federal, state and
local income tax and Excise Tax imposed upon the Gross-Up Payment shall be equal
to the Payment. The determination of whether an Excise Tax is due in respect of
any payment or benefit, the amount of the Excise Tax and the amount of the
Gross-Up Payment shall be made by an independent auditor (the "Auditor") jointly
selected by the Company and the Executive and paid by the Company. If the
Executive and the Company cannot agree on the firm to serve as the Auditor, then
the Executive and the Company shall each select one nationally recognized
accounting firm and those two firms shall jointly select the nationally
recognized accounting firm to serve as the Auditor. Notwithstanding the
foregoing, for purposes of determining the Gross-Up Payment in respect of any
Payment, (i) any other payments or benefits received or to be received by the
Executive in connection with a Change in Control or the Executive's termination
of employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions result
in a Change in Control or any person affiliated with the Company or such person)
shall be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of Section 280G of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Auditor, such other
payments or benefits (in whole or in part) do not constitute parachute payments,
or are otherwise not subject to the Excise Tax, and (ii) the Executive shall be
deemed to pay federal income tax at the highest marginal rate applicable in the
calendar year in which the Gross-Up Payment is made, and state and local income
taxes at the highest marginal rate of taxation in the state and locality of the
Executive's residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes. In the event the actual Excise Tax or such income tax is more or
less than the amount used to calculate the Gross-Up Payment, the Executive or
the Company, as the case may be, shall pay to the other an amount reflecting the
actual Excise Tax or such income tax, plus interest on the amount of such
19
repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
9. MITIGATION. The Executive shall not be required to mitigate
amounts payable pursuant to Section 7 hereof by seeking other employment or
otherwise, nor shall there be any offset against such payments on account of (a)
any remuneration attributable to any subsequent employment that he may obtain or
(b) any claims the Company may have against the Executive.
10.CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS, NON-COMPETITION.
(a) CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company and its subsidiaries (the
"Sunbeam Entities") all trade secrets, confidential information, and knowledge
or data relating to the Sunbeam Entities and the businesses and investments of
the Sunbeam Entities, which shall have been obtained by the Executive during the
Executive's employment by the Company, including such information with respect
to any products, improvements, formulas, designs or styles, processes, services,
customers, suppliers, marketing techniques, methods, future plans or operating
practices ("Confidential Information"); PROVIDED, HOWEVER, that Confidential
Information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive) or any
specific information or type of information generally not considered
confidential by persons engaged in the same business as the Company, or
information disclosed by the Company or any officer thereof to a third party
without restrictions on the disclosure of such information. Except as may be
required or appropriate in connection with his carrying out his duties under
this Agreement, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such Confidential Information to anyone other than the Company
and those designated by the Company.
(b) REMOVAL OF DOCUMENTS. All records, files, drawings,
documents, models, and the like relating
20
to the business of the Sunbeam Entities, which the Executive prepares, uses or
comes into contact with and which contain Confidential Information shall not be
removed by the Executive from the premises of any Sunbeam Entity (without the
written consent of the Company) during or after the Employment Period unless
such removal shall be required or appropriate in connection with his carrying
out his duties under this Agreement, and, if so removed by the Executive, shall
be returned to such Sunbeam Entity immediately upon termination of the
Executive's employment hereunder.
(c) NON-COMPETITION. During (i) the Executive's employment
with the Company and (ii) the two (2) year period immediately following the
Executive's Date of Termination, the Executive (A) shall not engage, anywhere
within the geographical areas in which any Sunbeam Entity is then conducting its
business operations, directly or indirectly, alone, in association with or as a
shareholder, principal, agent, partner, officer, director, employee or
consultant of any other organization, in any business (a "Competitive Business")
which competes with any business then being conducted by such Sunbeam Entity;
(B) shall not solicit or encourage any officer, employee or consultant of any of
the Sunbeam Entities to leave the employ of any of the Sunbeam Entities for
employment by or with any Competitive Business; and (C) shall not solicit,
divert or take away, or attempt to divert or to take away, the business or
patronage of any of the customers or accounts, or prospective customers or
accounts, of any Sunbeam Entity, which were contacted, solicited or served by
the Executive while employed by the Company; provided, however, that nothing
herein shall prohibit the Executive from owning a maximum of two percent (2%) of
the outstanding stock of any publicly traded corporation. Following the Date of
Termination, ownership by the Executive of not more than five percent (5%) of
any publicly traded corporation shall not constitute a violation hereof. If, at
any time, the provisions of this Section 10(c) shall be determined to be invalid
or unenforceable, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Section 10(c) shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of
activity as shall
21
be determined to be reasonable and enforceable by the court or other body having
jurisdiction over the matter; and the Executive agrees that this Section 10(c)
as so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein. For purposes of this Section 10(c), the
design, manufacture and marketing of outdoor barbecue grills, casual outdoor and
indoor furniture and small kitchen appliances shall be construed to be a
Competitive Business; provided, however, that the gross revenues derived from
sales of such products by such competitor are greater than the lesser of (i) 10%
of its total revenues and (ii) $500,000,000.
(d) REMEDIES. In the event of a breach or threatened breach of
this Section 10, the Executive agrees that the Company shall be entitled to
apply for injunctive relief in a court of appropriate jurisdiction to remedy any
such breach or threatened breach, the Executive acknowledging that damages would
be inadequate and insufficient.
(e) CONTINUING OPERATION. Any termination of the Executive's
employment or of this Agreement shall have no effect on the continuing
operation of this Section 10.
11. INDEMNIFICATION. The Company shall indemnify the Executive to
the full extent permitted by law and the By-laws of the Company for all
expenses, costs, liabilities and legal fees which the Executive may incur in the
discharge of all his duties hereunder, including, without limitation, the right
to be paid in advance by the Company for his expenses in defending a civil or
criminal action, proceeding or investigation prior to the final disposition
thereof. The Executive shall be insured under the Company's Directors' and
Officers' Liability Insurance Policy as in effect from time to time.
Notwithstanding any other provision of this Agreement to the contrary, any
termination of the Executive's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. SUCCESSORS; BINDING AGREEMENT.
22
(a) COMPANY'S SUCCESSORS. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the business and/or
assets of the Company, provided that the assignee or transferee is the successor
to all or substantially all of the business and/or assets of the Company and
such assignee or transferee assumes the liabilities, obligations and duties of
the Company, as contained in this Agreement, either contractually or as a matter
of law. The Company will require any such successor to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement (except in the definition of Change in
Control), "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement or by operation of law.
(b) EXECUTIVE'S SUCCESSORS. This Agreement shall not be
assignable by the Executive. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Upon the Executive's death, all amounts to
which he is entitled hereunder, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
13. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
23
If to the Executive:
Albert J. Dunlap
422 Addison Park Lane
Boca Raton, Florida 33432
(With a copy to:
Reboul, MacMurray, Hewitt, Maynard
& Kristol
45 Rockefeller Plaza
New York, New York 10111
Attn: Howard G. Kristol, Esq.)
If to the Company:
Sunbeam Corporation
2100 New River Center
200 East Las Olas Boulevard
Fort Lauderdale, Florida 33301
Attn: Chairman of the Compensation
Committee
(With a copy to:
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attn: Richard L. Easton, Esq.)
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
14. MISCELLANEOUS. No provisions of this Agreement may be modified
unless such modification is agreed to in writing signed by the Executive and an
authorized officer of the Company. Any waiver or discharge must be in writing
and signed by the Executive or such an authorized officer of the Company, as the
case may be. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be
24
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. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware without regard to its conflicts
of law principles.
15. WITHHOLDING. Any payments provided for in this Agreement
shall be paid net of any applicable withholding of taxes required under federal,
state or local law.
16. ARBITRATION. Except as otherwise provided herein, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled under the rules of the American Arbitration Association then in
effect in the State of Florida, as the sole and exclusive remedy of either
party, and judgment upon such award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction. The costs of the arbitration shall be
borne as determined by the arbitrators PROVIDED, HOWEVER, that if the Company's
position is not substantially upheld, as determined by the arbitrators, the
expenses of the Executive (including, without limitation, fees and expenses
payable to the AAA and the arbitrators, fees and expenses payable to witnesses,
including expert witnesses, fees and expenses payable to attorneys and other
professionals, expenses of the Executive in attending the hearings, costs in
connection with obtaining and presenting evidence and costs of transcription of
the proceedings), as determined by the arbitrators, shall be reimbursed to him
by the Company.
17. VALIDITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
25
19. ENTIRE AGREEMENT. This Agreement between the Company and the
Executive sets forth the entire agreement of the parties hereto in respect of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by the parties hereto in respect of the
subject matter contained herein; and any prior agreement of the parties hereto
in respect of the subject matter contained herein is hereby terminated and
cancelled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on July 18, 1996 to be effective as of the Effective Date.
SUNBEAM CORPORATION
By:/s/ Peter A. Langerman
------------------------------------
Name: Peter A. Langerman
Title: Chairman of the Executive
Committee
/s/ Albert J. Dunlap
------------------------------------
Albert J. Dunlap
26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective as of July 22, 1996 (the "Effective
Date"), by and between RUSSELL A. KERSH (the "Executive") and SUNBEAM
CORPORATION, a Delaware corporation (the "Company").
RECITALS
WHEREAS, the Company desires to employ the Executive and the Executive
desires to furnish services to the Company on the terms and conditions
hereinafter set forth; and
WHEREAS, the parties desire to enter into this agreement setting forth the
terms and conditions of the employment relationship of the Executive with the
Company;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD. The period of employment of the Executive by the
Company hereunder (the "Employment Period") shall commence on the Effective Date
and shall end on July 22, 1999 (or the Date of Termination (as defined in
Section 6 below), if earlier).
3. POSITION AND DUTIES. The Executive shall serve as Executive Vice
President, Finance and Administration, and shall have such responsibilities,
duties and authority as are consistent with such position and such other duties
as may from time to time be assigned to him by the Chief Executive Officer. The
Executive agrees to devote substantially all his working time, attention and
energies to the performance of his duties for the Company. The Company shall
nominate the Executive as a director of the Company and shall use its best
efforts to have the Executive elected and reelected to the Board for the
duration of the Employment Period.
4. PLACE OF PERFORMANCE. The principal place of employment of the
Executive shall be at the Company's principal executive offices in either
Broward or Palm Beach County, Florida, or such other location as may be agreed
to by the Board. In the event that the Company's principal executive offices are
moved from Broward or Palm Beach County Florida, the Company shall promptly pay,
or reimburse the Executive for, all reasonable expenses incurred by the
Executive relating to any change of the Executive's residence from Broward or
Palm Beach County, Florida, in connection with his employment hereunder,
including, without limitation, reasonable expenses for himself and his family of
travel, moving, storage and suitable lodging and maintenance, and the Company
shall reimburse the Executive on a grossed up basis in the event that any tax is
assessed upon him in relation to any such expenses. The Company shall pay or
reimburse the Executive for all reasonable costs and expenses of residential
relocation incurred by him in connection with each and every additional change,
if any, in the location of
the principal executive offices of the Company, and the Executive shall be
reimbursed by the Company on a grossed up basis in the event that any tax is
assessed upon him in relation to any such costs or expenses.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. As compensation for the performance by the Executive
of his duties hereunder, during the Employment Period the Company shall pay the
Executive a base salary at an annual rate of $425,000 (the "Base Salary"), which
Base Salary shall be payable in substantially equal semi-monthly installments.
It is agreed that there shall be no increase or decrease in the Base Salary
during the Employment Period. The Company also shall pay to the Executive,
within fifteen (15) days from the Effective Date, the sum of One Hundred and
Twenty Five Thousand Dollars ($125,000) as a one time bonus for agreeing to the
terms hereof. The parties agree that the Executive shall not be entitled to
participate in any other bonus or incentive compensation programs of the
Company.
(b) EQUITY AND STOCK OPTION GRANTS.
(i) PURCHASE OF COMMON STOCK. Effective as of the Effective Date, the
Executive shall purchase from the Company for his own account, and the
Company shall sell to the Executive, a total of 40,817 shares of the
Company's Common Stock, par value $.01 per share ("Common Stock"), for the
sum of $500,008.25 ($12.25 per share of Common Stock) (the "Purchased
Stock"). The Purchased Stock shall be the sole property of the Executive,
shall be unrestricted (although unregistered at the time of issuance) and
shall be freely tradeable by the Executive, subject to applicable
securities laws and other legal restrictions.
(ii) RESTRICTED SHARES. Effective as of the Effective Date, the
Executive has been granted, without cost to the Executive, 100,000 shares
of the Company's Common Stock, on the terms and conditions set forth
herein (the "Restricted Shares"). One-third of such Restricted Shares
shall vest and cease to be restricted in equal installments on each of the
first, second and third anniversaries of the Effective Date (subject to
earlier vesting provisions set forth in Section 7) provided that the
Executive continues to be employed pursuant to this Agreement upon such
anniversary dates. All such shares, once vested, shall be the sole
property of the Executive, shall be unrestricted and shall be freely
tradeable by the Executive, subject to applicable legal restrictions.
(A) ISSUANCE OF CERTIFICATES. The Restricted Shares shall be
registered in the Executive's name, but the certificates evidencing
the Restricted Shares shall be retained by the Company until such
shares become vested and the restrictions thereon lapse. The period
prior to the time that any particular Restricted Shares become vested
and the restrictions thereon lapse is hereinafter referred to as the
"Restricted Period" with respect to such shares. The Executive shall
execute a
2
stock power, in blank, with respect to such Restricted Shares and
deliver the same to the Company.
(B) RIGHTS AS A STOCKHOLDER. Except as provided herein, during the
Restricted Period, the Executive shall have all the rights of a
stockholder with respect to Restricted Shares, including the right to
receive dividends or other distributions and the right to vote such
shares; provided that, in the discretion of the Company any such
dividends or other distributions may be retained by the Company
unless and until the Restricted Shares in respect of which such
dividends or other distributions were paid shall vest.
(C) NON-TRANSFERABILITY. During the Restricted Period, the Executive
may not sell, transfer, pledge, or otherwise encumber or dispose of
the Restricted Shares, and any attempted sale, transfer, pledge or
other encumbrance or disposition (whether voluntary or involuntary)
in violation of this Section 5(b)(ii)(C) shall be null and void.
(D) DELIVERY OF SHARE CERTIFICATES. Upon the vesting of any
Restricted Shares, the certificates evidencing such Restricted
Shares, together with any dividends or other distributions retained
by the Company pursuant to Section 5(b)(ii)(B), shall be delivered
promptly to the Executive. In the case of Executive's death, such
certificates, dividends and distributions will be delivered to the
beneficiary designated in writing by the Executive pursuant to a form
of designation provided by the Company, to the Executive's legatee or
legatees, or to his personal representatives or distributees, as the
case may be.
(iii) STOCK OPTIONS. The Executive shall be granted the following
stock options (collectively, the "Option Award"):
(A) Effective as of the Effective Date, by action of the Executive
Development and Compensation Committee of the Board of Directors, the
Executive has been granted a stock option (the "Plan Option") to
purchase 250,000 shares of Common Stock pursuant to the Company's
Amended and Restated Equity Team Plan (the "Option Plan") (a copy of
which Option Plan is attached hereto as SCHEDULE A and incorporated
herein by reference), which options are granted upon the terms and
conditions as set forth in the Option Plan (at an exercise price of
$14.26/share), except that such option shall vest in equal increments
on the first, second and third anniversaries of the grant date and
shall be subject to and modified by all other terms and provisions of
this Agreement, as expressly set forth herein. In the event of any
conflict between any terms of the Option Plan and the terms and
provisions of this Agreement, the terms and provisions of this
Agreement shall take precedence and shall be controlling as between
such documents.
3
(B) Effective as of the Effective Date, and subject to shareholder
approval by the Company's shareholders at a special meeting to be
held for that purpose (the "Special Meeting"), which Special Meeting
the Company agrees to convene as soon as practicable after the
Effective Date hereof, by action of the Executive Development and
Compensation Committee, the Executive has been granted a
non-qualified stock option (the "Non-Qualified Option") to purchase
250,000 shares of Common Stock. The Non-Qualified Option shall be
upon the same terms and conditions as are set forth in Section
5(b)(iii)(A) above, including the exercise price of $14.26/share and
the three year vesting schedule. In the event that Company's
shareholders fail to approve the grant of the Non-Qualified Option at
the Special Meeting, the Company and the Executive shall negotiate in
good faith a mutually acceptable alternative compensation
arrangement; provided, however, that the Executive, in his sole
discretion, may elect to terminate this Agreement, and the Executive
shall be entitled to receive the compensation, rights and benefits
provided in Section 7(b) hereof (other than in respect of the
Non-Qualified Option).
(iv) REGISTRATION RIGHTS. Within six months after the Effective Date,
the Company shall cause the Purchased Stock, the Restricted Shares and all
shares of stock subject to the Option Award to be registered or qualified
for resale under the Securities Act of 1933 and applicable state laws.
Unless and until registered under the Securities Act of 1933, as amended,
certificates evidencing the Purchased Stock, the Restricted Shares and
shares acquired pursuant to the exercise of the Non-Qualified Option shall
bear the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS,
IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH REGISTRATION IS NOT
REQUIRED.
(c) EXPENSES. During the Employment Period, the Company shall
reimburse the Executive for all reasonable business expenses in accordance with
applicable policies and procedures then in force.
(d) VACATION AND OTHER ABSENCES. The Executive shall be entitled to
paid vacation and other paid absences, whether for holidays, illness, personal
time or any similar purposes, during the Employment Period in accordance with
policies applicable generally to senior executives of the Company; provided,
however, that the Executive shall always be entitled to at least six weeks of
paid vacation in each calendar year and pro rata for part of a year. Up to four
weeks per year of unused vacation may be maintained by the Executive on a
cumulative basis and may be subsequently used in any year or if not so used, the
Executive shall be compensated for any unused vacation days upon the termination
of this Agreement for any reason.
4
(e) TAX PLANNING SERVICES. During the Employment Period, the Company
shall provide the Executive with tax-related advice and services without cost or
expense to him and shall reimburse the Executive on a grossed up basis in the
event that any tax is assessed upon him in relation to such services.
(f) OTHER BENEFITS. During the Employment Period, the Executive shall
be eligible to participate at no cost or expense to him in welfare plans and
programs (including any tax-deferred savings plan, group life insurance plan,
medical and dental insurance plan, and accident and disability insurance plan)
("Benefit Plans") applicable generally to employees and/or senior executives of
the Company. The Company will waive, or obtain the waiver of, any waiting
periods for eligibility under the Benefit Plans or will provide comparable
benefits to the Executive without cost to him during the waiting period.
6. TERMINATION. The Executive's employment hereunder, as the case may
be, may be terminated as follows:
(a) DEATH. The Executive's employment shall terminate upon his
death, and the date of his death shall be the Date of Termination.
(b) DISABILITY. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis for one hundred and twenty (120)
consecutive days and, within thirty (30) days after written Notice of
Termination (as defined in Section 6(g) hereof), shall not have returned to the
performance of his duties hereunder on a full-time basis ("Disability"), the
Company may terminate the Executive's employment hereunder. In this event, the
Date of Termination shall be thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such thirty (30) day period).
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder:
(i) upon the Executive's conviction for the commission of
a felony (or a plea of nolo contendere thereto); or
(ii) willful failure by the Executive substantially to
perform his duties hereunder (other than any such failure resulting from
the Executive's incapacity due to Disability).
For purposes hereof, no act or failure to act by the Executive
shall be considered "willful" unless done or omitted to be done by him not
in good faith or without reasonable belief that his action or omission was
in the best interests of the
5
Company or contrary to written instructions of the Chief Executive Officer
or the Board of Directors. The Date of Termination shall be the date
specified in the Notice of Termination; provided, however, that, in the
case of a termination for Cause under clause (ii) above, the Date of
Termination shall not be earlier than 30 days after delivery of the Notice
of Termination. Anything herein to the contrary notwithstanding, if,
following a termination of the Executive's employment by the Company for
Cause based upon the conviction of the Executive for a felony, such
conviction is overturned in a final determination on appeal, the Executive
shall be entitled to the payments and the economic equivalent of the
benefits the Executive would have received if his employment had been
terminated by the Company without Cause.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
may terminate his employment hereunder for Good Reason, provided that the
Executive shall have delivered a Notice of Termination (as defined in Section
6(g) hereof) within ninety (90) days after the occurrence of the event of Good
Reason giving rise to such termination. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of one or more of the following circumstances,
without the Executive's express written consent, which are not remedied by the
Company within thirty (30) days of receipt of the Executive's Notice of
Termination:
(i) an assignment to the Executive of any duties materially
inconsistent with his positions, duties, responsibilities and status with
the Company or any material limitation of the powers of the Executive not
consistent with the powers of the Executive contemplated by Section 3
hereof; or
(ii) any removal of the Executive from, or any failure to
re-elect the Executive to, the executive officer position specified in
Section 3 of this Agreement, or, without the Executive's consent, failure
to re-elect the Executive as a Director of the Company; or
(iii) any other material breach by the Company of this
Agreement.
In the event of a termination for Good Reason, the Date of
Termination shall be the date specified in the Notice of Termination, which
shall be no more than thirty (30) days after the Notice of Termination.
(e) OTHER TERMINATIONS. The Company may terminate the
Executive's employment hereunder at any time, subject to the provisions of
Section 7(e) hereof. The Executive may terminate his employment at any time,
subject to the provisions of Section 7(d) hereof. If the Executive's employment
is terminated hereunder for any reason other than as set forth in Sections 6(a)
through 6(d) hereof, the date on which a Notice of Termination is given or any
later date (within 30 days) set forth in such Notice of Termination shall be the
Date of Termination.
6
(f) TERMINATION BY THE EXECUTIVE UPON CHANGE IN CONTROL. Upon a
Change in Control (as defined below), the Executive shall have the right, upon
delivery to the Company of a Notice of Termination (which shall specify a Date
of Termination not less than 30 days after such Notice of Termination), to
terminate his employment under this Agreement and to receive the payments
provided pursuant to Section 7(f) below. If the Executive shall elect to
terminate his employment with the Company other than upon a Change in Control,
he shall receive only the compensation referred to in Section 7(d) below. For
purposes of this Agreement, a Change in Control shall mean the occurrence of any
one of the following events:
(i) any "person" as such term is used in Sections 3(a)(9)
and 13(d) of the Securities Exchange Act of 1934, as amended, becomes a
"beneficial owner," as such term is used in Rule 3d-3 promulgated under
that Act, of 25% or more of the voting stock of the Company (other than a
person that is currently the beneficial owner of such percentage of the
Company's voting stock);
(ii) the majority of the Board consists of individuals
other than Incumbent Directors, which term means the members of the Board
on the date of this Agreement, the Executive and the individuals
designated as directors by the Chief Executive Officer of the Company;
provided that any person becoming a director subsequent to such date whose
election or nomination for election was supported by two-thirds of the
directors who then comprised the Incumbent Directors shall be considered
to be an Incumbent Director;
(iii) the Company, without the Executive's consent, adopts
any plan of liquidation providing for the distribution of all or
substantially all of its assets; or
(iv) all or substantially all of the assets or business of
the Company are disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of the Company immediately prior to
such merger, consolidation or other transaction beneficially own, directly
or indirectly, in substantially the same proportion as they owned the
voting stock of the Company, all of the voting stock or other ownership
interests of the entity or entities, if any, that succeed to the business
of the Company).
(g) NOTICE OF TERMINATION. Any termination of the Executive's
employment hereunder by the Company or by the Executive (other than termination
pursuant to Section 6(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. If any dispute concerning a Notice of Termination of the
Executive's employment under Section 6(b), 6(c) or 6(d) hereof results in a
determination that a proper basis for such
7
termination did not exist under such section, the Executive's employment under
this Agreement shall be treated, with respect to a Notice of Termination
pursuant to Section 6(b) or 6(c) hereof, as having been terminated pursuant to
Section 6(e) hereof or, with respect to a Notice of Termination pursuant to
Section 6(d) hereof, as having not been terminated.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY PERIOD. During any period during the Employment
Period that the Executive fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness ("Disability Period"), the
Executive shall continue to (i) receive his full Base Salary and (ii)
participate in the Benefit Plans. Such payments made to the Executive during the
Disability Period shall be reduced by the sum of the amounts, if any, payable to
the Executive at or prior to the time of any such payment under disability
benefit plans of the Company or under the Social Security disability insurance
program, and which amounts were not previously applied to reduce any such
payment.
(b) DEATH. If the Executive's employment hereunder is terminated
as a result of death, then:
(i) the Company shall pay the Executive's estate or
designated beneficiary, as soon as practicable after the Date of
Termination, any Base Salary installments due in the month of death and
any reimbursable expenses, accrued or owing the Executive hereunder as of
the Date of Termination;
(ii) the Options granted to the Executive pursuant to the
Plan Option and the Options granted to the Executive pursuant to the
Non-Qualified Option (if such Non-Qualified Option has been approved by
the shareholders as provided in Section 5(b)(iii)(B)) shall become vested
and exercisable, as of the Date of Termination, to the extent such Option
Award would have otherwise become vested on or before the first
anniversary of the Date of Termination, and all vested Options shall
remain exercisable for a period of one year following such Date of
Termination and shall thereafter be completely forfeited and cancelled;
any Options that would not have become vested and exercisable on or before
the first anniversary of the Date of Termination shall terminate and be
forfeited as of the Date of Termination; and
(iii) the portion of the Restricted Shares that have not
vested as the Date of Termination equal to the number of such unvested
Restricted Shares multiplied by a fraction, the numerator of which is 36
minus the number of full months remaining in the Employment Period
(disregarding the earlier termination thereof) after the Date of
Termination and denominator of which is 36, shall become vested as of the
Date of Termination and the restrictions imposed thereon shall lapse. The
balance of such unvested Restricted Shares shall be forfeited to the
Company (without further action on
8
the part of the Company or the Executive) as of the Date of Termination,
and the Executive shall have no further rights with respect to such
balance.
(c) DISABILITY. If the Executive's employment hereunder is
terminated as a result of Disability, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Options granted to the Executive pursuant to the
Plan Option and the Options granted to the Executive pursuant to the
Non-Qualified Option (if such Non-Qualified Option has been approved by
the shareholders as provided in Section 5(b)(iii)(B)) shall become vested
and exercisable, as of the Date of Termination, to the extent such Option
Award would have otherwise become vested on or before the first
anniversary of the Date of Termination, and all vested Options shall
remain exercisable for a period of three years following such Date of
Termination and shall thereafter be completely forfeited and cancelled;
any Options that would not have become vested and exercisable on or before
the first anniversary of the Date of Termination shall terminate and be
forfeited as of the Date of Termination; and
(iii) the portion of the Restricted Shares that have not
vested as the Date of Termination equal to the number of such unvested
Restricted Shares multiplied by a fraction, the numerator of which is 36
minus the number of full months remaining in the Employment Period
(disregarding the earlier termination thereof) after the Date of
Termination and denominator of which is 36, shall become vested, and the
restrictions imposed thereon shall lapse. The balance of such unvested
Restricted Shares shall be forfeited to the Company (without further
action on the part of the Company or the Executive) as of the Date of
Termination, and the Executive shall have no further rights with respect
to such balance.
(d) CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive's employment hereunder is terminated by the Company for Cause or by
the Executive other than for Good Reason, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses accrued or owing the Executive hereunder for
services as of the Date of Termination; and
(ii) the Executive shall immediately forfeit any unvested
Restricted Shares and any unvested portion of the Option Award. In the
event of termination by the Company for Cause, the Executive shall have
the right to exercise the vested unexercised portion of the Option Award
for a period of ninety (90) days after the
9
Date of Termination, and the unexercised portion of such Option Award
shall be forfeited thereafter. In the event of termination by the
Executive other than for Good Reason the Executive shall have the right to
exercise the vested unexercised portion of the Option Award for a period
of one year following the Date of Termination and the unexercised portion
of such Option Award shall be forfeited thereafter.
(e) TERMINATION BY COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE
WITH GOOD REASON. If the Executive's employment hereunder is terminated by the
Company (other than for Cause or Disability) or by the Executive for Good
Reason, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Company shall immediately pay to the Executive as
liquidated damages and not as a penalty a lump sum amount equal to the
total Base Salary that would have otherwise been payable to the Executive
with respect to the period commencing immediately following the Date of
Termination and ending on July 22, 1999, at the annualized rate in effect
at the time Notice of Termination is given;
(iii) the Options granted to the Executive pursuant to the
Option Award shall become fully vested and exercisable, and the Restricted
Shares shall become fully vested, as of the Date of Termination. The
Option Award shall remain exercisable for the balance of its original
10-year term; and
(iv) the Executive shall continue to participate in all
employee benefit plans and programs in which the Executive was entitled to
participate immediately prior to the Date of Termination, in accordance
with the terms of such plans and programs as in effect from time to time,
through July 22, 1999; provided that the Executive's continued
participation is permitted under the general terms and provisions of such
plans and programs. In the event that the Executive's participation in any
such plan or program is barred, the Company shall arrange to provide the
Executive and his dependents with benefits substantially the same as those
which the Executive and his dependents would otherwise have been entitled
to receive under such plans and programs from which their continued
participation is barred or provide their economic equivalent.
(f) TERMINATION UPON CHANGE IN CONTROL. If the Executive shall
elect to terminate his employment under this Agreement upon a Change in Control,
the Company shall pay to the Executive the payments described in Sections
7(e)(i), (ii), (iii) and (iv) above.
8. GROSS-UP FOR EXCISE TAX. In the event that the Executive receives
any payment or benefit (including but not limited to the payments or benefits
pursuant to Section 7 of this Agreement) (a "Payment") that is subject to the
excise tax (the "Excise Tax") under Sec-
10
tion 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the
Company shall pay to the Executive, as soon thereafter as practicable, an
additional amount (a "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax imposed upon the Payment and
any federal, state and local income tax and Excise Tax imposed upon the Gross-Up
Payment shall be equal to the Payment. The determination of whether an Excise
Tax is due in respect of any payment or benefit, the amount of the Excise Tax
and the amount of the Gross-Up Payment shall be made by an independent auditor
(the "Auditor") jointly selected by the Company and the Executive and paid by
the Company. If the Executive and the Company cannot agree on the firm to serve
as the Auditor, then the Executive and the Company shall each select one
nationally recognized accounting firm and those two firms shall jointly select
the nationally recognized accounting firm to serve as the Auditor.
Notwithstanding the foregoing, for purposes of determining the Gross-Up Payment
in respect of any Payment, (i) any other payments or benefits received or to be
received by the Executive in connection with a Change in Control or the
Executive's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
person whose actions result in a Change in Control or any person affiliated with
the Company or such person) shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G of the Code shall be treated as subject to
the Excise Tax, unless in the opinion of tax counsel selected by the Auditor,
such other payments or benefits (in whole or in part) do not constitute
parachute payments, or are otherwise not subject to the Excise Tax, and (ii) the
Executive shall be deemed to pay federal income tax at the highest marginal rate
applicable in the calendar year in which the Gross-Up Payment is made, and state
and local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes. In the event the actual Excise Tax or such income
tax is more or less than the amount used to calculate the Gross-Up Payment, the
Executive or the Company, as the case may be, shall pay to the other an amount
reflecting the actual Excise Tax or such income tax, plus interest on the amount
of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
9. MITIGATION. The Executive shall not be required to mitigate
amounts payable pursuant to Section 7 hereof by seeking other employment or
otherwise, nor shall there be any offset against such payments on account of (a)
any remuneration attributable to any subsequent employment that he may obtain or
(b) any claims the Company may have against the Executive.
10. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS, NON-COMPETITION.
(a) CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company and its subsidiaries (the
"Sunbeam Entities") all trade secrets, confidential information, and knowledge
or data relating to the Sunbeam Entities and the businesses and investments of
the Sunbeam Entities, which shall have been obtained by the Executive during the
Executive's employment by the Company, including such information with
11
respect to any products, improvements, formulas, designs or styles, processes,
services, customers, suppliers, marketing techniques, methods, future plans or
operating practices ("Confidential Information"); PROVIDED, HOWEVER, that
Confidential Information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by the Executive)
or any specific information or type of information generally not considered
confidential by persons engaged in the same business as the Company, or
information disclosed by the Company or any officer thereof to a third party
without restrictions on the disclosure of such information. Except as may be
required or appropriate in connection with his carrying out his duties under
this Agreement, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such Confidential Information to anyone other than the Company
and those designated by the Company.
(b) REMOVAL OF DOCUMENTS. All records, files, drawings,
documents, models, and the like relating to the business of the Sunbeam
Entities, which the Executive prepares, uses or comes into contact with and
which contain Confidential Information shall not be removed by the Executive
from the premises of any Sunbeam Entity (without the written consent of the
Company) during or after the Employment Period unless such removal shall be
required or appropriate in connection with his carrying out his duties under
this Agreement, and, if so removed by the Executive, shall be returned to such
Sunbeam Entity immediately upon termination of the Executive's employment
hereunder.
(c) NON-COMPETITION. During (i) the Executive's employment with
the Company and (ii) the two (2) year period immediately following the
Executive's Date of Termination, the Executive (A) shall not engage, anywhere
within the geographical areas in which any Sunbeam Entity is then conducting its
business operations, directly or indirectly, alone, in association with or as a
shareholder, principal, agent, partner, officer, director, employee or
consultant of any other organization, in any business (a "Competitive Business")
which competes with any business then being conducted by such Sunbeam Entity;
(B) shall not solicit or encourage any officer, employee or consultant of any of
the Sunbeam Entities to leave the employ of any of the Sunbeam Entities for
employment by or with any Competitive Business; and (C) shall not solicit,
divert or take away, or attempt to divert or to take away, the business or
patronage of any of the customers or accounts, or prospective customers or
accounts, of any Sunbeam Entity, which were contacted, solicited or served by
the Executive while employed by the Company; provided, however, that nothing
herein shall prohibit the Executive from owning a maximum of two percent (2%) of
the outstanding stock of any publicly traded corporation. Following the Date of
Termination, ownership by the Executive of not more than five percent (5%) of
any publicly traded corporation shall not constitute a violation hereof. If, at
any time, the provisions of this Section 10(c) shall be determined to be invalid
or unenforceable, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Section 10(c) shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by the court or
other body having jurisdiction over the matter; and the Executive agrees that
this Section 10(c) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not
12
been included herein. For purposes of this Section 10(c), the design,
manufacture and marketing of outdoor barbecue grills, casual outdoor and indoor
furniture and small kitchen appliances shall be construed to be a Competitive
Business; provided, however, that the gross revenues derived from sales of such
products by such competitor are greater than the lesser of (i) 10% of its total
revenues and (ii) $500,000,000.
(d) REMEDIES. In the event of a breach or threatened breach of
this Section 10, the Executive agrees that the Company shall be entitled to
apply for injunctive relief in a court of appropriate jurisdiction to remedy any
such breach or threatened breach, the Executive acknowledging that damages would
be inadequate and insufficient.
(e) CONTINUING OPERATION. Any termination of the Executive's
employment or of this Agreement shall have no effect on the continuing operation
of this Section 10.
11. INDEMNIFICATION. The Company shall indemnify the Executive to the
full extent permitted by law and the By-laws of the Company for all expenses,
costs, liabilities and legal fees which the Executive may incur in the discharge
of all his duties hereunder, including, without limitation, the right to be paid
in advance by the Company for his expenses in defending a civil or criminal
action, proceeding or investigation prior to the final disposition thereof. The
Executive shall be insured under the Company's Directors' and Officers'
Liability Insurance Policy as in effect from time to time. Notwithstanding any
other provision of this Agreement to the contrary, any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 11.
12. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the business and/or
assets of the Company, provided that the assignee or transferee is the successor
to all or substantially all of the business and/or assets of the Company and
such assignee or transferee assumes the liabilities, obligations and duties of
the Company, as contained in this Agreement, either contractually or as a matter
of law. The Company will require any such successor to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement (except in the definition of Change in
Control), "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement or by operation of law.
13
(b) EXECUTIVE'S SUCCESSORS. This Agreement shall not be
assignable by the Executive. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Upon the Executive's death, all amounts to
which he is entitled hereunder, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
13. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Russell A. Kersh
3609 NW 62nd Street
Boca Raton, Florida 33496
If to the Company:
Sunbeam Corporation
2100 New River Center
200 East Las Olas Boulevard
Fort Lauderdale, Florida 33301
Attn: Chairman of the Compensation Committee
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
14. MISCELLANEOUS. No provisions of this Agreement may be modified
unless such modification is agreed to in writing signed by the Executive and an
authorized officer of the Company. Any waiver or discharge must be in writing
and signed by the Executive or such an authorized officer of the Company, as the
case may be. No waiver by either party hereto at any time of any breach by the
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. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
regard to its conflicts of law principles.
14
15. WITHHOLDING. Any payments provided for in this Agreement shall be
paid net of any applicable withholding of taxes required under federal, state or
local law.
16. ARBITRATION.
(a) Except as otherwise provided herein, all controversies,
claims or disputes arising out of or related to this Agreement shall be settled
under the rules of the American Arbitration Association then in effect in the
State of Florida, as the sole and exclusive remedy of either party, and judgment
upon such award rendered by the arbitrator(s) may be entered in any court of
competent jurisdiction. The costs of the arbitration shall be borne as
determined by the arbitrators PROVIDED, HOWEVER, that if the Company's position
is not substantially upheld, as determined by the arbitrators, the expenses of
the Executive (including, without limitation, fees and expenses payable to the
AAA and the arbitrators, fees and expenses payable to witnesses, including
expert witnesses, fees and expenses payable to attorneys and other
professionals, expenses of the Executive in attending the hearings, costs in
connection with obtaining and presenting evidence and costs of transcription of
the proceedings), as determined by the arbitrators, shall be reimbursed to him
by the Company.
(b) Notwithstanding the provisions of Section 16(a) above, the
parties agree that nothing contained herein shall preclude the Company from
bringing an action in a court of competent jurisdiction (whether prior to or
during any arbitration proceeding) seeking to specifically enforce the
provisions of Section 10 hereof by means of seeking an injunction or other
equitable relief.
17. ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the terms of
the Option Plan set forth the entire agreement of the parties hereto in respect
of the subject matter contained herein, supersede all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto; and any prior agreement of the parties hereto or thereto in
respect of the subject matter contained herein or therein is hereby terminated
and cancelled. This Agreement may be signed in counterparts.
18. CONFLICT WITH OPTION PLAN. To the extent, if any, of any
inconsistency or conflict between the terms and provisions of this Agreement and
the Option Plan, this Agreement shall control in all matters.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on ________________, 1996 to be effective as of the Effective Date.
SUNBEAM CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
_______________________________
RUSSELL A. KERSH
16
Exhibit A
AMENDED AND RESTATED
SUNBEAM CORPORATION
EQUITY TEAM PLAN
(Amended and Restated as of May 15, 1996)
1. PURPOSE.
The purpose of the Sunbeam Corporation Equity Team Plan is to provide
incentives for selected executives, key employees, Outside Directors
and Designated Others to promote the financial success and progress of
Sunbeam Corporation. Capitalized terms used throughout this Plan shall
have the meanings ascribed to them in Section 16 hereof.
2. STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of this Section and Section 9, the
maximum number of shares of Stock that may be issued under the
Plan is 11,500,000 shares, to be allocated as follows:
(i) 11,300,000 shares may be issued in connection with
the grant of Options pursuant to Section 3; and
(ii) 200,000 shares may be issued in connection with the
grant of Restricted Stock Awards pursuant to Section
3.
Such shares may be either authorized but unissued shares or
treasury shares.
(b) The number of shares subject to an Option or a Restricted
Stock Award that has been granted under the Plan shall no
longer be charged against the limitation provided in Section
2(a), and may again be made subject to Options or Restricted
Stock Awards, as the case may be, to the extent that Options
expire unexercised or are terminated, surrendered or canceled
before exercise or Restricted Stock Awards are forfeited,
terminated, surrendered or canceled due to a Participant's
termination of employment or service as an Outside Director or
for any other reason.
3. GRANTS OF OPTIONS AND RESTRICTED STOCK AWARDS.
(a) Subject to the provisions of the Plan, the Committee may at
any time, or from time to time, grant Options to officers, key
employees, Outside Directors of the Company (or its
subsidiaries) and Designated Others.
(b) Subject to the provisions of the Plan, the Committee may at
any time, or from time to time, grant shares of Stock which
are subject to the Restrictions set forth in Section 4(b)
("Restricted Stock") to officers, key employees and Outside
Directors of the Company (or its subsidiaries) and Designated
Others.
(c) The Committee shall cause 5,000 shares of Restricted Stock to
be issued immediately and automatically upon the initial
election or appointment of each Outside Director of the
Company. The provisions of this Section 3(c) shall not be
amended more often than once in any six (6) month period,
other than to comport with changes in the Code, ERISA or the
rules thereunder.
(d) The Committee shall cause Options to be granted annually for
the purchase of 1,000 shares of Stock to each Outside
Director, which Options shall be granted immediately and
automatically as
of the date of the election of such director. The provisions
of this Section 3(d) shall not be amended more often than once
in any six (6) month period, other than to comport with
changes in the Code, ERISA or the rules thereunder.
(e) Each Option shall be evidenced by a Stock Option Agreement,
and each Restricted Stock Award shall be evidenced by a
Restricted Stock Award Agreement, each in a form approved by
the Committee or by a Company officer designated by the
Committee.
(f) Notwithstanding any other provision of the Plan, no person
shall be granted Options for more than 250,000 shares of Stock
or Restricted Stock Awards for more than 25,000 shares of
Stock in any single fiscal year of the Company.
4. TERMS AND CONDITIONS.
(a) OPTIONS.
(i) An Option shall entitle the Participant who holds it
to exercise the Option on and subject to the terms,
conditions and restrictions of the Plan (as the Plan
may be amended from time to time) and such additional
terms, conditions and restrictions as may be imposed
by the Committee at the time of grant.
(ii) Unless otherwise specified by the Committee, the
term of each Option granted prior to May 15, 1996
(herein the "1996 Amendment Date") and which is
In-the-Money as of the 1996 Amendment Date shall
commence on the date of grant of the Option and shall
expire at the close of business on the earlier of (A)
the tenth anniversary of the date of grant or (B) the
45th day following the termination of the
Participant's employment with, or service as director
of, the Company (or a subsidiary). Unless otherwise
specified by the Committee, the term of each Option
granted on or after the 1996 Amendment Date and the
term of each Option granted prior to the 1996
Amendment Date which is Out- of-the- Money as of the
1996 Amendment Date, shall commence on the Grant Date
of the Option and shall expire at the close of
business on the earliest of (A) the tenth anniversary
of the Grant Date; or (B) the third anniversary of
the date of termination of the Participant's
employment with, or service as a director of, the
Company (or a subsidiary), in the case of retirement
or termination by the Company without Cause; or (C)
90 days after the date of termination of employment
in the case of resignation, voluntary departure or
termination by the Company with Cause; or (D) in the
case of a Designated Other, the date specified in the
Stock Option Agreement. Notwithstanding the foregoing
sentence, Participants who are subject to Section
16(b) of the Exchange Act shall have until the
earlier of (A) the tenth anniversary of the Grant
Date; or (B) the third anniversary of the date of
termination of their employment with, or service as a
director of the Company, regardless of the cause,
within which to exercise Options which are granted on
or after the 1996 Amendment Date and Options which
are Out-of-the-Money as of the 1996 Amendment Date;
provided, however, that no such Option may be
exercised by any such person during the period
beginning on the date of termination and ending on
the six month anniversary of the date of termination.
(iii) Options granted to Outside Directors pursuant to
Section 3(d) shall become exercisable
2
with respect to all of the shares subject to the
Option on the Grant Date. Unless otherwise specified
by the Committee (which is empowered to provide
different vesting schedules with respect to any grant
of Options or Restricted Stock), all other Options
granted under the Plan shall become exercisable with
respect to 20% of the shares subject to the Option
beginning on the first anniversary of the Grant Date
and as to an additional 20% on each of the second,
third, fourth and fifth anniversaries of the Grant
Date (each twelve month period ending on an
anniversary of a Grant Date being referred to herein
as an "Option Year"), provided in each case that the
Participant shall have remained an employee or a
director of the Company (or a subsidiary), or in the
case of a Designated Other, shall have remained in
the position set forth in the Stock Option Agreement,
continuously since the Grant Date. Notwithstanding
the foregoing, during the remaining term of any
options (if not already so exercisable) : (A) if a
Participant's employment or service as a director, or
in the case of a Designated Other, the period of
service as defined in the Stock Option Agreement,
terminates due to death, all Options held by the
Participant at death shall become immediately
exercisable in full; (B) upon a Change in Control,
coupled with a Change in Status of a Participant, all
Options held by such Participant who is then an
employee or director of the Company (or a subsidiary)
shall become immediately exercisable in full; (C) in
the event that the exercisability of an Option
accelerates due to a Change in Control and a Change
in Status, Participants who are subject to Section
16(b) of the Exchange Act may not sell the shares
acquired upon such accelerated exercise within six
months of the Grant Date of such Option; and (D) upon
the termination during an Option Year of employment
of an officer of the Company elected by the Board,
the portion of shares subject to any Option held by
such officer which was scheduled to become
exercisable on the next anniversary of the Grant Date
immediately following such termination (the "Next
Option Increment") shall be prorated on the basis of
the number of full calendar months worked in such
Option Year to permit partial exercisability of the
Next Option Increment.
(iv) Except to the extent permitted by Rule 16b-3 or
its successor, Options shall not be sold, assigned,
transferred, pledged, hypothecated, or otherwise
disposed of, except by will or the laws of descent
and distribution, pursuant to a qualified domestic
relations order ("QDRO") as defined in the Code or
ERISA (or the rules thereunder) or as otherwise set
forth in this Section 4(a)(iv). Each Option shall be
exercisable during the lifetime of a Participant only
by the Participant to whom it was granted, and after
the Participant's death only by the Participant's
estate or legal representative. To the extent
exercisable, an Option may be exercised in whole at
any time, or in part from time to time, during the
term of the Option.
(v) Any Option may be converted, modified, forfeited or
canceled, prospectively or retroactively, in whole or
in part, by the Committee in its sole discretion;
provided, however, that no such action shall
adversely affect the rights of any Participant under
any Option granted prior to such action without his
consent. Except as may be otherwise provided in an
Agreement, the Committee may, in its sole discretion,
in whole or in part, waive any restrictions or
conditions applicable to, or accelerate the vesting
of, any Option.
(b) STOCK AWARDS.
(i) Upon the grant of a Restricted Stock Award, a stock
certificate representing a number of
3
shares of Stock equal to the number of shares of
Restricted Stock granted to a Participant shall be
registered in the Participant's name but shall be
held in custody by the Company for the Participant's
account. The Participant shall generally have the
rights and privileges of a stockholder as to such
Restricted Stock, including the right to vote such
Restricted Stock, except that the following
restrictions (the "Restrictions") shall apply: (A)
the Participant shall not be entitled to delivery of
the certificate until the Restricted Period (set
forth in paragraph (iii) below) applicable to such
Restricted Stock has expired or terminated and until
any other conditions prescribed by the Committee are
satisfied; (B) none of the Restricted Stock may be
sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted
Period applicable to such Restricted Stock and prior
to the satisfaction of any other conditions
prescribed by the Committee; and (C) shares of
Restricted Stock shall be forfeited and all rights of
the Participant to such Restricted Stock shall
terminate without further obligation on the part of
the Company unless the Participant has (1) remained
an employee or a director of the Company (or a
subsidiary) until the expiration or termination of
the Restricted Period applicable to such Restricted
Stock (or in the case of a Designated Other, the
duration specified in the Restricted Stock Award
Agreement) and (2) satisfied any other conditions
prescribed by the Committee applicable to such
Restricted Stock. At the discretion of the Committee,
cash and stock dividends with respect to the
Restricted Stock may be either currently paid or
withheld by the Company for the Participant's
account. Cash dividends so withheld by the Committee
shall not be subject to forfeiture. Upon the
forfeiture of any shares of Restricted Stock, such
forfeited Restricted Stock shall be transferred to
the Company without further action by the
Participant. The Participant shall have the same
rights and privileges, and be subject to the
Restrictions, with respect to any shares or other
property received pursuant to Section 9.
(ii) Upon the expiration or termination of the
Restricted Period with respect to shares of
Restricted Stock and the satisfaction of any other
conditions prescribed by the Committee, the
Restrictions applicable to such Restricted Stock
shall lapse and a stock certificate for the number of
shares of Stock with respect to which the Restricted
Period has lapsed shall be delivered, free of all
restrictions, except any that may be imposed by law,
to the Participant or the Participant's beneficiary
or estate, as the case may be. The Company shall not
be required to deliver any fractional share of Stock
but will pay, in lieu thereof, the Fair Market Value
(determined as of the date the Restricted Period
expires or terminates) of such fractional share to
the Participant or the Participant's beneficiary or
estate, as the case may be. No payment will be
required from the Participant upon the issuance or
delivery of any shares of Stock under this paragraph,
except that any amount necessary to satisfy
applicable federal, state or local tax requirements
shall be withheld or paid promptly upon notification
of the amount due and prior to or concurrently with
the issuance or delivery of a certificate
representing such shares.
(iii) The Restrictions shall lapse with respect to
one-fifth of the Restricted Stock subject to a
Restricted Stock Award made to an Outside Director
pursuant to Section 3(c) hereof on each of the first
through the fifth anniversaries of the Grant Date on
which the Outside Director remains a director of the
Company. Unless otherwise specified by the Committee
at the time of the award and included in the
Restricted Stock Award Agreement, the Restrictions
shall also lapse with respect to one-fifth of the
Restricted Stock subject to all other Restricted
Stock Awards on each of the first through the fifth
4
anniversaries of the Grant Date, provided in each
case that the Participant shall have remained an
employee or a director of the Company (or a
subsidiary) continuously since the date of grant (or
in the case of a Designated Other, shall have
complied with the terms and conditions of the
Restricted Stock Award Agreement). Notwithstanding
the foregoing: (A) if a Participant's employment or
service as a director, or in the case of a Designated
Other, the period defined in the Restricted Stock
Award Agreement, terminates due to death, the
Restrictions shall lapse with respect to all
Restricted Stock Awards held by the Participant at
death (if not already so lapsed); (B) upon a Change
in Control, coupled with a Change in Status of a
Participant, the Restrictions shall lapse with
respect to all Restricted Stock Awards held by such
Participant who is an employee or director of the
Company (or a subsidiary) (if not already so lapsed);
and (C) in the event of an accelerated lapse of
Restrictions due to a Change in Control and a Change
in Status, Participants who are subject to Section
16(b) of the Exchange Act may not sell the shares of
Stock whose Restrictions have so lapsed within six
months of the Grant Date of the Restricted Stock
Award pursuant to which such Stock was received. The
"Restricted Period" as to any shares constituting
part of a Restricted Stock Award shall be the period
of time commencing with the Grant Date of a
Restricted Stock Award and ending with the date on
which the Restrictions lapse with respect to any such
shares, or any portion thereof.
(c) In the event that the acceleration of (i) the exercisability
of an Option or (ii) the lapse of Restrictions relating to
Restricted Stock upon a Change in Control and a Change in
Status results in excise tax pursuant to Section 4999 of the
Code, or any successor or similar provision thereto, or
comparable state or local tax laws, the Company shall pay to
the Participant such additional compensation as is necessary
(after taking into account all Federal, state and local income
and excise taxes payable by the Participant as result of the
receipt of such compensation ) to place the Participant in the
same after-tax position he would have been in had no such
excise tax (or any interest or penalties thereon) been paid or
incurred. The amount of such payment shall be determined by
the independent accounting firm serving as the Company's
outside auditor immediately prior to the Change in Control.
5. EXERCISE OF OPTIONS.
(a) The Exercise Price of the shares purchasable under an Option
shall be the Fair Market Value per share on the Grant Date of
such Option, subject to subsequent adjustment pursuant to the
provisions of Section 9.
(b) Options shall be considered exercised (herein the "Exercise
Date") on the date written notice, in such form as the
Committee may prescribe, is received by the Option Plan
Administrator of the Company, advising of the exercise of an
Option and either transmitting payment of the total Exercise
Price for the number of shares of Stock involved or electing
one of the alternative payment procedures set forth in Section
5(c) below.
(c) The Exercise Price shall be paid in cash (including cash
obtained through a margin loan on the shares as to which the
Option is being exercised) or (and provided (x) the use of the
following procedure by a Participant would comply with
safeguards established by the Committee designed to avoid
"short-swing" profits to the Participant under Section 16(b)
of the Exchange Act, and (y) does not otherwise violate any
applicable laws) through (i) a broker-assisted cashless
exercise
5
program established by the Committee, based on the actual
proceeds from the sale of share of Stock; or (ii) in shares of
Stock, valued on the basis of the closing market price of the
Stock on the Exercise Date.
(b) Subject to the provisions of Section 6 and the other
provisions of the Plan, the Stock Option Agreement and the
Option, the Company shall issue shares of Stock in the
Participant's name as soon as practicable (but in no event
later than 30 days) after the Exercise Date. The Participant
shall not be deemed to be a holder of any shares pursuant to
an Option, and shall not have any rights as a stockholder in
connection with such shares, until the date of transfer of
shares of Stock to the Participant. The Company shall have no
liability of any nature whatsoever to any Participant by
reason of any change in the market price of the Stock during
the period of time between the Exercise Date and the date on
which any shares of Stock resulting from the exercise are
issued or sold.
6. RESTRICTIONS.
(a) Notwithstanding any other provision of the Plan, an Option or
Restricted Stock Award to the contrary, no Option shall be
exercised, and the Company shall not be obligated to issue or
transfer shares of Stock under any Option or Restricted Stock
Award, until the Company shall have received such assurances
as the Company may reasonably request from its counsel that
the exercise of the Option and the issuance and transfer of
shares pursuant to the Option or Restricted Stock Award will
not violate the Securities Act of 1933, as amended, or any
other applicable Federal or state laws. In connection with any
such issuance or transfer, the Participant shall, if requested
by the Company, give assurances satisfactory to counsel to the
Company, in respect of the Participant's investment intent or
such other matters as counsel to the Company may deem
necessary or desirable to assure compliance with all
applicable legal requirements.
(b) No provisions of the Plan or any Option or Restricted Stock
Award shall be interpreted or construed to obligate the
Company to register any Stock under Federal or state law.
(c) The Company and the Committee reserve the right to investigate
at any time the circumstances surrounding any exercise of
Options, including any investigation regarding whether a
Participant is in compliance with the provisions of Section 13
hereof (or has threatened or is reasonably believed to intend
to violate the provisions of Section 13 hereof), and the
Company and the Committee shall have no liability or
responsibility to any Participant for any alleged damage
sustained by the Participant by reason of any delay in the
implementation of an Option exercise during the pendency of
any such investigation, whether by reason of any change in the
market price of the Stock or otherwise.
(d) Notwithstanding any other provision hereof, the Committee
shall have the right at any time to deny or delay a
Participant's exercise Options if such Participant is
reasonably believed by the Committee (i) to be engaged in
material conduct adversely affecting the Company or (ii) to be
contemplating such conduct, unless and until the Committee
shall have received reasonable assurance that the Participant
is not engaged in, and is not contemplating, such material
conduct adverse to the interests of the Company.
(e) Participants are and at all times shall remain subject to the
trading window policies adopted by the Company from time to
time throughout the period of time during which they may
exercise Options
6
or sell Restricted Stock granted pursuant to the Plan.
Participants may request at any time a copy of any calendar of
scheduled open windows by contacting the Option Plan
Administrator.
7. FAIR MARKET VALUE.
(a) During any period that the Company's Stock is Actively Traded,
Fair Market Value shall equal the arithmetic average of the
closing prices of a share of Stock on the exchange or national
market system on which the Stock is traded, for the last
twenty market trading days prior to the date of determination
of Fair Market Value, or pursuant to such other method as the
Committee may reasonably specify for determining the Stock's
Fair Market Value.
(b) During any period during which the Company's Stock is not
Actively Traded, Fair Market Value shall be determined by the
Committee.
8. TERM.
This Amended and Restated Plan shall be effective as of the date set
forth on the first page hereof. No Option or Restricted Stock Award
shall be granted under the Plan after February 12, 2006, but the Plan
shall continue in effect thereafter with respect to any previously
granted Options and Restricted Stock Awards that remain outstanding and
the duration of any such grant or award shall not be affected by the
expiration of the Plan.
9. ADJUSTMENTS.
In the event that any recapitalization, or reclassification, split-up
or consolidation of shares of Stock shall be effected, or the
outstanding shares of Stock shall, in connection with a merger or
consolidation of the Company or a transaction or series of related
transactions that results in the sale of all or substantially all of
the Company's assets, be exchanged for a different number or class of
shares of stock or other securities or property of the Company or any
other Person, or a record date or dates for determination of holders of
Stock entitled to receive a dividend payable in stock or a liquidating
dividend (or series of dividends) shall occur, equitable and
proportional adjustments aimed at preventing the inequitable
enlargement or dilution of any rights hereunder shall be made to (i)
the number and class of shares or other securities or property that may
be issued or transferred pursuant to the Plan and any outstanding
Options and Restricted Stock Awards and (ii) the Exercise Price to be
paid per share under any outstanding Options; PROVIDED, HOWEVER, that
in the event of a merger or consolidation of the Company, or similar
transaction pursuant to which the outstanding Stock is exchanged for
cash or other property, the unexercised Options shall thereafter be
exercisable for, and the Restricted Stock Awards shall entitle the
Participant to receive, the cash or other property which an Option or
Restricted Stock Award holder, as the case may be, would have been
entitled to receive had the Options been exercised, or the Restrictions
relating to the Restricted Stock Award lapsed, immediately prior to the
record date for such merger, consolidation or similar transaction
except to the extent that provision is made in writing in connection
with such transaction for (1) the assumption of the Options by, or the
substitution for the Options of new options covering the stock of, a
successor acquiring corporation, in each case providing terms no less
favorable to the holder of such Options than would an assumption or
substitution described in Treasury Regulation ss.1.425-1(a) that would
not constitute a "modification" for purposes of Code ss.424(a), and (2)
the substitution for Restricted Stock Awards of stock of a successor or
acquiring corporation having terms no less favorable to the holder
thereof than the terms of the Restricted Stock Award in effect before
such transaction.
7
10. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The Committee
shall, subject to the provisions of the Plan, have full power
and authority to administer the Plan, to select the
Participants in the Plan, and, except for grants and awards
which are automatically made to Outside Directors as provided
pursuant to Section 3 of the Plan, to determine the number of
shares to be made subject to each Option and Restricted Stock
Award and all terms and conditions of each Option and
Restricted Stock Award. The Committee shall have the power to
interpret the Plan and to adopt such rules for the
administration, interpretation and application of the Plan as
are consistent therewith and to interpret, amend or revoke any
such rules. All actions taken and all interpretations and
determinations made by the Committee shall be final and
binding upon all Participants, the Company and all other
interested persons, absent a determination by a court of
competent jurisdiction that the Committee has acted in bad
faith or has engaged in reckless or willful misconduct.
(b) Members of the Committee and the Board and officers
administering this Plan shall be fully protected in taking
actions under the Plan or in relying upon the advice of
counsel and shall incur no liability except for bad faith,
recklessness or willful misconduct in the performance of their
duties.
(c) Except as required by Rule 16b-3 with respect to grants of
Options to individuals who are subject to Section 16 of the
Exchange Act, or as otherwise required for compliance with
Rule 16b-3 or other applicable law, the Committee may delegate
all or any part of its authority under the Plan to an
employee, employees or committee of employees.
(d) To the extent the Committee deems it necessary, appropriate or
desirable to comply with foreign law or practices and to
further the purpose of the Plan, the Committee may, without
amending this Plan, establish special rules applicable to
Options granted to Participants who are foreign nationals, are
employed outside the United States, or both, including rules
that differ from those set forth in the Plan, and grant
Options to such Participants in accordance with those rules.
(e) Determinations by the Committee under the Plan relating to the
form, amount and terms and conditions of grants and awards
need not be uniform, and may be made selectively among persons
who receive or are eligible to receive grants and awards under
the Plan, whether or not such persons are similarly situated.
11. GENERAL PROVISIONS.
(a) Nothing in this Plan or in any instrument executed pursuant
hereto shall confer upon any Person any right to continue in
the employment or other service of the Company (or any
subsidiary), or shall affect the right of the Company (or any
subsidiary) to terminate the employment or other service of
any person at any time with or without Cause.
(b) The Company may make appropriate provisions for the
withholding of any taxes which the Company determines it is
required to withhold in connection with any Option or
Restricted Stock Award including, at the request of a
Participant and provided that it does not violate any
applicable laws, the payment of such withholding taxes through
a broker-assisted sale of a sufficient number of shares
underlying the Option or subject to the Restricted Stock Award
or by delivery to the
8
Company of shares of Stock previously owned by the
Participant, in either case having an actual sale price equal
to the amount of such taxes. Notwithstanding the foregoing, a
Participant whose transactions in Stock are subject to Section
16(b) of the Exchange Act may make a share withholding
election only if it complies with safeguards established by
the Committee designed to avoid "short swing" profits to the
Participant under Section 16(b) of the Exchange Act.
(c) By accepting any benefits under the Plan, each Participant,
and each Person claiming under or through the Participant,
shall be conclusively deemed to have indicated acceptance and
ratification of, and consent to, all provisions of the Plan.
Each Participant hereby further agrees that amendments and
modifications to the Plan, which may be adopted from time to
time by the Committee and/or the Board of the Corporation (as
set forth in Section 12 hereof), shall be binding upon such
Participant and upon all Options or Restricted Stock which the
Participant may hold, including (with retroactive effect)
Options or Restricted Stock previously granted to the
Participant, except to the extent set forth in Section 12
hereof.
(d) With respect to Participants subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to
comply with all applicable provisions of Rule 16b-3 or its
successor. To the extent any provision the Plan or action by
the Plan administrators fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed
advisable by the Committee.
(e) A Participant shall have no rights as a stockholder of the
Company with respect to any Shares to be issued upon exercise
of an Option until such Participant has exercised such Option
and becomes a holder of such Shares.
12. AMENDMENTS; MODIFICATION AND TERMINATION.
This Plan may be amended or modified by the Committee, with
ratification by the Board, or terminated by the Board, at any time and
in any respect, except that no amendment shall be made without the
approval of the shareholders of the Company if shareholder approval
would be required by Rule 16b-3 under the Exchange Act or any other law
or rule of any governmental authority, stock exchange or other
self-regulatory organization to which the Company is subject. No such
amendment, modification or termination shall have effect to reduce the
number of shares as to which any Option or Restricted Stock Award
previously has been granted to a Participant; to extend the vesting
schedule with respect to any Option or Restricted Stock Award or to
extend the period of non-competition or confidentiality as set forth in
Section 13 hereof. In the event of the passage of any law, rule or
regulation or a determination by any regulatory agency or court,
requiring an adverse change in the Company's accounting or tax
treatment relating to the Plan, the Committee shall have the right to
modify the terms of outstanding Options and Restricted Stock Awards to
the extent necessary to avoid the adverse consequences of such change.
13. CONFIDENTIALITY AND NON-COMPETITION; CONDUCT NOT IN THE INTEREST OF THE
CORPORATION.
By accepting Options or Restricted Stock Awards under the Plan and as a
condition to the exercise of Options and the enjoyment of any of the
benefits of the Plan, each Participant agrees as follows:
(a) CONFIDENTIALITY -- During the period of each Participant's
employment or service as a director with the Company (or the
Participant's engaging in any other activity with or for the
Company) and for a two year period thereafter, each
Participant shall treat and safeguard as confidential and
secret
9
all Confidential Information received by such Participant at
any time. Without the prior written consent of the Company,
except as required by law, such Participant will not disclose
or reveal any Confidential Information to any third party
whatsoever or use the same in any manner except in connection
with the businesses of the Company and its subsidiaries. In
the event that a Participant is requested or required (by oral
questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or other
process) to disclose (i) any Confidential Information or (ii)
any information relating to his opinion, judgment or
recommendations concerning the Company or its subsidiaries as
developed from the Confidential Information, Participant will
provide the Company with prompt written notice of any such
request or requirement so that the Company may seek an
appropriate protective order or waive compliance with the
provisions contained herein. If, failing the entry of a
protective order or the receipt of a waiver hereunder,
Participant is, in the reasonable opinion of his counsel,
compelled to disclose Confidential Information, Participant
shall disclose only that portion of the Confidential
Information which his counsel advises that he is compelled to
disclose and will exercise best efforts to obtain assurances
that confidential treatment will be accorded such Confidential
Information.
(b) NON-COMPETITION -- During the period of employment with the
Company or its subsidiaries of any Participant (other than a
director) compensated at a rate (including bonuses) in excess
of $75,000 per year in cash compensation from his employment
with the Company or any of its subsidiaries (determined as of
the most recently completed fiscal year of the Company), and,
for a two-year period thereafter (the "Non-Compete Period"),
each such Participant shall not, without prior written consent
of the Committee, do, directly or indirectly, any of the
following:
(1) own, manage, control or participate in the ownership,
management, or control of, or be employed or engaged
by or otherwise affiliated or associated with, any
other corporation, partnership, proprietorship, firm,
association or other business entity, or otherwise
engage in any business which competes with the
business of the Company or any of its subsidiaries
(as such business is conducted during the term of
such Participant's employment with the Company or its
subsidiaries) in the geographical regions in which
such business is conducted; PROVIDED, HOWEVER, that
the ownership of a maximum of one percent of the
outstanding stock of any publicly traded corporation
shall not violate this covenant; or
(2) employ, solicit for employment or assist in employing
or soliciting for employment any present, former or
future employee, officer or agent of the Company or
any of its subsidiaries.
In the event any court of competent jurisdiction should
determine that the foregoing covenant of non-competition is
not enforceable because of the extent of the geographical area
or the duration thereof, then the Company and the affected
Participant hereby petition such court to modify the foregoing
covenant to the extent, but only to the extent, necessary to
create a covenant which is enforceable in the opinion of such
court, with the intention of the parties that the Company
shall be afforded the maximum enforceable covenant of
non-competition which may be available under the circumstances
and applicable law.
(c) Each Participant acknowledges that remedies at law for any
breach by him of this section 13 may be inadequate and that
the damages resulting from any such breach are not readily
susceptible to
10
being measured in monetary terms. Accordingly, each
Participant acknowledges that upon his violation of any
provision of this Section 13, the Company will be entitled to
immediate injunctive relief and may obtain an order
restraining any threatened or future breach. Each Participant
further agrees, subject to the proviso at the end of this
sentence, that if he violates any provision of this Section
13, he shall immediately forfeit any rights and benefits under
this Plan and shall return to the Company any unexercised
Options and forfeit the rights under any Restricted Stock
Awards and shall return any shares of Stock held by such
Participant received upon exercise of any Option or the lapse
of the Restrictions relating to Restricted Stock Awards
granted hereunder, together with any proceeds from sales of
any shares of Stock received upon exercise of such Options or
the lapse of Restrictions of such Restricted Stock Awards;
PROVIDED, HOWEVER, that upon violation of subsection (b) of
this Section, the forfeiture and return provisions contained
in this sentence shall apply only to Options which have become
exercisable, and Restricted Stock, the Restrictions with
respect to which have lapsed, and in any such case the
proceeds of sales therefrom, during the two year period
immediately prior to termination of the Participant's
employment. Nothing in this Section 13 will be deemed to
limit, in any way, the remedies at law or in equity of the
Company, for a breach by Participant of any of the provisions
of this Section 13.
(d) Each Participant agrees to provide written notice of the
provisions of this Section 13 to any future employer of
Participant, and the Company expressly reserves the right to
provide such notice to the Participant's future employer(s).
(e) If any provision or part of any provision of this Section 13
is held for any reason to be unenforceable, (i) the remainder
of this Section 13 shall nevertheless remain in full force and
effect and (ii) such provision or part shall be deemed to be
amended in such manner as to render such provision
enforceable.
14. GOVERNING LAW.
The validity, construction and effect of the Plan and any rules
relating to the Plan shall be determined in accordance with the laws of
the State of Delaware and applicable Federal law.
15. ARBITRATION.
The Company and each Participant hereby agree that in the event of any
dispute or controversy arising with respect to the Plan, any Stock
Option Agreement, the exercise of any Option (or the disallowance of
any exercise at any time, for any reason) or any other matter relating
to Options or Restricted Stock Awards, then such dispute or controversy
shall be submitted by the parties to mandatory and binding arbitration
before a panel of arbitrators appointed by the American Arbitration
Association ("AAA"), each of whom shall be knowledgeable in matters of
securities in general and, if possible, the administration of stock
option programs similar to the Plan. The arbitration proceedings shall
be conducted in whichever of the following cities is closest to the
work location of the affected Participant: Fort Lauderdale, Florida;
Chicago, Illinois; New York, New York; Kansas City, Missouri; Jackson,
Mississippi; Nashville, Tennessee or Atlanta, Georgia. The decision of
the Company as to which city is closest to the work location of the
Participant shall be conclusive and binding, except for manifest error.
The decision of the arbitrators shall be rendered in writing, shall be
promptly rendered after a hearing on the matter and shall be final,
conclusive and binding and may be incorporated in a final judgment
rendered by any court of competent jurisdiction.
11
Notwithstanding the foregoing, nothing contained herein shall preclude
the Company from seeking injunctive or other relief from any court of
competent jurisdiction to enforce the provisions of Section 13 hereof.
16. DEFINITIONS.
The following terms, when used in the Plan, shall have the meanings set
forth below:
ACTIVELY TRADED: Trading of Company Stock on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ
National Market System in an average weekly volume that equals
at least 0.20% of the then outstanding Company Stock for each
of at least four weeks in a row.
BENEFICIAL OWNER: With respect to any securities of the
Company, any Person who is a beneficial owner of such
securities as defined in rule 13d-3 under the Exchange Act.
The Committee may from time to time adopt interpretations or
pronouncements as to who shall be deemed to be Beneficial
Owners of the Company's outstanding voting securities as of a
given date, which interpretation shall be final and binding on
all Participants, the Company and all other interested
Persons.
BOARD: The Board of Directors of the Company.
CAUSE: Any cause stated in an employment agreement between the
Company and the Participant and/or material violations of
employment agreements or the terms of this Plan, acts of
dishonesty with respect to the Company, insubordination,
divulging confidential information about the Company,
interference with the relationship between the Company and any
supplier, client, customer, similar person, or performance of
any act or omission which the Committee, in its sole
discretion, deems to be sufficiently injurious to the interest
of the Company to constitute cause.
CHANGE IN CONTROL: The occurrence of any of the following: (i)
a merger or consolidation to which the Company is a party if
the individuals and entities who were stockholders of the
Company immediately prior to the effective date of such merger
or consolidation are Beneficial Owners of less than 50% of the
total combined voting power for election of directors of the
surviving corporation following the effective date of such
merger or consolidation; or (ii) any Person becomes the
Beneficial Owner in the aggregate of securities of the Company
representing 50% or more of the total combined voting power of
the Company's then issued and outstanding securities unless
such Person (or a Person owned directly or indirectly by such
Person) was the Beneficial Owner, directly or indirectly, as
of the Grant Date applicable to the affected Participant, of
more than 50% of the Company's voting securities outstanding
as of such Grant Date; or (iii) the sale of all or
substantially all of the assets of the Company to any person
or entity that is not a wholly-owned subsidiary of the
Company; or (iv) the stockholders of the Company approve any
plan or proposal for the liquidation of the Company.
CHANGE IN STATUS: The occurrence with respect to a
Participant, of any of the following (but only if such event
occurs within two (2) years following a Change in Control):
(i) any reduction in the aggregate annual compensation paid or
payable to a Participant, or any material reduction in the
aggregate benefit coverages provided to such Participant under
the Company's standard benefit package for all employees; (ii)
the assignment to the Participant of any duties inconsistent
in any material respect with the Participant's position
(including status, offices, titles and reporting
12
responsibilities), authorities, duties or responsibilities as
in effect immediately prior to the date of the Change in
Control; (iii) the Company's requiring the Participant to be
based at any office, facility or location other than the
office, facility or location at which the Participant was
based immediately prior to the date of the Change in Control;
(iv) if the Participant is a party to any employment agreement
with the Company, any material breach by the Company of such
agreement, or any purported termination by the Company of the
Participant's employment otherwise than as permitted by such
employment agreement; or (v) in the case of a director, the
removal of a director or the failure to nominate the director
for reelection.
CODE: Internal Revenue Code of 1986, as amended.
COMMITTEE: A committee designated by the Board consisting of
not less than two members of the Board who are "disinterested
persons," as defined in Rule 16b-3 under the Exchange Act, to
administer the Plan.
COMPANY: Sunbeam Corporation (formerly known as Sunbeam-Oster
Company, Inc.)
CONFIDENTIAL INFORMATION: Any information not generally known
to the public, including, without limiting the generality of
the foregoing, any customer lists, supplier lists, trade
secrets, invention, formulas, methods or processes, whether or
not patented or patentable, channels of distribution, business
plans, pricing policies and records, financial information of
any sort and inventory records of the Company or any affiliate
(and such other information normally understood to be
confidential or otherwise designated as such in writing by the
Company or its subsidiaries). It is not necessary, however,
that any information be formally designated as "confidential"
if it falls within any of the foregoing categories and is not
generally known to the public.
DESIGNATED OTHER: Any consultant, advisor, contractor or agent
of the Company or its subsidiaries, who is not an employee,
officer or Outside Director of the Company and who is granted
Options or a Restricted Stock Award pursuant to this Plan.
EFFECTIVE DATE: January 1, 1991; Amended and Restated as of
May 15, 1996.
ERISA: Titles I and IV of the Employee Retirement Income
Security Act of 1974, as amended.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXERCISE PRICE: The Exercise Price of shares purchasable upon
exercise of an Option, as determined pursuant to the terms of
Section 5(a).
FAIR MARKET VALUE: The fair market value of a share of Stock,
as determined pursuant to the terms of Section 7.
GRANT DATE: The date as of which the Committee (or such other
committee of the Board of Directors of the Company as shall be
empowered to grant Options or to make awards of Restricted
Stock) shall grant Options or Restricted Stock, as the case
may be, to a Participant under the Plan, as so designated by
such Committee.
13
IN-THE-MONEY: Options to acquire Stock are considered to be
"in-the-money" if the exercise price of the Option is less
than the current market price of the Stock.
NEXT OPTION INCREMENT: This term shall have the meaning
ascribed to it in Section 4(a)(iii).
OPTION: An option, granted under the Plan, to purchase shares
of Stock at the Exercise Price. Options granted under the Plan
shall not be incentive stock options pursuant to Section 422
of the Code.
OPTION YEAR: This term shall have the meaning ascribed to it
in Section 4(a)(iii).
OUT-OF-THE-MONEY: Options to acquire Stock are considered to
be "out-of-the-money" if the exercise price is equal to or
greater than the current market price of the Stock.
OUTSIDE DIRECTOR: A director of the Company who is not either:
(i) an officer or employee of the Company, or (ii) a
Beneficial Owner of, or an officer or employee of any Person
which is a direct or indirect Beneficial Owner of, more than
10% of the outstanding Stock.
PARTICIPANT: An officer, employee, Outside Director of the
Company (or a subsidiary of the Company) or Designated Other
who is granted an Option or a Restricted Stock Award under the
Plan by the Committee. Upon the death of a Participant, the
"Participant" shall be deemed to mean the Participant's estate
or legal representative.
PERSON: Any individual, corporation, partnership, association,
company, trust, joint venture or other organization or entity
or group of associated persons or entities acting in concert.
As used herein, references to the male gender shall include
the female gender or the neuter, as applicable.
PLAN: The Equity Team Plan herein set forth, as it may be
amended from time to time.
RESTRICTED PERIOD: This term shall have the meaning ascribed
to it in Section 4(b)(iii).
RESTRICTED STOCK: Shares of Stock granted pursuant to Section
3(b) or (c) of the Plan.
RESTRICTED STOCK AWARD: The grant of Shares of Restricted
Stock to a Participant pursuant to Section 3(b) or 3(c) of the
Plan.
RESTRICTED STOCK AWARD AGREEMENT: The agreement described in
Section 3(e).
RESTRICTIONS: The restrictions described in Section 4(b)
relating to Restricted Stock.
"SHARES" or "STOCK": The Common Stock, $0.01 par value per
share, of the Company, or such other class of securities as
may be applicable pursuant to the provisions of Section 9.
STOCK OPTION AGREEMENT: The agreement described in Section
3(e).
14
Appendix C
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective as of July 26, 1996 (the
"Effective Date"), by and between P. NEWTON WHITE (the "Executive") and SUNBEAM
CORPORATION, a Delaware corporation (the "Company").
RECITALS
WHEREAS, the Company desires to employ the Executive and the Executive
desires to furnish services to the Company on the terms and conditions
hereinafter set forth; and
WHEREAS, the parties desire to enter into this agreement setting forth
the terms and conditions of the employment relationship of the Executive with
the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD. The period of employment of the Executive by
the Company hereunder (the "Employment Period") shall commence on the Effective
Date and shall end on July 26, 1999 (or the Date of Termination (as defined in
Section 6 below), if earlier).
3. POSITION AND DUTIES. The Executive shall serve as Executive Vice
President, Consumer Products Worldwide, and shall have such responsibilities,
duties and authority as are consistent with such position and such other duties
as may from time to time be assigned to him by the Chief Executive Officer. The
Executive agrees to devote substantially all his working time, attention and
energies to the performance of his duties for the Company.
4. PLACE OF PERFORMANCE. The principal place of employment of the
Executive shall be at the Company's principal executive offices in Broward or
Palm Beach County, Florida, or such other location as may be agreed to by the
Board. In the event that the Company's principal executive offices are moved
from Broward or Palm Beach County, Florida, the Company shall promptly pay, or
reimburse the Executive for, all reasonable expenses incurred by the Executive
relating to any change of the Executive's residence from Broward or Palm Beach
County, Florida, in connection with his employment hereunder, including, without
limitation, reasonable expenses for himself and his family of travel, moving,
storage and suitable lodging and maintenance, and the Company shall reimburse
the Executive on a grossed up basis in the event that any tax is assessed upon
him in relation to any such expenses. The Company shall pay or reimburse the
Executive for all reasonable costs and expenses of residential relocation
incurred by him in connection with each and every additional change, if any, in
the location of the principal executive offices of the Company, and the
Executive shall be reimbursed by the Company
on a grossed up basis in the event that any tax is assessed upon him in relation
to any such costs or expenses.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. As compensation for the performance by the
Executive of his duties hereunder, during the Employment Period the Company
shall pay the Executive a base salary at an annual rate of $425,000 (the "Base
Salary"), which Base Salary shall be payable in substantially equal semi-monthly
installments. It is agreed that there shall be no increase or decrease in the
Base Salary during the Employment Period. The Company also shall pay to the
Executive, within fifteen (15) days from the Effective Date, the sum of One
Hundred and Twenty Five Thousand Dollars ($125,000) as a one time bonus for
agreeing to the terms hereof. The parties agree that the Executive shall not be
entitled to participate in any other bonus or incentive compensation programs of
the Company.
(b) EQUITY AND STOCK OPTION GRANTS.
(i) PURCHASE OF COMMON STOCK. Effective as of the Effective
Date, the Executive shall purchase from the Company for his own
account, and the Company shall sell to the Executive, a total of 25,807
shares of the Company's Common Stock, par value $.01 per share ("Common
Stock"), for the sum of $500,010.62 ($19.375 per share of Common Stock)
(the "Purchased Stock"). The Purchased Stock shall be the sole property
of the Executive, shall be unrestricted (although unregistered at the
time of issuance) and shall be freely tradeable by the Executive,
subject to applicable securities laws and other legal restrictions.
(ii) RESTRICTED SHARES. Effective as of the Effective Date, the
Executive has been granted, without cost to the Executive, 100,000
shares of the Company's Common Stock, on the terms and conditions set
forth herein (the "Restricted Shares"). One-third of such Restricted
Shares shall vest and cease to be restricted in equal installments on
each of the first, second and third anniversaries of the Effective Date
(subject to earlier vesting provisions set forth in Section 7) provided
that the Executive continues to be employed pursuant to this Agreement
upon such anniversary dates. All such shares, once vested, shall be the
sole property of the Executive, shall be unrestricted and shall be
freely tradeable by the Executive, subject to applicable legal
restrictions.
(A) ISSUANCE OF CERTIFICATES. The Restricted Shares shall be
registered in the Executive's name, but the certificates
evidencing the Restricted Shares shall be retained by the Company
until such shares become vested and the restrictions thereon
lapse. The period prior to the time that any particular Restricted
Shares become vested and the restrictions thereon lapse is
hereinafter referred to as the "Restricted Period" with respect to
such shares. The Executive shall execute a
2
stock power, in blank, with respect to such Restricted Shares
and deliver the same to the Company.
(B) RIGHTS AS A STOCKHOLDER. Except as provided herein, during
the Restricted Period, the Executive shall have all the rights of
a stockholder with respect to Restricted Shares, including the
right to receive dividends or other distributions and the right to
vote such shares; provided that, in the discretion of the Company
any such dividends or other distributions may be retained by the
Company unless and until the Restricted Shares in respect of which
such dividends or other distributions were paid shall vest.
(C) NON-TRANSFERABILITY. During the Restricted Period, the
Executive may not sell, transfer, pledge, or otherwise
encumber or dispose of the Restricted Shares, and any
attempted sale, transfer, pledge or other encumbrance or
disposition (whether voluntary or involuntary) in violation of
this Section 5(b)(ii)(C) shall be null and void.
(D) DELIVERY OF SHARE CERTIFICATES. Upon the vesting of any
Restricted Shares, the certificates evidencing such Restricted
Shares, together with any dividends or other distributions
retained by the Company pursuant to Section 5(b)(ii)(B), shall
be delivered promptly to the Executive. In the case of
Executive's death, such certificates, dividends and
distributions will be delivered to the beneficiary designated
in writing by the Executive pursuant to a form of designation
provided by the Company, to the Executive's legatee or
legatees, or to his personal representatives or distributees,
as the case may be.
(iii) STOCK OPTIONS. The Executive shall be granted the
following stock options (collectively, the "Option Award"):
(A) Effective as of the Effective Date, by action of the
Executive Development and Compensation Committee of the Board
of Directors, the Executive has been granted a stock option
(the "Plan Option") to purchase 250,000 shares of Common Stock
pursuant to the Company's Amended and Restated Equity Team
Plan (the "Option Plan") (a copy of which Option Plan is
attached hereto as SCHEDULE A and incorporated herein by
reference), which options are granted upon the terms and
conditions as set forth in the Option Plan (at an exercise
price of $15.07/share), except that such option shall vest in
equal increments on the first, second and third anniversaries
of the grant date and shall be subject to and modified by all
other terms and provisions of this Agreement, as expressly set
forth herein. In the event of any conflict between any terms
of the Option Plan and the terms and provisions of this
Agreement, the terms and provisions of this Agreement shall
take precedence and shall be controlling as between such
documents.
3
(B) Effective as of the Effective Date, and subject to
shareholder approval by the Company's shareholders at a
special meeting to be held for that purpose (the "Special
Meeting"), which Special Meeting the Company agrees to convene
as soon as practicable after the Effective Date hereof, by
action of the Executive Development and Compensation
Committee, the Executive has been granted a non-qualified
stock option (the "Non-Qualified Option") to purchase 250,000
shares of Common Stock. The Non-Qualified Option shall be upon
the same terms and conditions as are set forth in Section
5(b)(iii)(A) above, including the exercise price of
$15.07/share and the three year vesting schedule. In the event
that the Company's shareholders fail to approve the grant of
the Non-Qualified Option at the Special Meeting, the Company
and the Executive shall negotiate in good faith a mutually
acceptable alternative compensation arrangement; provided,
however, that the Executive, in his sole discretion, may elect
to terminate this Agreement, and the Executive shall be
entitled to receive the compensation, rights and benefits
provided in Section 7(b) hereof (other than in respect of the
Non-Qualified Option).
(iv) REGISTRATION RIGHTS. Within six months after the
Effective Date, the Company shall cause the Purchased Stock, the
Restricted Shares and all shares of stock subject to the Option Award
to be registered or qualified for resale under the Securities Act of
1933 and applicable state laws. Unless and until registered under the
Securities Act of 1933, as amended, certificates evidencing the
Purchased Stock, the Restricted Shares and shares acquired pursuant to
the exercise of the Non-Qualified Option shall bear the following
legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL FOR THE COMPANY,
SUCH REGISTRATION IS NOT REQUIRED.
(c) EXPENSES. During the Employment Period, the Company
shall reimburse the Executive for all reasonable business expenses in accordance
with applicable policies and procedures then in force.
(d) VACATION AND OTHER ABSENCES. The Executive shall be
entitled to paid vacation and other paid absences, whether for holidays,
illness, personal time or any similar purposes, during the Employment Period in
accordance with policies applicable generally to senior executives of the
Company; provided, however, that the Executive shall always be entitled to at
least six weeks of paid vacation in each calendar year and pro rata for part of
a year. Up to four weeks per year of unused vacation may be maintained by the
Executive on a cumulative basis and may be subsequently used in any year or if
not so used, the Executive shall be
4
compensated for any unused vacation days upon the termination of this Agreement
for any reason.
(e) TAX PLANNING SERVICES. During the Employment Period, the
Company shall provide the Executive with tax-related advice and services without
cost or expense to him and shall reimburse the Executive on a grossed up basis
in the event that any tax is assessed upon him in relation to such services.
(f) TRAVEL BENEFITS. During the initial year of the
Employment Period, the Company shall reimburse the Executive on a grossed up
basis (in the event that any tax is assessed upon him in relation to such travel
reimbursement) for one round trip airline fare per month to and from Santa Fe,
New Mexico and the location at which the Executive may be working for the
Company at the time.
(g) OTHER BENEFITS. During the Employment Period, the
Executive shall be eligible to participate at no cost or expense to him in
welfare plans and programs (including any tax-deferred savings plan, group life
insurance plan, medical and dental insurance plan, and accident and disability
insurance plan) ("Benefit Plans") applicable generally to employees and/or
senior executives of the Company. The Company will waive, or obtain the waiver
of, any waiting periods for eligibility under the Benefit Plans or will provide
comparable benefits to the Executive without cost to him during the waiting
period.
6. TERMINATION. The Executive's employment hereunder, as the case may
be, may be terminated as follows:
(a) DEATH. The Executive's employment shall terminate upon
his death, and the date of his death shall be the Date of Termination.
(b) DISABILITY. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis for one hundred and twenty (120)
consecutive days and, within thirty (30) days after written Notice of
Termination (as defined in Section 6(g) hereof), shall not have returned to the
performance of his duties hereunder on a full-time basis ("Disability"), the
Company may terminate the Executive's employment hereunder. In this event, the
Date of Termination shall be thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such thirty (30) day period).
(c) CAUSE. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder:
5
(i) upon the Executive's conviction for the
commission of a felony (or a plea of nolo contendere thereto); or
(ii) willful failure by the Executive substantially to
perform his duties hereunder (other than any such failure resulting
from the Executive's incapacity due to Disability).
For purposes hereof, no act or failure to act by the Executive
shall be considered "willful" unless done or omitted to be done by him
not in good faith or without reasonable belief that his action or
omission was in the best interests of the Company or contrary to
written instructions of the Chief Executive Officer or the Board of
Directors. The Date of Termination shall be the date specified in the
Notice of Termination; provided, however, that, in the case of a
termination for Cause under clause (ii) above, the Date of Termination
shall not be earlier than 30 days after delivery of the Notice of
Termination. Anything herein to the contrary notwithstanding, if,
following a termination of the Executive's employment by the Company
for Cause based upon the conviction of the Executive for a felony, such
conviction is overturned in a final determination on appeal, the
Executive shall be entitled to the payments and the economic equivalent
of the benefits the Executive would have received if his employment had
been terminated by the Company without Cause.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment hereunder for Good Reason, provided that
the Executive shall have delivered a Notice of Termination (as defined in
Section 6(g) hereof) within ninety (90) days after the occurrence of the event
of Good Reason giving rise to such termination. For purposes of this Agreement,
"Good Reason" shall mean the occurrence of one or more of the following
circumstances, without the Executive's express written consent, which are not
remedied by the Company within thirty (30) days of receipt of the Executive's
Notice of Termination:
(i) an assignment to the Executive of any duties
materially inconsistent with his positions, duties, responsibilities
and status with the Company or any material limitation of the powers of
the Executive not consistent with the powers of the Executive
contemplated by Section 3 hereof; or
(ii) any removal of the Executive from, or any failure
to re-elect the Executive to, the executive officer position specified
in Section 3 of this Agreement; or
(iii) any other material breach by the Company of this
Agreement.
In the event of a termination for Good Reason, the Date of
Termination shall be the date specified in the Notice of Termination, which
shall be no more than thirty (30) days after the Notice of Termination.
6
(e) OTHER TERMINATIONS. The Company may terminate the Executive's
employment hereunder at any time, subject to the provisions of Section 7(e)
hereof. The Executive may terminate his employment at any time, subject to the
provisions of Section 7(d) hereof. If the Executive's employment is terminated
hereunder for any reason other than as set forth in Sections 6(a) through 6(d)
hereof, the date on which a Notice of Termination is given or any later date
(within 30 days) set forth in such Notice of Termination shall be the Date of
Termination.
(f) TERMINATION BY THE EXECUTIVE UPON CHANGE IN CONTROL. Upon a
Change in Control (as defined below), the Executive shall have the right, upon
delivery to the Company of a Notice of Termination (which shall specify a Date
of Termination not less than 30 days after such Notice of Termination), to
terminate his employment under this Agreement and to receive the payments
provided pursuant to Section 7(f) below. If the Executive shall elect to
terminate his employment with the Company other than upon a Change in Control,
he shall receive only the compensation referred to in Section 7(d) below. For
purposes of this Agreement, a Change in Control shall mean the occurrence of any
one of the following events:
(i) any "person" as such term is used in Sections 3(a)(9)
and 13(d) of the Securities Exchange Act of 1934, as amended, becomes a
"beneficial owner," as such term is used in Rule 3d-3 promulgated under
that Act, of 25% or more of the voting stock of the Company (other than
a person that is currently the beneficial owner of such percentage of
the Company's voting stock);
(ii) the majority of the Board consists of individuals other
than Incumbent Directors, which term means the members of the Board on
the date of this Agreement and the individuals designated as directors
by the Chief Executive Officer of the Company; provided that any person
becoming a director subsequent to such date whose election or
nomination for election was supported by two-thirds of the directors
who then comprised the Incumbent Directors shall be considered to be an
Incumbent Director;
(iii) the Company, without the Executive's consent, adopts
any plan of liquidation providing for the distribution of all or
substantially all of its assets; or
(iv) all or substantially all of the assets or business of
the Company are disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company immediately
prior to such merger, consolidation or other transaction beneficially
own, directly or indirectly, in substantially the same proportion as
they owned the voting stock of the Company, all of the voting stock or
other ownership interests of the entity or entities, if any, that
succeed to the business of the Company).
7
(g) NOTICE OF TERMINATION. Any termination of the Executive's
employment hereunder by the Company or by the Executive (other than termination
pursuant to Section 6(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. If any dispute concerning a Notice of Termination of the
Executive's employment under Section 6(b), 6(c) or 6(d) hereof results in a
determination that a proper basis for such termination did not exist under such
section, the Executive's employment under this Agreement shall be treated, with
respect to a Notice of Termination pursuant to Section 6(b) or 6(c) hereof, as
having been terminated pursuant to Section 6(e) hereof or, with respect to a
Notice of Termination pursuant to Section 6(d) hereof, as having not been
terminated.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY PERIOD. During any period during the Employment
Period that the Executive fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness ("Disability Period"), the
Executive shall continue to (i) receive his full Base Salary and (ii)
participate in the Benefit Plans. Such payments made to the Executive during the
Disability Period shall be reduced by the sum of the amounts, if any, payable to
the Executive at or prior to the time of any such payment under disability
benefit plans of the Company or under the Social Security disability insurance
program, and which amounts were not previously applied to reduce any such
payment.
(b) DEATH. If the Executive's employment hereunder is terminated
as a result of death, then:
(i) the Company shall pay the Executive's estate or
designated beneficiary, as soon as practicable after the Date of
Termination, any Base Salary installments due in the month of death and
any reimbursable expenses, accrued or owing the Executive hereunder as
of the Date of Termination;
(ii) the Options granted to the Executive pursuant to the
Plan Option and the Options granted to the Executive pursuant to the
Non-Qualified Option (if such Non-Qualified Option has been approved by
the shareholders as provided in Section 5(b)(iii)(B)) shall become
vested and exercisable, as of the Date of Termination, to the extent
such Option Award would have otherwise become vested on or before the
first anniversary of the Date of Termination, and all vested Options
shall remain exercisable for a period of one year following such Date
of Termination and shall thereafter be completely forfeited and
cancelled; any Options that would not have become vested and
exercisable on or before the first anniversary of the Date of
Termination shall terminate and be forfeited as of the Date of
Termination; and
8
(iii) the portion of the Restricted Shares that have not
vested as of the Date of Termination equal to the number of such
unvested Restricted Shares multiplied by a fraction, the numerator of
which is 36 minus the number of full months remaining in the Employment
Period (disregarding the earlier termination thereof) after the Date of
Termination and denominator of which is 36, shall become vested as of
the Date of Termination and the restrictions imposed thereon shall
lapse. The balance of such unvested Restricted Shares shall be
forfeited to the Company (without further action on the part of the
Company or the Executive) as of the Date of Termination, and the
Executive shall have no further rights with respect to such balance.
(c) DISABILITY. If the Executive's employment hereunder is
terminated as a result of Disability, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Options granted to the Executive pursuant to the
Plan Option and the Options granted to the Executive pursuant to the
Non-Qualified Option (if such Non-Qualified Option has been approved by
the shareholders as provided in Section 5(b)(iii)(B)) shall become
vested and exercisable, as of the Date of Termination, to the extent
such Option Award would have otherwise become vested on or before the
first anniversary of the Date of Termination, and all vested Options
shall remain exercisable for a period of three years following such
Date of Termination and shall thereafter be completely forfeited and
cancelled; any Options that would not have become vested and
exercisable on or before the first anniversary of the Date of
Termination shall terminate and be forfeited as of the Date of
Termination; and
(iii) the portion of the Restricted Shares that have not
vested as of the Date of Termination equal to the number of such
unvested Restricted Shares multiplied by a fraction, the numerator of
which is 36 minus the number of full months remaining in the Employment
Period (disregarding the earlier termination thereof) after the Date of
Termination and denominator of which is 36, shall become vested, and
the restrictions imposed thereon shall lapse. The balance of such
unvested Restricted Shares shall be forfeited to the Company (without
further action on the part of the Company or the Executive) as of the
Date of Termination, and the Executive shall have no further rights
with respect to such balance.
9
(d) CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive's employment hereunder is terminated by the Company for Cause or by
the Executive other than for Good Reason, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses accrued or owing the Executive hereunder for
services as of the Date of Termination; and
(ii) the Executive shall immediately forfeit any unvested
Restricted Shares and any unvested portion of the Option Award. In the
event of termination by the Company for Cause, the Executive shall have
the right to exercise the vested unexercised portion of the Option
Award for a period of ninety (90) days after the Date of Termination,
and the unexercised portion of such Option Award shall be forfeited
thereafter. In the event of termination by the Executive other than for
Good Reason the Executive shall have the right to exercise the vested
unexercised portion of the Option Award for a period of one year
following the Date of Termination and the unexercised portion of such
Option Award shall be forfeited thereafter.
(e) TERMINATION BY COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE
WITH GOOD REASON. If the Executive's employment hereunder is terminated by the
Company (other than for Cause or Disability) or by the Executive for Good
Reason, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Company shall immediately pay to the Executive as
liquidated damages and not as a penalty a lump sum amount equal to the
total Base Salary that would have otherwise been payable to the
Executive with respect to the period commencing immediately following
the Date of Termination and ending on July 26, 1999, at the annualized
rate in effect at the time Notice of Termination is given;
(iii) the Options granted to the Executive pursuant to the
Option Award shall become fully vested and exercisable, and the
Restricted Shares shall become fully vested, as of the Date of
Termination. The Option Award shall remain exercisable for the balance
of its original 10-year term; and
(iv) the Executive shall continue to participate in all
employee benefit plans and programs in which the Executive was entitled
to participate immediately prior to the Date of Termination, in
accordance with the terms of such plans and programs as in effect from
time to time, through July 26, 1999; provided that the Executive's
continued participation is permitted under the general terms and
provisions of such plans and programs. In the event that the
Executive's participation in any such plan or program
10
is barred, the Company shall arrange to provide the Executive and his
dependents with benefits substantially the same as those which the
Executive and his dependents would otherwise have been entitled to
receive under such plans and programs from which their continued
participation is barred or provide their economic equivalent.
(f) TERMINATION UPON CHANGE IN CONTROL. If the Executive shall
elect to terminate his employment under this Agreement upon a Change in Control,
the Company shall pay to the Executive the payments described in Sections
7(e)(i), (ii), (iii) and (iv) above.
8. GROSS-UP FOR EXCISE TAX. In the event that the Executive receives
any payment or benefit (including but not limited to the payments or benefits
pursuant to Section 7 of this Agreement) (a "Payment") that is subject to the
excise tax (the "Excise Tax") under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the Company shall pay to the Executive, as soon
thereafter as practicable, an additional amount (a "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction of any Excise Tax
imposed upon the Payment and any federal, state and local income tax and Excise
Tax imposed upon the Gross-Up Payment shall be equal to the Payment. The
determination of whether an Excise Tax is due in respect of any payment or
benefit, the amount of the Excise Tax and the amount of the Gross-Up Payment
shall be made by an independent auditor (the "Auditor") jointly selected by the
Company and the Executive and paid by the Company. If the Executive and the
Company cannot agree on the firm to serve as the Auditor, then the Executive and
the Company shall each select one nationally recognized accounting firm and
those two firms shall jointly select the nationally recognized accounting firm
to serve as the Auditor. Notwithstanding the foregoing, for purposes of
determining the Gross-Up Payment in respect of any Payment, (i) any other
payments or benefits received or to be received by the Executive in connection
with a Change in Control or the Executive's termination of employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person) shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of Section 280G of
the Code shall be treated as subject to the Excise Tax, unless in the opinion of
tax counsel selected by the Auditor, such other payments or benefits (in whole
or in part) do not constitute parachute payments, or are otherwise not subject
to the Excise Tax, and (ii) the Executive shall be deemed to pay federal income
tax at the highest marginal rate applicable in the calendar year in which the
Gross-Up Payment is made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. In the
event the actual Excise Tax or such income tax is more or less than the amount
used to calculate the Gross-Up Payment, the Executive or the Company, as the
case may be, shall pay to the other an amount reflecting the actual Excise Tax
or such income tax, plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code.
11
9. MITIGATION. The Executive shall not be required to mitigate
amounts payable pursuant to Section 7 hereof by seeking other employment or
otherwise, nor shall there be any offset against such payments on account of (a)
any remuneration attributable to any subsequent employment that he may obtain or
(b) any claims the Company may have against the Executive.
10. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS, NON-COMPETITION.
(a) CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company and its subsidiaries (the
"Sunbeam Entities") all trade secrets, confidential information, and knowledge
or data relating to the Sunbeam Entities and the businesses and investments of
the Sunbeam Entities, which shall have been obtained by the Executive during the
Executive's employment by the Company, including such information with respect
to any products, improvements, formulas, designs or styles, processes, services,
customers, suppliers, marketing techniques, methods, future plans or operating
practices ("Confidential Information"); PROVIDED, HOWEVER, that Confidential
Information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive) or any
specific information or type of information generally not considered
confidential by persons engaged in the same business as the Company, or
information disclosed by the Company or any officer thereof to a third party
without restrictions on the disclosure of such information. Except as may be
required or appropriate in connection with his carrying out his duties under
this Agreement, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such Confidential Information to anyone other than the Company
and those designated by the Company.
(b) REMOVAL OF DOCUMENTS. All records, files, drawings,
documents, models, and the like relating to the business of the Sunbeam
Entities, which the Executive prepares, uses or comes into contact with and
which contain Confidential Information shall not be removed by the Executive
from the premises of any Sunbeam Entity (without the written consent of the
Company) during or after the Employment Period unless such removal shall be
required or appropriate in connection with his carrying out his duties under
this Agreement, and, if so removed by the Executive, shall be returned to such
Sunbeam Entity immediately upon termination of the Executive's employment
hereunder.
(c) NON-COMPETITION. During (i) the Executive's employment with
the Company and (ii) the two (2) year period immediately following the
Executive's Date of Termination, the Executive (A) shall not engage, anywhere
within the geographical areas in which any Sunbeam Entity is then conducting its
business operations, directly or indirectly, alone, in association with or as a
shareholder, principal, agent, partner, officer, director, employee or
consultant of any other organization, in any business (a "Competitive Business")
which competes with any business then being conducted by such Sunbeam Entity;
(B) shall not solicit or encourage any officer, employee or consultant of any of
the Sunbeam Entities to leave the employ of any of the Sunbeam Entities for
employment by or with any Competitive Business; and (C) shall not solicit,
12
divert or take away, or attempt to divert or to take away, the business or
patronage of any of the customers or accounts, or prospective customers or
accounts, of any Sunbeam Entity, which were contacted, solicited or served by
the Executive while employed by the Company; provided, however, that nothing
herein shall prohibit the Executive from owning a maximum of two percent (2%) of
the outstanding stock of any publicly traded corporation. Following the Date of
Termination, ownership by the Executive of not more than five percent (5%) of
any publicly traded corporation shall not constitute a violation hereof. If, at
any time, the provisions of this Section 10(c) shall be determined to be invalid
or unenforceable, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Section 10(c) shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by the court or
other body having jurisdiction over the matter; and the Executive agrees that
this Section 10(c) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein. For purposes of
this Section 10(c), the design, manufacture and marketing of outdoor barbecue
grills, casual outdoor and indoor furniture and small kitchen appliances shall
be construed to be a Competitive Business; provided, however, that the gross
revenues derived from sales of such products by such competitor are greater than
the lesser of (i) 10% of its total revenues and (ii) $500,000,000.
(d) REMEDIES. In the event of a breach or threatened breach of
this Section 10, the Executive agrees that the Company shall be entitled to
apply for injunctive relief in a court of appropriate jurisdiction to remedy any
such breach or threatened breach, the Executive acknowledging that damages would
be inadequate and insufficient.
(e) CONTINUING OPERATION. Any termination of the Executive's
employment or of this Agreement shall have no effect on the continuing operation
of this Section 10.
11. INDEMNIFICATION. The Company shall indemnify the Executive to the
full extent permitted by law and the By-laws of the Company for all expenses,
costs, liabilities and legal fees which the Executive may incur in the discharge
of all his duties hereunder, including, without limitation, the right to be paid
in advance by the Company for his expenses in defending a civil or criminal
action, proceeding or investigation prior to the final disposition thereof. The
Executive shall be insured under the Company's Directors' and Officers'
Liability Insurance Policy as in effect from time to time. Notwithstanding any
other provision of this Agreement to the contrary, any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 11.
12. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of the Company
under this Agreement may be assigned or transferred by the Company except that
such rights or obligations may be assigned or transferred pursuant to a merger
or consolidation in which the
13
Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the business and/or assets of the Company, provided that
the assignee or transferee is the successor to all or substantially all of the
business and/or assets of the Company and such assignee or transferee assumes
the liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law. The Company will require
any such successor to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement
(except in the definition of Change in Control), "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 12 or which otherwise becomes bound by all the terms and provisions of
this Agreement or by operation of law.
(b) EXECUTIVE'S SUCCESSORS. This Agreement shall not be
assignable by the Executive. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Upon the Executive's death, all amounts to
which he is entitled hereunder, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
13. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
P. Newton White
------------------
Boca Raton, Florida
If to the Company:
Sunbeam Corporation
2100 New River Center
200 East Las Olas Boulevard
Fort Lauderdale, Florida 33301
Attn: Chairman of the Compensation Committee
14
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
14. MISCELLANEOUS. No provisions of this Agreement may be modified
unless such modification is agreed to in writing signed by the Executive and an
authorized officer of the Company. Any waiver or discharge must be in writing
and signed by the Executive or such an authorized officer of the Company, as the
case may be. No waiver by either party hereto at any time of any breach by the
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. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
regard to its conflicts of law principles.
15. WITHHOLDING. Any payments provided for in this Agreement shall be
paid net of any applicable withholding of taxes required under federal, state or
local law.
16. ARBITRATION.
(a) Except as otherwise provided herein, all controversies,
claims or disputes arising out of or related to this Agreement shall be settled
under the rules of the American Arbitration Association then in effect in the
State of Florida, as the sole and exclusive remedy of either party, and judgment
upon such award rendered by the arbitrator(s) may be entered in any court of
competent jurisdiction. The costs of the arbitration shall be borne as
determined by the arbitrators PROVIDED, HOWEVER, that if the Company's position
is not substantially upheld, as determined by the arbitrators, the expenses of
the Executive (including, without limitation, fees and expenses payable to the
AAA and the arbitrators, fees and expenses payable to witnesses, including
expert witnesses, fees and expenses payable to attorneys and other
professionals, expenses of the Executive in attending the hearings, costs in
connection with obtaining and presenting evidence and costs of transcription of
the proceedings), as determined by the arbitrators, shall be reimbursed to him
by the Company.
(b) Notwithstanding the provisions of Section 16(a) above, the
parties agree that nothing contained herein shall preclude the Company from
bringing an action in a court of competent jurisdiction (whether prior to or
during any arbitration proceeding) seeking to specifically enforce the
provisions of Section 10 hereof by means of seeking an injunction or other
equitable relief.
17. ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the terms of
the Option Plan set forth the entire agreement of the parties hereto in respect
of the subject matter contained herein, supersede all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto; and any prior agreement of the parties hereto or thereto in
re-
15
Agreement may be signed in counterparts.
18. CONFLICT WITH OPTION PLAN. To the extent, if any, of any
inconsistency or conflict between the terms and provisions of this Agreement and
the Option Plan, this Agreement shall control in all matters.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on August 7, 1996 to be effective as of the Effective Date.
SUNBEAM CORPORATION
By: /s/ ALBERT J. DUNLAP
----------------------
Name: Albert J. Dunlap
Title: Chairman & CEO
/s/ P. NEWTON WHITE
-----------------------
P. Newton White
16