<PAGE> 1
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 Section 14a-11(c) or Section 14a-12
FIGGIE INTERNATIONAL INC.
------------------------------------------------
(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 table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11*:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
* Set forth the amount on which the filing fee is calcualted and state how it
was determined.
/X/ 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:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE> 2
FIGGIE INTERNATIONAL INC.
4420 SHERWIN ROAD
WILLOUGHBY, OHIO 44094
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of Class A
Common Stock, par value $.10 per share, and the holders of Class B Common Stock,
par value $.10 per share, of Figgie International Inc. (the "Corporation") will
be held at Rawlings Hall at the Corporation's Headquarters, 4420 Sherwin Road,
Willoughby, Ohio 44094 on Wednesday, October 19, 1994 at 10:00 a.m., Eastern
Daylight Savings Time, to consider and take action with respect to the
following:
1. To elect a class of 4 Directors each for a term of 3 years and until
their successors shall be elected and qualified;
2. To approve a proposal to adopt the Figgie International Inc. Key
Employees' Stock Option Plan;
3. To ratify the Board of Directors' selection of Arthur Andersen & Co. as
independent public accountants of the Corporation; and
4. To conduct such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Holders of Class A Common Stock and holders of Class B Common Stock of
record at the close of business on September 21, 1994 are entitled to notice of
and to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
L. A. Harthun
Secretary
Dated: September 22, 1994
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY/VOTING
INSTRUCTION CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 3
FIGGIE INTERNATIONAL INC.
4420 SHERWIN ROAD
WILLOUGHBY, OHIO 44094
------------------------
PROXY STATEMENT
MAILED ON SEPTEMBER 22, 1994
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 19, 1994
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Figgie International Inc. (the
"Corporation") to be used at the Annual Meeting of the holders of Class A Common
Stock, par value $.10 per share, and the holders of Class B Common Stock, par
value $.10 per share, of the Corporation to be held on October 19, 1994 and at
any adjournments thereof. The time and place of the Annual Meeting are stated in
the Notice of Annual Meeting of Stockholders which accompanies this Proxy
Statement.
The expense of soliciting proxies, including the costs of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Corporation. In addition to the use of the mails, proxies may be solicited
personally or by telephone or telegraph, and the Corporation may pay persons
holding shares for others their expenses in sending proxy material to their
principals. Solicitation of proxies may also be made on behalf of the Board of
Directors by Morrow & Company at a total cost, including fees and expenses, of
approximately $7,000. Proxies may be solicited by Morrow & Company by personal
interview, mail, telephone and telegraph.
VOTING RIGHTS
Only stockholders of record at the close of business on September 21, 1994
are entitled to notice of and to vote at the Annual Meeting. The proxy will also
serve to instruct the trustees of the Figgie International Inc. Stock Ownership
Trust and Plan (the "ESOP"), the Figgie International Inc. Stock Ownership Trust
and Plan for Salaried Employees (the "ESOP for Salaried Employees"), the Figgie
International Inc. Stock Bonus Trust and Plan (the "Stock Bonus Plan") and the
Figgie International Inc. Supplementary Retirement Savings Plan (the "SRSP") on
how to vote any shares of the Corporation's common stock held by the plans. The
number of shares printed on the proxy/voting instruction card accompanying this
proxy statement includes, when applicable, shares allocated to the participants
in any such plan. The instructions given by the participants in such plans will
also serve to instruct the trustees of such plans on how to vote the unallocated
shares held by such plans.
At the close of business on September 21, 1994, the Corporation had
outstanding and entitled to vote 13,745,905 shares of Class A Common Stock and
4,958,655 shares of Class B Common Stock. The holders of issued and outstanding
shares of Class A Common Stock are generally entitled to 1/20 of one vote for
each share held by them on each matter to be presented with certain exceptions
set forth below. The holders of issued and outstanding shares of Class B Common
Stock are generally entitled to one vote for each share held by them on each
matter to be presented with certain exceptions set forth below.
Article Sixth of the Corporation's Restated Certificate of Incorporation
(the "Substantial Stockholder Provision") places limitations on the ability of
certain persons coming within the definition of a
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<PAGE> 4
"Substantial Stockholder" to vote shares of the Corporation's voting stock
beneficially owned by them. A Substantial Stockholder is defined as any
beneficial owner of more than a "threshold percentage" -- generally 20.00% -- of
the outstanding shares of any class of voting stock of the Corporation. If a
stockholder's percentage of shares of a class of voting stock of the Corporation
increases above the threshold applicable to him as a result of purchases,
redemptions or other acquisitions of shares of the class by the Corporation or
decreases below the threshold applicable to him as a result of an issuance of
shares of a class by the Corporation or a reduction in beneficial ownership by
the stockholder, then the stockholder's threshold percentage is adjusted to
equal the percentage of outstanding shares of the class held immediately after
such event, but never below 20.00%. The record holders of any shares
beneficially owned by a Substantial Stockholder are entitled to 1/20 of one vote
for each share of Class A Common Stock held and one vote for each share of Class
B Common Stock held up to the Substantial Stockholder's threshold percentage of
each class or series, and 1/100 of such vote for each share held in excess of
such threshold percentage for each class or series. Thus, a Substantial
Stockholder holding shares in excess of the applicable threshold percentage
would be entitled to 1/2000 of a vote for each such share of Class A Common
Stock and 1/100 of a vote for each such share of Class B Common Stock. Also, a
Substantial Stockholder may exercise a maximum percentage of the voting power of
each class or series equal to his threshold percentage for that class plus 5%.
The excess shares owned above the threshold percentage plus 5% cannot be voted
by the Substantial Stockholder. The aggregate voting power of a Substantial
Stockholder, so limited, is allocated proportionately among the record holders
of the shares beneficially owned by the Substantial Stockholder.
At September 12, 1994, the Corporation believes that no stockholder of the
Corporation beneficially owned shares in excess of such stockholder's applicable
threshold percentage.
The holders of Class A Common Stock are entitled to cast 687,295 votes at
the Annual Meeting and the holders of Class B Common Stock are entitled to cast
4,958,655 votes at the Annual Meeting. The total number of votes of both classes
entitled to be cast at the Annual Meeting is 5,645,950. The holders of record of
shares entitled to cast a majority of such votes must be present in person or
represented by proxy in order to constitute a quorum for the holding of a
meeting.
Candidates for election as Directors receiving a plurality of the votes of
holders of Class A Common Stock and holders of Class B Common Stock present in
person or represented by proxy, voting together and not as separate classes,
will be elected to the seats on the Board of Directors of the class whose term
expires in 1997. The affirmative vote of a majority of the votes of holders of
Class A Common Stock and holders of Class B Common Stock present in person or
represented by proxy, voting together and not as separate classes, is required
for the approval of the adoption of the Figgie International Inc. Key Employees'
Stock Option Plan and the ratification of the selection of independent public
accountants.
Shares entitled to vote represented by proxies which are properly executed
and returned before the Annual Meeting will be voted at the Annual Meeting as
directed therein. If no vote is specified therein, the shares will be voted
"FOR" the election of the Directors named as nominees in the Proxy Statement,
"FOR" the approval of the Figgie International Inc. Key Employees' Stock Option
Plan, and "FOR" the ratification of the selection of Arthur Andersen & Co. as
independent public accountants of the Corporation.
Shares represented by proxies which are marked "WITHHELD" with regard to
the election of Directors will be excluded entirely from the vote and will have
no effect. Shares represented by proxies which are marked "ABSTAIN" with respect
to any of the other matters presented for consideration at the Annual Meeting
will be considered present in person or represented by proxy at the meeting and,
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<PAGE> 5
accordingly, will have the effect of a negative vote because those matters
require the affirmative vote of a majority of the votes of holders of shares
present in person or represented by proxy. In addition, where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not provided voting instructions with respect to a particular matter
("broker non-votes"), those shares will have no effect on the outcome of such
matter.
The Board of Directors does not know of any other business to be presented
for consideration at the Annual Meeting. If any other business properly comes
before the Annual Meeting or any adjournment thereof, the proxies will be voted
on such matters in the discretion of the proxy holders insofar as the proxies
are not limited to the contrary. The Delaware General Corporation Law provides
that, unless otherwise provided in the proxy and unless the proxy is coupled
with an interest, a stockholder may revoke a proxy previously given at any time
prior to its exercise at the Annual Meeting. A stockholder who has given a proxy
may revoke it at any time before it is exercised by delivering to any of the
persons named as proxies, or to the Corporation addressed to the Secretary, an
instrument revoking the proxy, by appearing at the Annual Meeting and voting in
person or by executing a later dated proxy which is exercised at the Annual
Meeting.
3
<PAGE> 6
PRINCIPAL STOCKHOLDERS
The stockholders named in the following table are those which are known to
the Corporation to be the beneficial owners of 5% or more of the Corporation's
Class A Common Stock or Class B Common Stock. Unless otherwise indicated, the
information is as of September 12, 1994. For purposes of this table, and as used
elsewhere in this Proxy Statement, the term "beneficial owner" means any person
who, directly or indirectly, has or shares the power to vote, or to direct the
voting of, a security or the power to dispose, or to direct the disposition of,
a security. Except as otherwise indicated, the Corporation believes that each
individual owner listed below exercises sole voting and dispositive power over
his or its shares.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
- - ----------------------- ----------------------------------- ------------ ---------
<S> <C> <C> <C>
Class A Common Stock The Goldman Sachs Group, L.P. 1,404,600(1) 10.2%
85 Broad Street
New York, NY 10004
Class A Common Stock NewSouth Capital Management, Inc. 2,094,785(2) 15.2%
755 Crossover Lane, Suite 233
Memphis, Tennessee 38117
Class B Common Stock Figgie International Inc. ESOP 312,226(3) 6.3%
4420 Sherwin Road
Willoughby, Ohio 44094
Class B Common Stock Harry E. Figgie, Jr. 985,182(4) 19.8%
Figgie International Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
<FN>
- - ---------
(1) This amount, as reflected in a report on Schedule 13G dated September 8,
1994, filed by The Goldman Sachs Group, L.P., Goldman Sachs & Co. and
Goldman Sachs Equity Portfolios, Inc. (on behalf of Goldman Sachs Small Cap
Equity Fund), as a group, consists of 1,404,600 shares as to which each of
the reporting persons claims shared voting power and 1,404,600 shares as to
which each of the reporting persons claims shared dispositive power.
(2) This amount, as reflected in a report on Schedule 13G dated June 3, 1994,
consists of 2,007,785 shares as to which the reporting person claims sole
voting power, 87,000 shares as to which the reporting person claims shared
voting power and 2,094,785 shares as to which the reporting person claims
sole dispositive power.
</TABLE>
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<PAGE> 7
(3) As of September 12, 1994, the ESOP held no shares of Class A Common Stock
but held 678,525 shares of Class B Common Stock, of which 366,299 shares
were allocated to participants. As of such date, the ESOP had no
dispositive power with respect to any shares of Class B Common Stock but
may have had residual voting power with respect to 312,226 shares of Class
B Common Stock. The Department of Labor has expressed the view that, under
certain circumstances, the Employee Retirement Income Security Act of 1974
may require a trustee of an employee stock ownership plan to vote or
determine whether to tender shares which are not allocated to participant's
accounts. In view of the terms of the ESOP, the ESOP disclaims beneficial
ownership of the unallocated shares held by the ESOP. The terms of the
trust agreement for the ESOP provide that the Trustee has the authority to
dispose of certain allocated and unallocated shares held by the ESOP only
pursuant to the directions of participants with respect to the
diversification of the investments of participant accounts, a response to a
tender or exchange offer or as needed for the purposes of making
distributions of cash in lieu of fractional shares or distributions of
shares of Class A Common Stock instead of Class B Common Stock. The terms
of the trust agreement for the ESOP, as amended effective April 1, 1994,
also provide that participants are entitled to instruct the Trustee, on a
confidential basis, on how to vote shares allocated to their accounts and
on how to vote certain of the unallocated shares on any matter to be voted
on by the stockholders of the Corporation. Under the trust agreement,
allocated and unallocated shares for which no instructions are received
cannot be voted or tendered by the Trustee. Each active participant is
entitled to instruct the Trustee as to the voting or tendering of a portion
of the unallocated shares in the proportion that his prior year's
compensation (subject to a maximum amount of compensation) bears to the
prior year's compensation of all active participants who actually give
voting or tendering instructions. The Board of Directors of the Corporation
appoints the trustee or trustees to act as the Trustee of the ESOP. The
prior individual trustees of the ESOP resigned and the Board of Directors
is seeking an institutional trustee.
(4) For a description of Mr. Figgie's beneficial ownership, see the table under
the caption "STOCK OWNERSHIP OF DIRECTORS, NOMINEES FOR DIRECTORS,
EXECUTIVE OFFICERS AND CERTAIN FORMER EXECUTIVE OFFICERS" and footnotes
(2), (5), (11) and (12) thereto.
5
<PAGE> 8
STOCK OWNERSHIP OF DIRECTORS,
NOMINEES FOR DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN FORMER EXECUTIVE OFFICERS
The following table and notes thereto set forth information, as of
September 12, 1994, with respect to the beneficial ownership of shares of Class
A and Class B Common Stock by each Director, each nominee for Director and each
Executive Officer named in the Summary Compensation Table (which includes the
three executive officers who resigned since December 31, 1993, Harry E. Figgie,
Jr., Dr. Harry E. Figgie, III and Joseph J. Skadra) and, as a group, by the
current Directors and Executive Officers of the Corporation, based upon
information furnished to the Corporation by such persons.
<TABLE>
<CAPTION>
AMOUNT OF BENEFICIAL
OWNERSHIP AS OF SEPTEMBER
12, 1994(1)
---------------------------
CLASS A PERCENTAGE CLASS B PERCENTAGE
NAME OF BENEFICIAL OWNER COMMON STOCK OF CLASS COMMON STOCK OF CLASS
- - ------------------------------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Fred J. Brinkman 500 * 3,000 *
Vincent A. Chiarucci 97,753(2) * 9,267(2) *
Dale S. Coenen 300 * 3,000 *
Alfred V. Gangnes 22,371(3) * 12,504(3) *
John S. Lanahan 358 * 6,536 *
F. Rush McKnight 1,315(4) * 6,503(4)(5) *
Harrison Nesbit, II 1,005(6) * 6,562(6) *
C.B. Robertson, III 2,500(7) * 9,000 *
Gerald K. Rugger 600 * 6,300 *
Harold B. Scott 7,600(8) * 4,500 *
Steven L. Siemborski 0 * 0 *
A. A. Sommer, Jr. 2,250 * 7,750 *
Walter M. Vannoy 99,894 * 22,903 *
Robert A. Weaver, Jr. 270 * 3,000(9) *
Harry E. Figgie, Jr.(10) 417,810(2)(11) 3.0% 985,182(2)(5)(12) 19.8%
Dr. Harry E. Figgie, III(10) 57,178(2)(13) * 193,050(2)(5)(14) 3.9%
L. A. Harthun 19,412(2) * 6,358(2) *
Joseph J. Skadra(15) 1,701(2) * 1,775(2) *
All Current Directors and
Executive Officers as a
Group** (20 persons) 256,128(2) 1.9% 107,183(2) 2.2%
<FN>
- - ---------
* Less than 1%.
** Does not include beneficial ownership of Harry E. Figgie, Jr., Dr. Harry E.
Figgie, III and Joseph J. Skadra.
</TABLE>
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<PAGE> 9
(1) Except as otherwise indicated in footnotes (2), (3), (8), (11), (12), (13)
and (14), each Director, Executive Officer or former Executive Officer
owning shares listed or included in this table exercises sole voting and
dispositive power over such shares.
(2) These amounts include shares of Class A and Class B Common Stock held by
the ESOP for Salaried Employees, the ESOP and the Stock Bonus Plan which
are subject to certain pass-through voting and tendering rights. The rights
of participants in the ESOP to vote the shares held by such plans and to
instruct the Trustee as to the tendering of both shares allocated to such
participants and unallocated shares are described above in footnote (3) to
the table under the caption "PRINCIPAL STOCKHOLDERS." The pass-through
voting and tendering rights of participants in the ESOP for Salaried
Employees are identical to those of the participants in the ESOP except
that shares purchased with amounts received from the Corporation's
Retirement Income Plan for Salaried Employees (the "Prior Plan") or
purchased with a loan repaid with amounts received from such plan must
remain in the ESOP for Salaried Employees. The Prior Plan was terminated in
1988. The pass-through voting and tendering rights of participants in the
Stock Bonus Plan are identical to those of the participants in the ESOP,
except that all of the shares in the Stock Bonus Plan have been allocated
to participants. The numbers of shares of Class A and Class B Common Stock
held by the ESOP for Salaried Employees, the ESOP and the Stock Bonus Plan
which have been allocated to the executive officers named in the Summary
Compensation Table and all current Executive Officers as a group are as
follows: (1) allocated shares in the ESOP for Salaried Employees: Mr.
Chiarucci -- 956 shares of Class A Common Stock and 468 shares of Class B
Common Stock; Mr. Figgie -- 1,101 shares of Class A Common Stock and 532
shares of Class B Common Stock; Dr. Figgie -- 752 shares of Class A Common
Stock and 381 shares of Class B Common Stock; Mr. Harthun -- 1,093 shares
of Class A Common Stock and 528 shares of Class B Common Stock; Mr. Skadra
-- 1,071 shares of Class A Common Stock and 518 shares of Class B Common
Stock; and all current Executive Officers as a group -- 3,947 shares of
Class A Common Stock and 1,912 shares of Class B Common Stock; (2)
allocated shares in the ESOP: Mr. Chiarucci -- 492 shares of Class B Common
Stock; Mr. Figgie -- 557 shares of Class B Common Stock; Dr. Figgie -- 417
shares of Class B Common Stock; Mr. Harthun -- 553 shares of Class B Common
Stock; Mr. Skadra -- 542 shares of Class B Common Stock; and all current
Executive Officers as a group -- 2,019 shares of Class B Common Stock; and
(3) allocated shares in the Stock Bonus Plan: Mr. Chiarucci -- 16 shares of
Class B Common Stock; Mr. Figgie -- 14,202 shares of Class B Common Stock;
Dr. Figgie -- 193 shares of Class B Common Stock; Mr. Harthun -- 4,516
shares of Class B Common Stock; Mr. Skadra -- 715 shares of Class B Common
Stock; and all current Executive Officers as a group -- 5,407 shares of
Class B Common Stock. The numbers of shares of Class A and Class B Common
Stock held by the ESOP for Salaried Employees, the ESOP and the Stock Bonus
Plan which have not been allocated and are reflected in the table above as
beneficially owned by the executive officers named in the Summary
Compensation Table and all current Executive Officers as a group are as
follows: (1) unallocated shares in the ESOP for Salaried Employees: Mr.
Chiarucci -- 706 shares of Class A Common Stock and 297 shares of Class B
Common Stock; Mr. Harthun -- 706 shares of Class A Common Stock and 297
shares of Class B Common Stock; and all current Executive Officers as a
group -- 3,025 shares of Class A Common Stock and 1,272 shares of Class B
Common Stock; (2) unallocated shares in the ESOP: Mr. Chiarucci -- 420
shares of Class B Common Stock; Mr. Harthun -- 420 shares of Class B Common
Stock; and all current Executive Officers as a group -- 1,799 shares of
Class B Common Stock; and (3) unallocated shares in the Stock Bonus Plan:
Mr. Chiarucci -- 44 shares of Class B Common Stock; Mr. Harthun -- 44
7
<PAGE> 10
shares of Class B Common Stock; and all current Executive Officers as a
group -- 188 shares of Class B Common Stock.
(3) Mr. Gangnes shares voting and dispositive power with respect to 22,371
shares of Class A Common Stock and 12,504 shares of Class B Common Stock
with his wife.
(4) These amounts do not include 575 shares of Class A Common Stock and 575
shares of Class B Common Stock owned by Mr. McKnight's wife.
(5) These amounts do not include 47,493 shares of Class B Common Stock held in
a trust established by Mr. Figgie for a member of his immediate family. Dr.
Figgie and Mr. McKnight serve as 2 of 3 trustees of such trust.
(6) These amounts do not include 2,405 shares of Class A Common Stock and 47
shares of Class B Common Stock owned by Mr. Nesbit's wife.
(7) This amount does not include 2,500 shares of Class A Common Stock owned by
Mr. Robertson's wife.
(8) This amount includes 3,600 shares of Class A Common Stock for which Mr.
Scott has shared voting and dispositive power as a co-trustee of a trust
and 500 shares of Class A Common Stock for which Mr. Scott has shared
voting and dispositive power as the custodian of a custodial account for
his minor children.
(9) This amount does not include 1,000 shares of Class B Common Stock owned by
a trust of which Mr. Weaver's wife is the beneficiary.
(10) Harry E. Figgie, Jr. is the father of Dr. Harry E. Figgie, III. Mr. Figgie
resigned from his positions as the Corporation's Chief Executive Officer
and Chairman of the Board as well as a member of the Board on May 18, 1994.
Dr. Harry E. Figgie, III resigned from his position as Vice Chairman-
Technology and Strategic Planning on March 16, 1994, and resigned from his
position as a Director on May 18, 1994.
(11) This amount includes 37,844 shares of Class A Common Stock owned by The
Clark-Reliance Corporation ("Clark-Reliance"), which are also included in
the beneficial ownership of Dr. Figgie. Mr. Figgie, who is Chairman of the
Board of Clark-Reliance, owns, together with members of his immediate
family, all of the shares of Clark-Reliance and has shared voting and
dispositive power with respect to the shares of Class A Common Stock owned
by Clark-Reliance. This amount does not include: (i) a total of 26,889
shares of Class A Common Stock, consisting of 8,640 shares owned directly
by and 18,249 shares owned in trust for members of Mr. Figgie's immediate
family, including Dr. Figgie's beneficial ownership in certain of the
Corporation's employee benefit plans (see footnote (2) above); and (ii)
1,500 shares of Class A Common Stock owned directly by the Figgie Family
Foundation of which Mr. Figgie is one of 6 trustees. Some of the shares
listed in (i) above may be deemed to be beneficially owned by Dr. Figgie.
See footnote (13) below.
(12) This amount includes 850,618 shares of Class B Common Stock as to which Mr.
Figgie has sole voting and dispositive power and 134,564 shares of Class B
Common Stock owned by Clark-Reliance as to which Mr. Figgie has shared
voting and dispositive power. The Clark-Reliance shares are also included
in the beneficial ownership of Dr. Figgie. This amount does not include:
(i) a total of 299,011 shares of Class B Common Stock, consisting of
173,867 shares owned directly by and 125,154 shares owned in trust for
members of Mr. Figgie's immediate family,
8
<PAGE> 11
including Dr. Figgie's beneficial ownership in certain of the Corporation's
employee benefit plans (see footnote (2) above); and (ii) 2,112 shares of
Class B Common Stock owned directly by the Figgie Family Foundation, of
which Mr. Figgie is one of 6 trustees. Some of the shares listed in (i)
above may be deemed to be beneficially owned by Dr. Figgie. See footnote
(14) below.
(13) This amount does not include 2,499 shares of Class A Common Stock owned in
trust for Dr. Figgie. This amount includes 37,844 shares of Class A Common
Stock owned by Clark-Reliance, of which Dr. Figgie is president, a director
and a minority stockholder. Dr. Figgie has shared voting and dispositive
power with respect to the shares of Class A Common Stock owned by
Clark-Reliance. The other shares of Class A Common Stock listed as
beneficially owned by Dr. Figgie are not included in the number of shares
of Class A Common Stock listed as beneficially owned by Mr. Figgie. See
footnote (11) above.
(14) This amount does not include 2,499 shares of Class B Common Stock held in
trust for Dr. Figgie. This amount includes 134,564 shares of Class B Common
Stock owned by Clark-Reliance. Dr. Figgie has shared voting and dispositive
power with respect to the shares owned by Clark-Reliance. The other shares
of Class B Common Stock listed as beneficially owned by Dr. Figgie are not
included in the number of shares of Class B Common Stock listed as
beneficially owned by Mr. Figgie. See footnote (12) above.
(15) Joseph J. Skadra resigned from his position as Senior Vice
President-Finance and Controller on March 16, 1994.
9
<PAGE> 12
Notwithstanding anything to the contrary, the following reports of the
Compensation Committee and the Stock Option Committee, and the Performance
Graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Corporation
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The basic elements of the Corporation's compensation program originated at
the time the ownership of the Corporation changed in 1963. The Management
Development & Compensation Committee of the Board of Directors has overall
authority with respect to the cash compensation paid by the Corporation to
executive personnel and other key employees. The Stock Option Committee of the
Board of Directors oversees the Corporation's long-term incentive program under
which restricted stock is awarded to key employees, including executives.
During 1993, the members of the Compensation Committee were Harry E.
Figgie, Jr., Dale S. Coenen, Russell W. McFall and Dr. Harry E. Figgie, III and
the members of the Stock Option Committee were Dale S. Coenen, Russell W. McFall
and A.A. Sommer, Jr. Mr. Figgie resigned from his positions as the Corporation's
chief executive officer and chairman of the Board of Directors and a member of
the Board on May 18, 1994. Dr. Figgie resigned from his position as the
Corporation's vice chairman in March 1994, and from the Corporation's Board of
Directors on May 18, 1994. Mr. McFall passed away on March 26, 1994. The
Compensation Committee was subsequently reconstituted and renamed with the
present members of the Management Development & Compensation Committee being
Harrison Nesbit, Fred J. Brinkman, Alfred V. Gangnes, Walter M. Vannoy and Dale
S. Coenen. Mr. Coenen is the only current member of the Management Development &
Compensation Committee who was also a member of the Compensation Committee in
1993, and other than Mr. Coenen, no current members of the Management
Development & Compensation Committee participated in decisions regarding
executive compensation for 1993. The current members of the Stock Option
Committee are Dale S. Coenen, A.A. Sommer, Jr. and Fred J. Brinkman.
Set forth below are the reports of each committee with respect to executive
compensation.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE CASH COMPENSATION
The Compensation Committee's cash compensation policies are designed: (a)
to align closely the financial interests of the Corporation's executive officers
with the financial interests of the Corporation's stockholders and thereby, to
enhance the Corporation's profitability and stockholder value; (b) to provide
compensation packages that are competitive and will attract and retain qualified
personnel; and (c) to reward individual performance. The Corporation's cash
compensation policies are designed to incentivize executive officers to achieve
the Corporation's goals by relating a substantial portion of executive
compensation directly to the Corporation's performance.
The Compensation Committee, with the assistance of an independent
compensation consultant, is presently reviewing the Corporation's compensation
policies, to determine whether the methodology used to determine the cash
incentive portion of executive compensation should be revised.
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<PAGE> 13
Executive Officer Compensation Policies
The Compensation Committee, assisted by both an independent compensation
consultant and data generated by independent executive compensation analysts,
annually establishes ranges of total cash compensation to be paid to executives
in each pay grade, including the CEO, based upon its review of national surveys
of executive compensation which include peer data for diversified corporations.
BASE SALARY. The Compensation Committee establishes base salary amount
ranges for pay grades for executive officers, including the CEO, at amounts
that, in general, are substantially similar to the average base salary amounts
expected by the Corporation to be paid by companies of comparable size to
executives having comparable positions. (Recently, an exception to this approach
was made in connection with the hiring of the Corporation's chief financial
officer in order to induce the individual to become the chief financial
officer.) The performance of such companies is not taken into account by the
Compensation Committee as the Compensation Committee believes that the
Corporation must pay competitive base salaries in order to attract and retain
qualified executives. In establishing base salaries for specific executive
officers, including the CEO, the Compensation Committee takes into account the
performance of the executive officers. The base salaries for 1993 were
established during the month of February 1993.
ANNUAL CASH INCENTIVE AMOUNTS. Each of the Corporation's executive
officers, including the CEO, has the opportunity to receive an incentive bonus
which is awarded in two components: a formula-based component and a
discretionary component. The maximum potential amount of each such component is
pre-established based upon the pay grade of each executive. The amounts of the
bonuses for a particular year are determined and awarded after the end of that
year. Typically, the Compensation Committee determines incentive awards for the
previous year in February.
An incentive pool is calculated for payment of the formula-based award
amounts. The amount of the pool is based upon the extent to which the
Corporation's performance during the fiscal year attained pre-established levels
with respect to three measures: return on sales, return on assets and annual
growth in earnings. For 1993, the Compensation Committee determined that return
on sales and return on assets be given more weight than the annual growth in
earnings in assessing the Corporation's performance. The weight to be given each
performance ratio, which is approved annually by the Compensation Committee,
reflects the Corporation's strategic objectives and plans. The target
performance levels are subject to adjustment by the Compensation Committee in
the event of changes in the Corporation's structure.
The Compensation Committee also reviews whether adjustments should be made
in the constituents of the ratios to reflect unusual corporate developments,
such as unusual expenses that the Compensation Committee determines should be
recognized over a period of time. The amount of the incentive pool is reduced by
the aggregate amount of the discretionary bonus awards made in the most recently
completed fiscal year. The remainder of the incentive pool is then distributed
to the executive officers and each executive receives a bonus based upon the
same percentage of base salary.
The discretionary component of the incentive award is based upon the
performance of the individual executives. The CEO recommends the amounts of the
discretionary bonus awards for the executive officers, other than himself, after
assessing the performance of each of those executives. The Compensation
Committee then determines the amount of the discretionary award for each
executive, including the CEO, up to the predetermined maximum percentage of base
salary for such award, based on the executive's performance, including such
person's contributions to the success of those operations for which such person
is responsible and to the Corporation in general.
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<PAGE> 14
The discretionary bonus award is payable in four equal annual installments.
The first installment is normally paid in the year in which the bonus is
declared. The remaining installments are normally paid in the three consecutive
years after the first payment, but only to those executives who remain in the
employ of the Corporation or whose employment termination is due to death,
disability or retirement. In cases of termination for any other reason, the
Compensation Committee has sole discretion to determine whether the remaining
bonus installments will be paid.
For 1993, the Corporation's executive officers were not eligible to receive
formula-based incentive bonuses because of the Corporation's performance. The
Compensation Committee determined that the Corporation's performance also did
not warrant the grant of any discretionary bonus awards to executive officers
for 1993.
Harry E. Figgie, Jr., the Corporation's former CEO, and Dr. Figgie, who
were members of the Compensation Committee during 1993, did not participate in
the determination of whether they should receive bonuses.
CEO Compensation
In determining the CEO's base salary and the maximum percentages of such
base salary amount payable as formula-based and discretionary bonus awards, the
Compensation Committee evaluates the compensation paid to chief executive
officers of comparable companies. In addition, the amounts of the CEO's base
salary and any discretionary bonus award reflect the CEO's performance with
respect to operations for which he is specifically responsible as well as the
overall success of the Corporation in achieving the strategic goals defined by
him and the Corporation's board of directors, taking into account the general
economic environment and conditions in the industries in which the Corporation
operates.
For 1993, the members of the Compensation Committee, excluding the former
CEO, who always recused himself from all discussions regarding his compensation,
increased the amount of the former CEO's base salary effective February 1, 1993,
by 9.21% to $760,000 based upon base salaries paid to chief executive officers
of comparably sized companies and their discretion as to the Corporation's
success in containing the effects of the weak economy in 1992. For 1993, the
Compensation Committee determined not to grant the former CEO a discretionary
bonus in view of the Corporation's performance in 1993. For 1992, the former CEO
received a discretionary bonus of $400,000.
Dale S. Coenen
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<PAGE> 15
STOCK OPTION COMMITTEE REPORT
ON LONG-TERM EXECUTIVE COMPENSATION
The Stock Option Committee has administered the Corporation's long-term
incentive program under which executive officers and other senior executives of
the Corporation have been provided the opportunity to buy restricted shares.
Starting in 1978, four five-year restricted stock purchase plans have been
approved by the Corporation's stockholders. In 1993, the Corporation's
stockholders approved the 1993 Restricted Stock Purchase Plan for Employees (the
"Restricted Stock Plan"), which is substantially similar to prior plans.
Under the Restricted Stock Plan, shares of the Corporation's common stock
were sold to executives at the beginning of the five year life of the plan at a
price of $1.00 per share. When participants acquire the shares, they become
holders of the restricted shares and are eligible to vote and receive dividends
on the shares, but the certificates representing the restricted shares are held
by the Corporation in escrow until the transfer restrictions lapse, generally at
the termination of the plan. Because of the transfer restrictions, the
participants cannot sell the stock and thus disengage the benefits under the
Restricted Stock Plan from the Corporation's performance. Generally, unless
otherwise directed by the Stock Option Committee, upon the termination of the
employment of any participant prior to the termination of the Plan and the lapse
of the transfer restrictions, other than terminations resulting from death or
total disability, the Corporation has the right to purchase all, or, in the case
of the retirement of a participant, a specific portion, of the restricted shares
at a price equal to the lesser of the price paid by the participant for such
shares or the then fair market value of the shares.
Awards were made under the Restricted Stock Plan in 1993. A maximum award
was established for each executive pay grade. In determining this maximum award,
the Stock Option Committee, assisted by an independent compensation consultant,
took into account the relationship between cash and bonus amounts paid to
executive officers, including CEOs, in comparable companies and the benefits
that such companies provided their executive officers, including CEOs, from
their stock incentive plans. Maximum award amounts were calculated based upon
average award sizes of the comparable companies and without regard to restricted
stock awards made under prior plans. Consistent with the earlier similar
restricted stock plans, the sizes of the actual awards made to executive
officers, including the CEO, were based upon the executives' performance over
the prior five years. If an executive officer, including the CEO, received
during the five preceding fiscal years an aggregate of either 70% or 80%,
depending upon the executive's pay grade, of the aggregate amount of the
potential discretionary bonus awards he could have received over that period,
the Stock Option Committee awarded the executive 100% of the maximum award
established for the executive under the Restricted Stock Plan. If the executive
received less than the requisite percentage of the potential discretionary bonus
awards justifying the maximum award, he would receive between 25% and 75% of the
maximum award, depending upon the percentage of the aggregate amount of the
potential discretionary bonus awards he had received over the five year period.
In such case, the Stock Option Committee can award the executive the balance of
the maximum restricted stock award if the executive receives during the next
five years aggregate discretionary bonus awards in specified percentages of the
potential maximum discretionary bonus awards for those years. The Stock Option
Committee and the Compensation Committee are studying the implications of
Section 162(m) of the Internal Revenue Code, which was added by the Omnibus
Budget Reconciliation Act of 1993 (signed into law on August 10, 1993), and have
not decided whether to adjust compensation in light of such section. Harry E.
Figgie, Jr., the Corporation's former CEO, was awarded the maximum award for his
pay grade under the Restricted Stock Plan.
Dale S. Coenen A. A. Sommer, Jr.
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<PAGE> 16
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table shows information concerning the annual and long-term
compensation earned during the last three fiscal years by the Corporation's
Chief Executive Officer as of December 31, 1993 and each of the four other most
highly compensated executives of the Corporation, including three officers who
resigned after December 31, 1993, Harry E. Figgie, Jr., Dr. Harry E. Figgie, III
and Joseph J. Skadra.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- -------------
OTHER RESTRICTED ALL OTHER
NAME AND ANNUAL STOCK COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) SATION(4)
- - --------------------------- ---- -------- -------- --------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Harry E. Figgie, Jr. 1993 $755,000 $ 0 $ 118,861 $ 2,539,087 $ 642,547
Chairman and CEO 1992 695,000 663,692 92,758 957,662
1991 635,833 666,045
Vincent A. Chiarucci 1993 371,875 0 1,434,825 116,931
President 1992 331,250 332,050 39,187
1991 277,500 277,180
Dr. Harry E. Figgie, III 1993 379,167 0 1,475,382 22,844
Vice Chairman 1992 329,167 313,362 307,177 12,752
1991 237,500 190,475
L. A. Harthun 1993 219,000 0 277,405 41,667
Sr. Vice President, 1992 207,333 189,856 26,723
General Counsel 1991 199,167 185,982
Joseph J. Skadra 1993 210,000 0 369,873 29,073
Sr. Vice President- 1992 190,003 196,210 17,021 19,182
Finance 1991 166,873 174,355
<FN>
- - ---------
(1) Includes the full amount of the discretionary component of the bonus awarded
with respect to the applicable fiscal year, although only one quarter of
that bonus is paid in the year it is declared and the remaining three
quarters of that bonus are paid in equal installments in each of the three
years after the discretionary bonus is declared if the executive continues
to be employed by the Corporation or if the termination of employment is
due to death, disability or retirement. In cases of termination for any
other reason, the Compensation Committee has sole discretion to determine
whether the remaining bonus installments will be paid.
(2) The amounts indicated represent the incremental cost to the Corporation of
expenses associated with the use of a company car ($46,971 and $34,653, in
1993 and 1992, respectively), aircraft ($19,078 and $26,354, in 1993 and
1992, respectively) and club dues ($39,753 and $31,751, in 1993 and 1992,
respectively), and $13,059 relating to an interest free loan provided to
Mr. Figgie at the time the restrictions on the restricted stock issued
under the 1988 Restricted Stock Purchase Plan for Employees (the "1988
Restricted Stock Plan") were terminated in December 1992.
</TABLE>
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<PAGE> 17
(3) The transfer and pledge restrictions on the restricted shares reflected in
the table with respect to 1993 are scheduled to lapse upon the termination
of the Restricted Stock Plan on July 1, 1998 under the terms of the plan.
The transfer and pledge restrictions on the restricted shares reflected in
the table for years prior to 1993 lapsed upon the termination of the 1988
Restricted Stock by the Board of Directors on December 22, 1992. As of
December 31, 1993, the aggregate number and the value of the shares (less
the purchase price paid by the executive) of restricted stock held by the
executives were as follows: Harry E. Figgie, Jr., 56,450 shares of Class A
Common Stock and 100,000 shares of Class B Common Stock having a market
value (less purchase price) of $2,037,681; Mr. Chiarucci, 91,100 shares of
Class A Common Stock having a market value (less purchase price) of
$1,150,137; Dr. Figgie, 37,024 shares of Class A Common Stock and 54,076
shares of Class B Common Stock having a market value (less purchase price)
of $1,183,935; Mr. Harthun, 17,613 shares of Class A Common Stock having a
market value (less purchase price) of $222,364; Mr. Skadra, 23,484 shares
of Class A Common Stock having a market value (less purchase price) of
$296,485.
(4) (a) Includes the rating payment paid by the Corporation on a split-dollar
insurance policy for the benefit of Mr. Figgie and the discounted value of
the benefit to each of the named executive officers of the premium paid by
the Corporation during 1993 for one or more split-dollar insurance policies
under which the executive receives an interest in the cash surrender value
of the policy at the time when the ownership of the policy is split between
the executive and the Corporation, which then becomes the beneficiary of a
policy on the executive's life with a cash surrender value equivalent to
the Corporation's premium payments. The executive officers paid a portion
of the premium based upon a rate for term life insurance. The amounts
reflected in the table for split-dollar insurance are as follows: Mr.
Figgie -- $119,203; Mr. Chiarucci -- $41,375; Dr. Figgie -- $8,282; Mr.
Harthun -- $14,472; and Mr. Skadra -- $9,742.
(b) Includes the monthly payments made by the Corporation to Mr. Figgie for
1993 in an aggregate amount of $513,562 under the Corporation's Senior
Executive Benefits Program. This program provides retirement and other
benefits prior to retirement in the event that a person remains an employee
of the Corporation after the normal retirement date of age 65 (or in
certain circumstances, age 62).
(c) Includes the allocations for 1993 of equivalent shares of Class A
Common Stock or Class B Common Stock under the Corporation's ESOP, ESOP for
Salaried Employees and Stock Bonus Plan. The dollar values as of December
31, 1993 of the allocations for each of the named executive officers of the
Corporation are as follows: Mr. Figgie -- $11,776; Mr. Chiarucci -- $6,463;
Dr. Figgie -- $6,521; Mr. Harthun -- $8,554; and Mr. Skadra -- $7,185.
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<PAGE> 18
STOCK PERFORMANCE GRAPH
The graph reflects a cumulative 5 year total return on an investment of
$100 on December 31, 1988 in Figgie International Inc. Class A and Class B
Common Stock, the NASDAQ Market Index and a peer group index and assumes
dividend reinvestment through the fiscal year ending December 31, 1993. The
returns of each company in the peer group index are weighted based on market
capitalization.
<TABLE>
<CAPTION>
Measurement Period FIGGIE CLASS NASDAQ MARKET Peer Group FIGGIE CLASS
(Fiscal Year Covered) A INDEX Index B
<S> <C> <C> <C> <C>
1988 100 100 100 100
1989 89.88 112.89 119.85 89.61
1990 58.77 91.57 100.57 60.04
1991 58.55 117.56 104.85 67.74
1992 76.17 118.71 118.20 64.98
1993 63.93 142.40 168.42 53.06
</TABLE>
The peer group is comprised of the companies set forth below, which are
among the companies included on the Fortune 500 Industrial and Farm Equipment
Companies list:
<TABLE>
<S> <C> <C>
AM International, Inc. Dresser Industries, Inc. Outboard Marine Corp.
Applied Materials Inc. Figgie International Inc. Parker Hannifin Corp.
Baker Hughes Incorporated Class A Pentair Inc.
Black and Decker Corp. Great American Management Stewart & Stevenson
Briggs & Stratton Corp. & Investment, Inc. Services, Inc.
Caterpillar Inc. Harnischfeger Industries, Tecumseh Products Co.
Cincinnati Milacron Inc. Inc. Tenneco Inc.
Clark Equipment Co. IMO Industries Inc. Terex Corp.
Cummins Engine Company, Ingersoll-Rand Company The Timken Company
Inc. Kennametal Inc. The Toro Company
Deere & Company NACCO Industries, Inc. Trinova Corporation
Dover Corporation Nortek Inc.
</TABLE>
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<PAGE> 19
APPROVAL OF THE FIGGIE INTERNATIONAL, INC.
KEY EMPLOYEES' STOCK OPTION PLAN
The following is a brief description of the material features of the Figgie
International Inc. Key Employees' Stock Option Plan. Such description is
qualified in its entirety by reference to such plan, a copy of which is attached
hereto as Exhibit A.
On August 17, 1994, the Board of Directors approved, subject to stockholder
approval, the Figgie International Inc. Key Employees' Stock Option Plan (the
"Plan"), providing for the granting to selected key employees of the Corporation
and its subsidiaries of options to purchase not more than 1,500,000 shares of
Class A Common Stock of the Corporation. The Plan, which would be effective
October 20, 1994, provides for the issuance to key employees of nonqualified
stock options and "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code (the "Code"). The Plan also provides for the granting
of stock appreciation rights that give the employee the right to elect a payment
equal to the appreciation of the stock value over the option price. The Plan is
intended to provide increased flexibility with respect to the terms and
conditions of stock awards to executives and other key employees.
PURPOSE OF THE PLAN
The Board of Directors adopted the Plan because it believes that stock
options are a competitively appropriate component of total compensation and that
the Plan would promote the interests of the Corporation by providing additional
incentives which will enhance the Corporation's ability to attract and retain
key employees and align employees' economic interests with those of the
Corporation's stockholders. If the Plan is approved by the stockholders, the
Board of Directors expects that options to purchase Common Stock will be issued
to key employees under the terms of the Plan taking into account any restricted
stock which the key employees hold under the Corporation's Restricted Stock
Plan. For new key employees, it is expected that stock options will become the
primary equity incentive compensation program of the Corporation with grants of
restricted stock under the Restricted Stock Plan being used sparingly.
ADMINISTRATION OF THE PLAN
The Plan provides that the committee that administers the Plan must be
composed of no fewer than two members of the Board of Directors of the
Corporation who will be designated by the Board of Directors. Each member of the
committee must be a "disinterested person" within the meaning of Rule 16b-3
promulgated under the Exchange Act or any amendment of or successor to such Rule
as may be in effect from time to time. If adopted, the Plan would be
administered by the Stock Option Committee of the Board of Directors of the
Corporation (the "Committee").
The Committee would be authorized: (i) to select the key employees to whom
options would be granted, (ii) to determine the number of shares of Class A
Common Stock which would be subject to any option, (iii) to determine the time
or times when options would be granted, (iv) to determine the option price of
Common Stock subject to an option, (v) to determine the times when each option
would become exercisable, (vi) to determine at the time of the granting of an
option under the Plan whether and to what extent such option would be an
incentive stock option entitled to the benefits of Section 422 of the Code,
(vii) to determine whether stock appreciation rights would be made part of any
option grant, the method of valuing the stock appreciation rights and whether
the stock appreciation rights would be exercisable in lieu of or in addition to
the related option, (viii) to prescribe the form of the
17
<PAGE> 20
option agreements to be entered into under the Plan, (ix) to adopt, amend and
rescind such rules and regulations as, in the Committee's opinion, would be
advisable in the administration of the Plan, and (x) to construe and interpret
the Plan, the rules and regulations and the instruments evidencing options
granted under the Plan and to make all other determinations deemed necessary or
advisable for the administration of the Plan.
EMPLOYEES ELIGIBLE FOR OPTIONS
The Plan provides that options may be granted from time to time in the
discretion of the Committee only to such key employees of the Corporation or of
a subsidiary corporation of the Corporation whose initiative and efforts
contribute or may be expected to contribute to the Corporation's growth and
future success, including key employees who may also be members of the Board of
Directors. A key employee is defined by the Plan as any person determined by the
Committee to be a high level executive officer or other valuable managerial or
technical employee of the Corporation or a subsidiary of the Corporation.
Approximately 75 employees may be considered to meet the definition of key
employee. Members of the Committee shall not be eligible to participate in the
Plan, or to receive options under it, while serving on the Committee or for the
year prior to serving on the Committee. A key employee who renounces in writing
any right to receive options under the Plan will not be eligible to receive any
options under the Plan. The Committee may grant more than one option, with or
without stock appreciation rights, to the same employee. No option may be
granted to any employee during any period of time when he or she is on leave of
absence.
SHARES SUBJECT TO THE PLAN
The aggregate number of shares of Class A Common Stock for which options
may be granted under the Plan is 1,500,000. Either treasury or authorized and
unissued shares, or both, in such amount or amounts, within the maximum limits
of the Plan, as the Board of Directors shall from time to time determine, may be
so issued. All shares of Common Stock which are the subject of any lapsed,
expired or terminated options may be made available for reoffering under the
Plan to any eligible employee. In the event a stock appreciation right is
granted, the exercise of which is in lieu of exercise of an option, and such
stock appreciation right is thereafter exercised in whole or in part, then such
option or the portion thereof to which the duly exercised stock appreciation
right relates shall be deemed to have been exercised and the shares of Common
Stock which otherwise would have been issued upon exercise of such option, to
the extent not used in payment for the stock appreciation right, may be made
available for reoffering under the Plan.
In the event that subsequent to the date of adoption of the Plan by the
Board of Directors the outstanding shares of Common Stock should be increased or
decreased or changed into or exchanged for a different number or kind of shares
of capital stock of the Corporation or of another corporation, appropriate
adjustments reflecting such changes will be made with respect to both the number
of shares for which options may be granted in the future and the number and the
exercise price for shares already subject to existing options.
18
<PAGE> 21
GRANT OF OPTIONS
As of the date hereof, no options have been granted pursuant to the Plan,
subject to the receipt of stockholder approval, and no decisions have been made
as to the bases upon which stock option grants will be made.
OPTION PROVISIONS
Option Price. The option price per share of Common Stock which is the
subject of an incentive stock option under the Plan will be determined by the
Committee at the time of grant but shall not be less than 100% of the fair
market value of a share of Common Stock on the date such an option is granted.
If the employee to whom an incentive stock option is granted, however, is at the
time of the grant of the option an owner of more than 10% of the total combined
voting power of all classes of the stock of the Corporation (a "Ten Percent
Stockholder"), the option price per share will not be less than 110% of the fair
market value of a share of Common Stock on the date an option is granted. The
option price per share under each option granted pursuant to the Plan which is
not an incentive stock option will be determined by the Committee at the time of
grant and may be above or below the fair market value of the Corporation's
Common Stock on the date such option is granted.
Period of Option. The Committee determines when each option is to expire
but no option may be exercisable for a period of more than ten years from the
date upon which the option is granted. No incentive stock option, however,
granted to an employee who is a Ten Percent Stockholder at the time of the grant
of the option may be exercisable after the expiration of five years from the
date of grant of the option.
Limitations on Exercise and Transfer of Options. Only the key employee to
whom the option is granted may exercise the option except where a guardian or
other legal representative has been duly appointed for the employee and except
as otherwise provided in the case of the employee's death. No option is
transferable otherwise than by the Last Will and Testament of the employee to
whom it is granted or, if the employee dies intestate, by the applicable laws of
descent and distribution. No option may be pledged or hypothecated, nor may any
option be subject to execution, attachment or similar process.
Conditions Governing Exercise of Option. The Committee may, in its absolute
discretion, either require that, prior to the exercise of any option, the
optionee must have been an employee for a specified period after the date of
such option, or make any option immediately exercisable. Each option is subject
to such additional restrictions or conditions with respect to the right to
exercise and the time and method of exercise as the Committee may prescribe.
Upon satisfaction of any such conditions, the option may be exercised in whole
or in part at any time during the option period, but this right of exercise
shall be limited to whole shares, unless the Committee determines otherwise.
Options are exercisable by the optionee giving written notice to the Corporation
of the optionee's exercise of the option accompanied by full payment of the
purchase price either in cash or, with the consent of the Committee, in whole or
in part in shares of Common Stock having a fair market value on the date the
option is exercised equal to that portion of the purchase price for which
payment in cash is not made. A dissolution or liquidation of the Corporation or,
unless the surviving corporation assumes said options, a merger or consolidation
in which the Corporation is not the surviving corporation, will cause each
outstanding option to terminate, although each optionee will have the right
during the period prescribed in the option agreement prior to such dissolution
or liquidation, or merger or consolidation in which the Corporation is not the
surviving corporation, to exercise his option in whole or in part.
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<PAGE> 22
Notwithstanding anything in the Plan to the contrary, in the event of a
"change in control" the Committee has the authority and power: (i) to cause all
outstanding options to be immediately exercisable notwithstanding any vesting
limitation otherwise previously imposed on such options; and (ii) to accelerate
the termination date of all such options. Thereafter, upon such determination,
an optionee may exercise any and all outstanding options (in whole or in part),
whether or not such options are by their terms fully exercisable at such time)
and the Committee may authorize the acceptance of the surrender of the right to
exercise such option or any portion thereof, but in no event after the
expiration of the term of the option. For purposes of the Plan, the term "change
in control" is defined to include, without limitation, the occurrence of the
following events: (i) the first purchase of shares pursuant to a tender offer or
exchange (other than a tender offer or exchange by the Corporation) for all or
part of the Corporation's Common Stock of any class or any securities
convertible into such Common Stock; (ii) the receipt by the Corporation of a
Schedule 13D or other advice indicating that a person is the "beneficial owner"
(as that term is defined in Rule 13d-3 under the Securities Exchange Act of
1934) of twenty percent (20%) or more of the Corporation's Common Stock
calculated as provided in paragraph (d) of said Rule 13d-3; (iii) the date of
approval by stockholders of the Corporation of an agreement providing for any
consolidation or merger of the Corporation in which the Corporation will not be
the continuing or surviving corporation or pursuant to which shares of capital
stock, of any class or any securities convertible into such capital stock, of
the Corporation would be converted into cash, securities, or other property,
other than a merger of the Corporation in which the holders of Common Stock of
all classes of the Corporation immediately prior to the merger would have the
same proportion of ownership of common stock of the surviving corporation
immediately after the merger; (iv) the date of the approval by stockholders of
the Corporation of any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially all the
assets of the Corporation; (v) the adoption of any plan or proposal for the
liquidation (but not a partial liquidation) or dissolution of the Corporation;
or (vi) such other event as the Committee shall, in its sole and absolute
discretion, deem to be a "change in control."
Termination of Employment. If an optionee ceases to be an employee of the
Corporation or any of its subsidiaries, the optionee shall be able to exercise
an option during the following periods (but not beyond the original term of the
option): (i) three months after the date the optionee ceased to be an employee
if the reason for the optionee's cessation as an employee was other than his
death or his disability; or (ii) one year after the date the optionee ceased to
be an employee if the reason for the optionee's cessation as an employee was his
disability. If an optionee should die prior to the expiration of an option, the
optionee's estate, or the person designated in his Last Will and Testament, or
the person to whom the option is transferred by the applicable laws of descent
and distribution shall be able to exercise the option during the one year period
after the date the optionee ceased to be an employee if either (A) the optionee
died while he was an employee of the Corporation or (B) either the optionee died
within twelve months of becoming disabled or the optionee died within three
months after ceasing to be an employee of the Corporation or any of its
subsidiaries.
Notwithstanding the foregoing, the Committee may in its discretion provide
in the option for shorter periods in which the option can be exercised after the
optionee's cessation as an employee or provide that the option shall not be
exercisable at all after the optionee's cessation as an employee of the
Corporation or any of its subsidiaries.
An optionee's employment shall not be deemed to have terminated while he is
on a military, sick or other bona fide approved leave of absence from the
Corporation or a subsidiary as such leave of absence
20
<PAGE> 23
is described in Section 1.421-7(h) of the Federal Income Tax Regulations or any
lawful successor regulations thereto.
Prohibition of Alternative Options. It is intended that key employees may
be granted, simultaneously or from time to time, "incentive stock options" under
Section 422 of the Code, or other stock options, but no key employees shall be
granted alternative rights in incentive stock options and other stock options so
as to prevent options granted as incentive stock options under the Plan from
qualifying as such within the meaning of Section 422 of the Code.
STOCK APPRECIATION RIGHTS
The Committee may provide, at the time of the grant of a stock option and
upon such terms and conditions as it deems appropriate, that an optionee may
have the right with respect to all or a portion of the option granted to him to
elect in lieu of exercising such option to surrender such option in exchange for
the consideration described below. Alternatively, the Committee may provide, at
the time of the grant of a stock option and upon such terms and conditions as it
deems appropriate, that an optionee may have the right with respect to all or a
portion of the option granted to him to receive the consideration set forth
below upon exercising such option in addition to any shares of Common Stock
purchased upon exercise thereof. Stock appreciation rights must be specifically
granted by the Committee; however, the Committee will have no authority to grant
stock appreciation rights except in connection with the grant of a stock option
pursuant to the Plan, and no optionee shall be entitled to such rights solely as
a result of the grant of an option to him. Stock appreciation rights, if
granted, may be exercised either with respect to all or a portion of the option
to which they relate. Stock appreciation rights are not transferrable separate
from the option with respect to which they were granted and are subject to all
of the restrictions on transfer applicable to such option. Stock appreciation
rights are exercisable only at such times and by such persons as are specified
in the option agreement governing the stock option with respect to which the
stock appreciation rights were granted. A stock appreciation right will provide
that an optionee will have the right to receive a percentage, not greater than
100%, of the excess over the option price, if any, of the fair market value of
the shares of Common Stock covered by the option, as determined by the Committee
as of the date of exercise of the stock appreciation right, in the manner
provided for in the Plan. Such amount will be payable in one or more of the
following manners, as determined by the Committee: (i) in cash; (ii) in shares
of Class A Common Stock having a fair market value equal to such amount; or
(iii) in a combination of cash and shares of Class A Common Stock. If payment is
made in whole or in part in shares of Class A Common Stock, such payment will
reduce the number of shares available for the grant of options under the Plan.
In no event may any optionee exercise any stock appreciation rights granted
under the Plan unless such optionee is then permitted to exercise the option or
the portion thereof with respect to which such stock appreciation rights relate.
If the option agreement with the optionee provides that exercise of the stock
appreciation right is in lieu of exercise of the option, then (i) upon the
exercise of any stock appreciation rights, the option or that portion thereof to
which the stock appreciation rights relate will be cancelled, and (ii) upon the
exercise of the option or that portion thereof to which the stock appreciation
rights relate, the stock appreciation rights will be cancelled, and the option
agreement governing such option will be deemed amended as appropriate without
any further action by the Committee or the optionee. If the option agreement
with the optionee provides that exercise of the stock appreciation right is in
addition to exercise of the option, then (i) upon the exercise of any stock
appreciation rights, the option or that portion thereof to which the stock
appreciation rights relate will be deemed exercised and (ii) upon the exercise
of the option, the stock appreciation rights corresponding thereto will be
deemed
21
<PAGE> 24
exercised to the extent the option is exercised. The terms of any stock
appreciation rights granted under the Plan will be incorporated into the option
agreement which governs the option with respect to which the stock appreciation
rights are granted, and will be such terms (not inconsistent with the Plan) as
the Committee may prescribe. The granting of an option or stock appreciation
right will impose no obligation upon the optionee to exercise such option or
right and the Corporation's obligation to satisfy stock appreciation rights will
not be funded or secured in any manner.
LIMITATIONS ON GRANT OF STOCK OPTIONS.
During the calendar year in which any incentive stock options granted under
the Plan first become exercisable by an optionee, the aggregate fair market
value of the shares of Common Stock which are subject to such incentive stock
options (determined as of the date the incentive stock options were granted) may
not exceed the sum of One Hundred Thousand Dollars ($100,000). Options which are
not designated as incentive stock options will not be subject to the limitation
described in the preceding sentence. In any event, no individual key employee
will be granted options for, or stock appreciation rights with respect to, more
than 750,000 shares of Class A Common Stock in any five-year period.
AMENDMENTS TO THE PLAN
The Committee is authorized to interpret the Plan and from time to time
adopt any rules and regulations for carrying out the Plan that it may deem
advisable. Subject to the approval of the Board of Directors of the Corporation,
the Committee may at any time amend, modify, suspend or terminate the Plan. In
no event, however, without the approval of stockholders, may any action of the
Committee or the Board of Directors result in: (i) amending, modifying or
altering the eligibility requirements; (ii) increasing or decreasing, except as
set forth in "Shares Subject to the Plan" above, the maximum number of shares as
to which options may be granted; (iii) decreasing the minimum option price per
share at which options may be granted under the Plan; (iv) extending either the
maximum period during which an option is exercisable or the date on which the
Plan shall terminate; (v) changing the requirements relating to the Committee;
or (vi) making any other change which would cause any options granted under the
Plan as incentive stock options not to qualify as such options within the
meaning of Section 422 of the Code, except to conform the Plan and the option
agreements to changes in the Code or governing law.
TERMINATION OF THE PLAN
The Plan will terminate on October 19, 2004. All options outstanding at the
time of termination of the Plan will continue in full force and effect according
to their terms and the terms and conditions of the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. With respect to an incentive stock option, the
optionee will realize no income for Federal income tax purposes upon the grant
or exercise of the option, but the difference between the option price and the
fair market value of the shares at the date of issuance of the shares to the
employee (following exercise of the incentive stock option) will constitute an
item of tax preference which may be subject to the alternative minimum tax.
If no disposition of shares acquired through the exercise of incentive
stock options is made by the optionee within one year after the issuance of the
shares to him, or within two years after the grant of the
22
<PAGE> 25
option, any amount realized by the optionee in the event of a sale of his shares
which is in excess of his cost will be taxed as a long-term capital gain. Sixty
percent of the net capital gain realized on the disposition of the shares is an
item of tax preference which may be subject to the alternative minimum tax. The
alternative minimum tax is paid only if it exceeds the regular tax.
The Corporation is entitled to no deduction for Federal income tax
purposes, either in connection with the granting of an incentive stock option or
the issuance of shares upon exercise. If, however, the optionee disposes of his
shares within the one-year or two-year periods mentioned above, he will be
required to include in his income, as compensation, the excess of the fair
market value of the shares at the date of issuance or, in certain cases, if
less, the amount realized on disposition, over the option price, and the
Corporation will be entitled to a business expense deduction in the year of
disposition of the shares equal to any amount which the optionee is required to
treat as compensation income.
Nonqualified Stock Option. With respect to a nonqualified stock option, an
optionee will not realize income upon the granting of such an option; however,
in any year in which an optionee exercises a part or all of such option, the
excess, if any, of the fair market value of the shares at the date of exercise
over the option price will be taxed as compensation at ordinary income tax
rates, and subject to certain limits on compensation over $1,000,000 to certain
executives, the Corporation will be entitled to a tax deduction for the same
amount in the same year. Under Section 162(m) of the Internal Revenue Code, the
Corporation is not entitled to deduct remuneration paid to anyone of the five
(5) highest paid executives in excess of $1,000,000. Under currently applicable
interpretations, the Corporation believes that stock options under the Plan will
not be subject to the $1,000,000 limit as long as the option price was at least
the fair market value on the date of grant and the composition of the Committee
meets certain requirements as to independence which will be contained in
Treasury Regulations which are currently proposed by the Treasury Department.
RECOMMENDATION; REQUIRED VOTE
Approval of the Plan will require the affirmative vote of holders of shares
representing a majority of the number of votes present in person or represented
by proxy at the Annual Meeting, provided a quorum is present.
THE BOARD OF DIRECTORS CONSIDERS THE
FIGGIE INTERNATIONAL INC. KEY EMPLOYEES'
STOCK OPTION PLAN TO BE IN THE BEST INTERESTS
OF THE CORPORATION AND ITS STOCKHOLDERS AND RECOMMENDS
A VOTE FOR APPROVAL OF THE PLAN.
23
<PAGE> 26
NOMINATION AND ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of Directors shall
consist of not less than nine nor more than sixteen members but, within such
limits, the Board of Directors is empowered to increase or decrease the total
number of Directors as well as the number of Directors in each class provided
that each class shall continue to consist of, as nearly as may be, one-third of
the whole number of the Board of Directors. On March 26, 1994, Mr. Russell W.
McFall passed away, and as of July 1, 1994, Mr. Steven Siemborski was elected to
fill the balance of Mr. McFall's term which expires at this Annual Meeting. Mr.
Harry E. Figgie, Jr., and Dr. Harry E. Figgie III resigned from the Board of
Directors on May 18, 1994, and Mr. Rugger, whose term expires at this Annual
meeting, has stated he will not stand for re-election. Rather than filling the
vacancies created by the resignations of Mr. Figgie and Dr. Figgie and the
decision of Mr. Rugger not to stand for re-election, the Board took the
following actions: (i) nominated Mr. A. A. Sommer, Jr. as an additional
candidate to replace Mr. Rugger in the class of Directors to be elected at this
Annual Meeting; (ii) passed a resolution reducing the total number of Directors
to thirteen effective upon the expiration of Mr. Rugger's term; and (iii)
reduced the number of Directors to be elected at this Annual Meeting and whose
terms will expire at the Annual Meeting in 1997, to four.
The four nominees for election at this Annual Meeting are Walter M. Vannoy,
C. B. Robertson III, A. A. Sommer, Jr. and Steven L. Siemborski, all of whom
have informed the Corporation that they are willing to serve for the term to
which they are nominated if they are elected. If a nominee for Director should
become unavailable for election or is unable to serve as a Director, the shares
represented by proxies voted in favor of that nominee will be voted for any
substitute nominee as may be named by the Board of Directors.
24
<PAGE> 27
The information appearing in the following table and the notes thereto has
been furnished to the Corporation, where appropriate, by the nominees for
Director and the Directors continuing in office with respect to: (i) the present
principal occupation or employment of each respective nominee and continuing
Director and, if such principal occupation or employment has not been carried on
during the past 5 years, the occupation or employment during such period, (ii)
the names and principal businesses of the corporations or other organizations in
which such occupation or employment is carried on and/or has been carried on
during the past 5 years, and (iii) the directorships held by each respective
nominee or continuing Director on the boards of publicly held and certain other
corporations and entities:
NOMINEES FOR ELECTION AS DIRECTORS TO BE
ELECTED FOR A TERM OF THREE YEARS
<TABLE>
<CAPTION>
IF ELECTED,
TERM EXPIRES
SERVED AS AT ANNUAL
NAME AND DIRECTOR MEETING OF
PRINCIPAL OCCUPATION SINCE STOCKHOLDERS IN
- - ---------------------------------------------------------------- ---------- ----------------
<S> <C> <C>
WALTER M. VANNOY, age 66 1981 1997
Chairman of the Board and Chief Executive Officer, Figgie
International Inc.; President, Vannoy Enterprises;
Director, Illinois Power Company; Director, ChemPower,
Inc.; former Vice Chairman, McDermott International Inc.;
former President and Chief Operating Officer, Babcock &
Wilcox.
A.A. SOMMER, JR., age 70 1986 1997
Partner, Morgan, Lewis & Bockius, Washington, D.C., law firm;
Director, Consolidated Natural Gas Co.; Chairman, Public
Oversight Board of the American Institute of Certified
Public Accountants; Member, Board of Governors, National
Association of Securities Dealers.
C.B. ROBERTSON, III, age 59 1986 1997
President, CBR Associates, Inc., real estate development.
STEVEN L. SIEMBORSKI, age 40 1994 1997
Senior Vice President and Chief Financial Officer, Figgie
International Inc., since July 1, 1994; former partner,
Ernst & Young; Certified Public Accountant.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF THE NOMINEES FOR DIRECTOR.
25
<PAGE> 28
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
TERM EXPIRES
SERVED AS AT ANNUAL
NAME AND DIRECTOR MEETING OF
PRINCIPAL OCCUPATION SINCE STOCKHOLDERS IN
- - ---------------------------------------------------------------- ---------- ----------------
<S> <C> <C>
HAROLD B. SCOTT, age 76 1974 1995
Retired; Director, Key Trust N.A.; Chairman of the Board and
Chief Executive Officer, Harold B. Scott, Inc.; former
Chairman of the Board, Syracuse Supply Co.; former Chairman of
the Board, Givaudan Corp.; former President and Chief
Executive Officer, U.S.-U.S.S.R. Trade and Economic Council,
Inc.; former Assistant Secretary, U.S. Department of Commerce.
DALE S. COENEN, age 66(1) 1964 1995
President and Director, Coenen & Co., Inc., investments;
Chairman of the Board and President, Trans-Industries, Inc.,
manufacturer of electronic information systems, environmental
systems and mechanical assemblies; Director, The
Clark-Reliance Corporation.
ROBERT A. WEAVER, JR., age 74(1) 1980 1995
Chairman and Chief Executive Officer, Robert A. Weaver, Jr.
and Associates, Inc., consultants in international strategic
planning and corporate growth; Chairman, Weaver Europe, S.A.,
and Weaver International Corp.; Director, Newsteam Video, Inc.
and Boston Parents Paper, Inc.
FRED J. BRINKMAN, age 65 1992 1995
Consultant; former partner, Arthur Andersen & Co., public
accountants, Senior Partner, Asia - Pacific area from 1978 to
1989 and Managing Partner of the firm's Washington, D.C.
office from 1981 to 1987; Director, Washington Gas Light Co.
and Charles E. Smith Residential Realty Inc.
VINCENT A. CHIARUCCI, age 64 1989 1995
President and Chief Operating Officer of Figgie International
Inc.; Group Vice President of Figgie International Inc.'s
Safety Products Distribution Group from 1988 to 1989; Business
Consultant (self-employed) from 1986 to 1988; Director,
Community Mutual Insurance Company.
ALFRED V. GANGNES, age 73 1972 1996
Retired; former President, Figgie International Inc.; former
Director, Evaluation Research Corporation.
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
TERM EXPIRES
SERVED AS AT ANNUAL
NAME AND DIRECTOR MEETING OF
PRINCIPAL OCCUPATION SINCE STOCKHOLDERS IN
- - ---------------------------------------------------------------- ---------- ----------------
<S> <C> <C>
HARRISON NESBIT, II, age 67(1) 1969 1996
Retired; former Chairman and Director, Godine, Nesbit, McCabe
& Co., an insurance brokerage firm; former General Agent,
State of Virginia, Massachusetts Mutual Life Insurance Co.;
Director, St. George Metals, Inc.; Director, O-Three Limited.
F. RUSH McKNIGHT, age 65(1) 1985 1996
Partner, Calfee, Halter & Griswold, Cleveland, Ohio, law firm;
Managing Partner from 1985 to 1991.
JOHN S. LANAHAN, age 72 1985 1996
Consultant; former Senior Vice President-Commercial, Chessie
System Railroads; former President and Managing Director, the
Greenbrier Resort Hotel.
<FN>
- - ---------
(1) See discussion under the caption "CERTAIN TRANSACTIONS."
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
In 1994 the Board of Directors altered its committee structure so that
currently the Board has standing Audit, Real Estate, Finance & Executive,
Nominating, Management Development & Compensation, Stock Option and Strategic
Planning Committees.
The Audit Committee has as its principal assignment the oversight and
review of the internal and external audit functions of the Corporation. The Real
Estate Committee assists the Corporation in the management of its various real
estate undertakings. The Finance & Executive Committee is empowered to act on
behalf of the Board of Directors on an interim basis when Board level action is
required but it is impractical to convene the entire Board and principally
reviews capital budgets, issuances of securities, proposed financings and
acquisitions and dispositions. The Nominating Committee evaluates candidates for
Board membership, recommends to the Board of Directors the number of directors
and candidates to be included in the Annual Proxy materials and recommends
candidates to fill Board vacancies as they arise. The Management Development &
Compensation Committee has overall authority with respect to the compensation,
development and succession of executive personnel. The Operations & Strategic
Planning Committee reviews the business plans and future prospects of the
Corporation's operating units and assists the Board in decision making with
respect to the retention or disposition of existing operations and the shaping
of the Corporation's business structure. The Stock Option Committee is charged
with the administration of the 1993 Restricted Stock Purchase Plan For
Employees, and will administer the 1994 Stock Option Plan should the
stockholders approve such plan.
The Board committees which existed during 1993 held the following numbers
of meetings during that year: Executive & Finance Committee - 6, Audit Committee
- - - 4, Compensation Committee - 2, International Committee - 2, Real Estate
Committee - 1, Insurance Committee - 2, and Stock Option Committee - 1. Not
included in these totals are those instances in which the committees took action
by written unanimous consent.
27
<PAGE> 30
The memberships of the current committees of the Board of Directors are set
forth below.
<TABLE>
<CAPTION>
FINANCE & EXECUTIVE
AUDIT COMMITTEE REAL ESTATE COMMITTEE COMMITTEE
- - ------------------------------------------------------------------------------------------------
<S> <C> <C>
A.A. Sommer, Chairman C.B. Robertson, Chairman F. Brinkman, Chairman
F. Brinkman J. Lanham D. Coenen
F.R. McKnight D. Coenen W. Vannoy
H. Nesbit, II G. Rugger H. Nesbit, II
G. Rugger A.A. Sommer C.B. Robertson
F.R. McKnight S. Siemborski
(ex-officio non-voting)
</TABLE>
<TABLE>
<CAPTION>
MANAGEMENT DEVELOPMENT STRATEGIC
NOMINATING COMMITTEE & COMPENSATION COMMITTEE PLANNING COMMITTEE
- - ------------------------------------------------------------------------------------------------
<S> <C> <C>
F.R. McKnight, Chairman H. Nesbit, II, Chairman H. Scott, Chairman
D. Coenen D. Coenen A. Gangnes
A.A. Sommer F. Brinkman J. Lanahan
C.B. Robertson A. Gangnes W. Vannoy
H. Scott W. Vannoy R. Weaver
V. Chiarucci
S. Siemborski
</TABLE>
STOCK OPTION COMMITTEE
- - ---------------------------------
D. Coenen, Chairman
A.A. Sommer
F. Brinkman
The Board of Directors held 7 meetings during the year ended December 31,
1993. During the year, no Director attended fewer than 75% of the aggregate of
(i) the total number of meetings of the Board of Directors held during the
period he served as a Director and (ii) the total number of meetings held by any
Committee of the Board on which he served except for Mr. Figgie.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Development & Compensation Committee of the Board of
Directors consists of Harrison Nesbit, II, Dale S. Coenen, Walter M. Vannoy,
Alfred V. Gangnes and Fred J. Brinkman. The members of the Compensation
Committee during fiscal year 1993 were Harry E. Figgie, Jr., Dale S. Coenen,
Russell W. McFall and Dr. Harry E. Figgie, III. Until his retirement from the
Corporation on May 18, 1994, Mr. Figgie was the Chairman of the Board of the
Corporation and its Chief Executive Officer and the Chairman of the Board of The
Clark-Reliance Corporation. Dr. Figgie is the President of The Clark-Reliance
Corporation and, during 1993, was Vice Chairman of Technology and Strategic
Planning of the Corporation.
The Stock Option Committee of the Board of Directors currently consists of
Dale S. Coenen, Fred J. Brinkman and A.A. Sommer, Jr. The members of the Stock
Option Committee during fiscal year 1993 were Dale S. Coenen, A. A. Sommer, Jr.
and Russell W. McFall.
On August 25, 1993, the Corporation made a loan to Harry E. Figgie, Jr. to
enable him to acquire restricted shares under the Restricted Stock Plan. The
loan was in the amount of $156,450, was payable on demand and bore an interest
rate equal to the Bank of Boston's prime rate. The full amount of the loan has
been repaid.
28
<PAGE> 31
In December 1992, the Corporation made short term, interest free loans to
Harry E. Figgie and to Dr. Figgie to pay the federal, state and local taxes owed
by them at the time of the lapse of the transfer restrictions on the restricted
shares they acquired under the 1988 Restricted Stock Plan, which was terminated
by the Board of Directors of the Corporation on December 22, 1992. The amount of
the loan made to Harry E. Figgie was $2,443,381 and the loan made to Dr. Figgie
was in the amount of $146,519. Harry E. Figgie and Dr. Figgie repaid their loans
prior to May 5, 1993.
Nancy Figgie, the wife of Harry E. Figgie, Jr., was Vice President of
Facilities Planning of the Corporation until her resignation in February 1994,
and Matthew Figgie, the son of Harry E. Figgie, Jr., was Director of Mergers and
Acquisitions, Currency Trading and Corporate Investments of the Corporation
prior to his resignation in May 1994. In 1993, Mrs. Figgie and Matthew Figgie
collectively earned salaries and bonuses in the amount of $85,540 in their
foregoing capacities.
As of October 30, 1991, the Corporation purchased $1,000,000 of 10%
Convertible Subordinated Debentures due October 30, 2001 issued by
Trans-Industries, Inc. The debentures provide for prepayment without premium of
$142,857 per year commencing in 1995 and the additional optional prepayments at
declining premiums over the same period. The debentures are convertible at any
time at the option of the Corporation into common stock of Trans-Industries at
$2.00 per share. Mr. Coenen is President, Chairman of the Board and a
shareholder of Trans-Industries and Mr. Harry E. Figgie, Jr. is also a
shareholder of Trans-Industries. The common stock of Trans-Industries is
publicly traded in the over-the-counter market. The purchase was approved by the
Board of Directors with Mr. Figgie and Mr. Coenen abstaining.
COMPENSATION OF DIRECTORS
The Directors, except for those who are also employees of the Corporation,
receive an annual stipend of $20,000. In addition, the non-employee members of
the Finance & Executive Committee receive $9,000 per year and members of the
remaining committees other than the Stock Option Committee receive $6,000 per
year. The non-employee Chairmen of the Committees receive an additional $1,000
per year for each chairmanship held except for the Chairman of the Stock Option
Committee.
The Corporation has agreed to pay a death benefit, in the amount of
$200,000 to the estate of each Director, other than a director who is also an
employee, upon his death. This benefit is provided to a Director while in office
and after retirement if he has served 5 years. The benefit is payable from the
general assets of the Corporation and the Corporation has insured this liability
by purchasing life insurance policies on the lives of the eligible Directors.
The Board of Directors and Committee members also receive travel and
lodging expenses in connection with their attendance at Board and Committee
meetings.
RETIREMENT PLANS
RETIREMENT INCOME PLAN II
All of the Executive Officers of the Corporation are currently accruing
retirement income credits under, or will accrue them upon their satisfaction of
the eligibility requirements set forth in, the Salaried Employee Retirement
Income Provisions of the Figgie International Inc. Retirement Income Plan II
(the "Salaried Provisions"), a defined benefit pension plan. The Salaried
Provisions cover the salaried
29
<PAGE> 32
employees of the Corporation except employees of certain non-participating
divisions and subsidiaries. Directors who are not employees are not entitled to
receive retirement benefits under the Retirement Income Plan II.
In general, the Salaried Provisions, as adopted effective July 31, 1993,
provide that salaried employees accrue dollar units of retirement income credits
for each calendar year of participation in the Salaried Provisions on the basis
of their "Annual Pensionable Earnings." To receive full benefits under the
Salaried Provisions, employees must contribute 2% of their "Annual Pensionable
Earnings" over their "Covered Compensation." The following sets forth the
percentage Annual Pensionable Earnings which is accrued as a Retirement Income
Credit under the Salaried Provision:
<TABLE>
<CAPTION>
ANNUAL
PENSIONABLE EARNINGS (1)
----------------------------
0-100% OF OVER 100% OF
COVERED COVERED
COMPENSATION COMPENSATION
(2) (2)
------------ ------------
<S> <C> <C>
Retirement Income Credit 0.7% 1.2%
<FN>
- - ---------
(1) "Annual Pensionable Earnings" includes cash salaries and bonuses received by
the participant but excludes any such earnings in excess of $235,840 for
calendar year 1994 and $150,000 thereafter (plus any increase for
cost-of-living as shall be prescribed by the Secretary of the Treasury
pursuant to Sections 401(a)(17) and 415(d) of the Internal Revenue Code).
(2) "Covered Compensation" means the average of the contributions and benefit
bases in effect under Section 230 of the Social Security Act for each such
calendar year in the 35 calendar years ending immediately prior to each
calendar year. For calendar year 1994, Covered Compensation will equal
$22,716.
</TABLE>
Generally, any salaried employee of the Corporation except employees of
certain nonparticipating divisions and subsidiaries is eligible to participate
in the Salaried Provisions after the earlier of the completion of one year of
service or attainment of age 40. A participant becomes vested in the Salaried
Provisions five years after the participant's hire date. Upon reaching normal
retirement at age 65, each participant is generally entitled to receive an
annual retirement benefit for life equal to the total of the retirement income
credits accrued by him during his period of participation. Such benefit is not
subject to any deduction for Social Security benefits. A reduced annual
retirement income benefit may be payable to a retired employee under other
actuarially equivalent forms of pay-out provided for in the Salaried Provisions.
The Salaried Provisions also contain provisions for early retirement and
preretirement death benefits payable to spouses and dependent children of
certain deceased participants. During 1993, certain employees of the Corporation
and its subsidiaries accrued retirement benefits under separate retirement plans
of the Corporation which cover employees of its divisions or subsidiaries which
are not or were not at the time participating under the Salaried Provisions or
the Prior Plan.
As of December 31, 1993, the annual benefits payable upon retirement under
the Salaried Provisions, including accrued benefits from a prior plan which was
terminated on November 21, 1988 ("Prior Plan"), to the 5 individuals named in
the Summary Compensation Table are stated below. In determining such benefits,
the executives' earnings were estimated through 1994 and were assumed not to
exceed $150,000 after 1994. Covered Compensation ($22,716 for 1994) was assumed
not to increase after 1993, the maximum allowable employer-funded benefit under
the Internal Revenue Code (which is the greater of $115,641 or the accrued
benefit as of December 31, 1982) was assumed to continue to
30
<PAGE> 33
retirement and executives were assumed to continue working until at least age 65
and to be fully vested. Based upon the preceding assumptions, the annual
benefits payable to such persons including benefits payable as a result of
voluntary contributions and the accrued benefits from the Prior Plan are as
follows: Mr. Figgie, $130,590; Dr. Figgie, $12,753; Mr. Chiarucci, $14,740; Mr.
Harthun, $115,087; and Mr. Skadra, $52,493.
SENIOR EXECUTIVE BENEFITS PROGRAM
The following plan table shows the annual benefits upon retirement at age
65 in 1993 for various combinations of compensation and lengths of service which
may be payable under the Corporation's Senior Executive Benefits Program (the
"SEBP") to the Executives named in the Summary Compensation Table. These amounts
are paid in addition to the amounts payable under the Corporation's Salaried
Provisions discussed above.
PENSION PLAN TABLE
Annual Benefit if the executive retires from the Company's Employment at
age 65 with the number of years of credited service shown(1):
<TABLE>
<CAPTION>
REMUNERATION(2) 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- - ------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $16,295 $36,486 $29,594 $22,701 $15,809 $ 8,917
150,000 24,128 48,236 39,844 31,451 23,059 14,667
175,000 34,961 64,486 56,094 47,701 39,309 30,917
200,000 45,795 80,736 72,344 63,951 55,559 47,167
225,000 56,628 96,986 88,594 80,201 71,809 63,417
250,000 67,461 113,236 104,844 96,451 88,059 79,667
300,000 89,128 145,236 137,344 128,951 120,559 112,167
400,000 132,461 210,736 202,344 193,951 185,559 177,167
450,000 154,128 243,236 234,844 226,451 218,059 209,667
500,000 175,795 275,736 267,344 258,951 250,559 242,167
<FN>
- - ---------
(1) Annual benefits are computed on the basis of 100% joint and survivor
benefit. The annual benefits reflected in the table constitute 65% of final
covered remuneration, less assumed social security benefits of $24,087.60
and less assumed amounts of benefits payable under the Salaried Provisions.
The benefits under the Salaried Provisions have been calculated based upon
the assumptions that the amount of Covered Compensation, as defined in the
Salaried Provisions, remains fixed and the amount of Annual Pensionable
Earnings, as defined in the Salaried Provisions, is limited to amounts that
do not exceed $150,000. (See the description of the Salaried Provisions set
forth above.) The annual benefits will be increased by 10% of the final
covered remuneration for a participant in the SEBP as of February 18, 1987
or a person hired prior to February 18, 1987 who completes 20 years of
service. The annual benefits will be reduced by any retirement or deferred
compensation plans of other employers.
(2) Consists of base salary and the installment payments that have been received
by an executive under the discretionary bonus component of the Corporation's
incentive bonus arrangements.
</TABLE>
As of December 31, 1993, the credit years of service for the 5 individuals
named in the Summary Compensation Table are as follows: Harry E. Figgie, Jr., 30
years; Harry E. Figgie, III, 18 years; Vincent A. Chiarucci, 7 years; Luther A.
Harthun, 28 years; and Joseph J. Skadra, 24 years. Harry E. Figgie, Jr.,
31
<PAGE> 34
Harry E. Figgie, III and Joseph J. Skadra are not accruing any additional
benefits under the SEBP since their resignations from the Corporation.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Corporation entered into an employment agreement dated November 18,
1988 (the "Employment Agreement") with Harry E. Figgie, Jr., the former Chairman
of the Board and former Chief Executive Officer of the Corporation. As noted
above, Mr. Figgie resigned from both of his positions on May 18, 1994. The
Employment Agreement, which was in effect during 1993, provided for Mr. Figgie's
employment through December 31, 1995, at an annual base salary of at least
$500,000. Mr. Figgie had the option under certain circumstances of extending his
employment arrangement for an additional 3 years to December 31, 1998. In
addition to his base salary, Mr. Figgie was entitled to receive both a
discretionary bonus, which could not be less than 60% of his base salary for the
fiscal year to which such bonus relates, and a formula-based bonus, and to
participate in other benefit plans provided by the Corporation. Mr. Figgie
acquiesced in the Compensation Committee's decision to not pay any discretionary
bonuses in 1993, including pursuant to the Employment Agreement. Pursuant to the
terms of the Employment Agreement, Mr. Figgie purchased 72,812 shares of Class A
Common Stock and 27,188 shares of Class B Common Stock at a price of $1.00 per
share pursuant to the 1988 Restricted Stock Plan as a sign-on bonus. Those
shares were forfeitable under the terms of the 1988 Restricted Stock Plan until
its termination in December 1992. The Employment Agreement also provided that
the Corporation could terminate the employment of Mr. Figgie for cause or upon
his disability (as defined) and that Mr. Figgie could terminate his employment
for good reason (as defined, including actions by the Corporation resulting in a
diminution of his position, authority, duties or responsibilities). The
Employment Agreement provided that if Mr. Figgie elected to terminate his
employment for good reason or his employment was terminated by the Corporation
other than for cause, he would be entitled to receive an amount equal to (i) his
base salary, discretionary bonus and formula-based bonus for the remaining term
of the employment period, (ii) any unpaid bonuses previously awarded for years
prior to such termination year, (iii) any other benefits provided under the
Corporation's plans, programs and practices, and (iv) those amounts otherwise
payable under his consulting arrangement (see discussion below). Further, the
Employment Agreement provided that in the event Mr. Figgie's employment was
terminated by the Corporation for cause or by Mr. Figgie other than for good
reason, or in the event of his death or disability, Mr. Figgie (or his successor
in interest) would be entitled to receive only his base salary through the date
of termination, any unpaid bonuses previously awarded for years prior to such
termination year and such other benefits through the date of termination as may
be available at such time pursuant to the terms of governing Corporation plans,
programs and practices. The Employment Agreement provided that upon completion
of his term of employment under the Employment Agreement (including any
extension thereof to December 31, 1998), Mr. Figgie would become a consultant to
the Corporation under the terms of the Employment Agreement for an additional
three-year period at 55% of his prior level of compensation. The Corporation is
discussing with Mr. Figgie the resolution of various matters relating to the
Employment Agreement.
The Corporation has entered into a severance agreement dated March 15, 1994
with Dr. Harry E. Figgie, III which provides for the payment of Dr. Figgie's
base salary of $16,667 bi-monthly and the continuation of his health care
benefits for a three-month period. The severance agreement provides that the
three-month period may be extended at the discretion of the Corporation for an
additional three months in the event that Dr. Figgie is unable to secure
alternative employment, and the Corporation determined to extend the period. In
lieu of outplacement services, Dr. Figgie received a cash payment of $25,000.
32
<PAGE> 35
The Corporation has entered into a severance agreement dated March 16, 1994
with Joseph J. Skadra, which provides for the payment of Mr. Skadra's base
salary of $9,166 bi-monthly, the continuation of his health care benefits and
use of a Corporation automobile for a three-month period. The severance
agreement provides that the three-month period may be extended at the discretion
of the Corporation for an additional three months in the event that Mr. Skadra
is unable to secure alternative employment. Although Mr. Skadra was able to
secure alternative employment, the Corporation determined to extend the period
during which Mr. Skadra was receiving his severance payments and benefits
through November 30, 1994. The Corporation also entered into a consulting
agreement dated March 16, 1994 with Mr. Skadra which provides that Mr. Skadra
will receive $1,000 for each day during which he performs services for the
Corporation at the Corporation's request. Mr. Skadra's consulting agreement was
terminated on August 25, 1994, and Mr. Skadra received total remuneration of
$79,500 for services performed for the Corporation pursuant to such agreement.
In May 1989, all corporate officers and corporate level department heads,
other than Mr. Figgie, who reported to the Chief Executive Officer of the
Corporation, entered into severance agreements (the "Severance Agreements") with
the Corporation which become effective in the event of a change of control of
the Corporation (as defined). The Severance Agreements provide compensation in
the event that within 3 years of such change of control the executive is
terminated other than for cause (as defined) or such employment terminates
because the executive's duties, title, compensation, employee benefits or place
of employment are adversely changed. In addition, if the executive terminates
his employment during a period of 30 days following the end of 6 months after a
change of control, the executive is entitled to severance compensation. Upon
termination of employment where severance compensation is payable under the
Severance Agreements, the executive is entitled to receive a payment comprised
of 2 times his highest annual base salary, discretionary bonus and formula-based
bonus awards through the date of his termination of employment, together with
payments relating to the fair market value of any restricted stock forfeited
pursuant to the terms of the related restricted stock purchase plan by such
executive, all amounts payable which had previously been deferred on such
executive's behalf and amounts provided under the Corporation's compensation or
retirement plans to the extent such executive participated in such plan or plans
at the time of such change of control. These payments are subject to reduction
to the extent necessary to keep the aggregate amount of such severance
compensation within the limits imposed by Section 280G of the Internal Revenue
Code.
CERTAIN TRANSACTIONS
Mr. Weaver, a member of the Board of Directors, is president of Robert A.
Weaver, Jr. and Associates, Inc., which has performed consulting services for
the Corporation in the area of acquisitions and dispositions. In 1993, the
Corporation paid to Robert A. Weaver, Jr. and Associates, Inc. $160,410 in
retainers, fees, advances and reimbursed expenses.
Mr. Nesbit, a member of the Board of Directors, was until July 1, 1993 the
Chairman of Godine, Nesbit, McCabe & Co., which has performed insurance
underwriting services for the Corporation in providing the Split-Dollar
Insurance Program for Mr. Figgie and the Split-Dollar Insurance Program for
Executive Officers. In 1993 until Mr. Nesbit's retirement from Godine, Nesbit,
McCabe & Co. on July 1, 1993, the Corporation paid to Massachusetts Mutual Life
Insurance Co. $1,644,558 in insurance premiums for split-dollar insurance
programs for executive officers, of which Mr. Nesbit received insurance
commissions and other payments in the aggregate amount of $33,400.18. In
addition, the Corporation paid Godine, Nesbit, McCabe & Co. $35,727.34 for
Corporate Officers' Life Insurance in 1993.
33
<PAGE> 36
Mr. McKnight, a member of the Board of Directors is a partner in the law
firm of Calfee, Halter & Griswold which performs legal services for the
Corporation. For services rendered during 1993, the Corporation paid Calfee,
Halter & Griswold $1,919,027.
Certain transactions relating to the corporation and Harry E. Figgie, Dr.
Figgie and Mr. Coenen are described under the caption "Compensation Committee
Interlocks and Insider Participation" and are incorporated by reference.
On August 25, 1993, the Corporation made a loan to Joseph J. Skadra to
enable him to acquire restricted shares he acquired under the Restricted Stock
Plan. The loan was in the amount of $23,484, was payable on demand and bore
interest at a rate equal to the Bank of Boston's prime rate. The loan has been
repaid in full.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
On March 7, 1994, a Form 5 "Annual Statement of Changes in Beneficial
Ownership," was filed with the Securities and Exchange Commission by Dean E.
Steel, a former employee of the Corporation, to report sales of shares of the
Corporation's Common Stock after the termination of his employment with the
Corporation but within six months of various changes in his beneficial ownership
of the Corporation's Common Stock as a result of his participation in the
Corporation's Automatic Dividend Reinvestment Plan, Supplementary Retirement
Savings Plan, ESOP, ESOP for Salaried Employees and Stock Bonus Plan, which
transactions were eligible for deferred reporting under Section 16 of the
Exchange Act. The sales should have been reported on timely Form 4s and the Form
5 should have been filed no later than February 14, 1994.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Although the Bylaws of the Corporation do not require the submission of the
selection of independent public accountants to the stockholders for approval,
the Board of Directors considers it desirable that its designation of
independent public accountants be ratified by the stockholders. The firm of
Arthur Andersen & Co., an international firm of public accountants, has audited
the annual financial statements of the Corporation since 1964. The Board of
Directors considers them to be well qualified and will ask the stockholders to
ratify the selection of this firm as independent public accountants for the
Corporation at the Annual Meeting.
Representatives of Arthur Andersen & Co. are expected to be present at the
Annual Meeting and they will have an opportunity to make a statement should they
so desire.
Ratification of the selection of the independent public accountants will
require the affirmative vote of holders of shares representing a majority of the
number of votes present in person or represented by proxy at the Annual Meeting,
provided a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE SELECTION OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
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<PAGE> 37
STOCKHOLDER PROPOSAL REQUIREMENTS
The Corporation intends to schedule its 1995 Annual Meeting on a date
consistent with the dates on which it has held its annual meetings in years
prior to 1994. Accordingly, any stockholder who wishes to submit a proposal for
inclusion in the proxy material to be disseminated by the Corporation in
connection with its 1995 Annual Meeting must do so no later than February 23,
1995. To be eligible for inclusion in the 1995 proxy material, such proposal
must conform to the requirements set forth in Regulation 14A under the
Securities Exchange Act of 1934. In order to be considered at an Annual Meeting,
a stockholder proposal must be presented by the proponents or their
representatives in attendance at the meeting.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those listed in the Notice of Annual Meeting of
Stockholders. However, if other matters properly come before the Meeting, it is
the intention of the persons named in the accompanying proxy to vote in
accordance with their best judgment on such matters insofar as the proxies are
not limited to the contrary.
To the extent that information contained in this Proxy Statement is
peculiarly within the knowledge of persons other than the management of the
Corporation, it has relied on such persons for the accuracy and completeness
thereof.
Upon the receipt of a written request from any stockholder entitled to vote
at the forthcoming Annual Meeting, the Corporation will mail, at no charge to
the stockholder, a copy of the Corporation's annual report on Form 10-K,
including the financial statements and schedules required to be filed with the
SEC pursuant to Rule 13a-1 under the Securities Exchange Act of 1934, for the
Corporation's most recent fiscal year. Requests from beneficial owners of the
Corporation's voting securities must set forth a good faith representation that,
as of the record date for the Annual Meeting, the person making the request was
the beneficial owner of securities entitled to vote at such meeting. Written
requests for such report should be directed to:
Ira Gamm
Manager Corporate Communications and Investor Relations
Figgie International Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
You are urged to sign and return your proxy promptly to make certain your
shares will be voted at the Annual Meeting. For your convenience, a return
envelope is enclosed requiring no additional postage if mailed in the United
States.
By Order of the Board of
Directors
L. A. Harthun
Secretary
Dated: September 22, 1994
35
<PAGE> 38
EXHIBIT A
FIGGIE INTERNATIONAL INC.
KEY EMPLOYEES' STOCK OPTION PLAN
Figgie International Inc. hereby adopts a stock option plan for the benefit
of certain persons and subject to the terms and provisions set forth below.
1. Definitions. The following terms shall have the meanings set forth
below whenever used in this instrument:
(a) The word "Board" shall mean the Board of Directors of the Company.
(b) The word "Code" shall mean the United States Internal Revenue Code
of 1986, as amended, or successor provisions of future United States
revenue laws (Title 26 of the United States Code).
(c) The word "Committee" shall mean the Stock Option Committee of the
Board.
(d) The words "Common Stock" shall mean the Class A Common stock,
$0.10 par value, of the Company.
(e) The word "Company" shall mean Figgie International Inc., a
Delaware corporation, and any successor thereto which shall maintain this
Plan.
(f) The word "Disability" shall mean the Optionee's inability to
engage in substantial gainful activity for the Company by reason of any
medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months, as determined by the
Committee pursuant to written certification of such Disability from a
physician acceptable to the Committee.
(g) The words "Incentive Stock Option" shall mean any option which
qualifies as an Incentive Stock Option under the terms of Section 422 of
the Code.
(h) The words "Key Employee" shall mean any person who is determined
by the Committee to be a high-level executive officer or other valuable
managerial or technical employee of either the Company or any Subsidiary.
(i) The word "Optionee" shall mean any Employee to whom a stock option
has been granted pursuant to this Plan.
(k) The word "Plan" shall mean this instrument, the Figgie
International Inc. Key Employees' Stock Option Plan, as it is originally
adopted and as it may be amended hereafter.
(l) The word "Subsidiary" shall mean any corporation at least 50% of
the common stock of which is owned directly or indirectly by the Company.
(m) The words "Substantial Stockholder" shall mean any Employee who
owns directly and through attribution more than 10% of the total combined
voting power of all classes of stock of either the Company or any
Subsidiary. Ownership shall be determined in accordance with Section 424(d)
of the Code and lawful applicable regulations.
2. Purpose of the Plan. The purpose of the Plan is to provide Key
Employees of the Company and its Subsidiaries with greater incentive to serve
and promote the interests of the Company and its
<PAGE> 39
stockholders. The premise of the Plan is that, if such persons acquire a
proprietary interest in the business of the Company or increase such proprietary
interest as they may already hold, then the incentive of such persons to work
toward the Company's continued success will be commensurately increased.
Accordingly, the Company will, from time to time during the effective period of
the Plan, grant to such Employees as may be selected to participate in the Plan
options to purchase Common Stock on the terms and subject to the conditions set
forth in the Plan. Options may be either Incentive Stock Options or
non-qualified stock options.
3. Effective Date of the Plan. The Plan shall become effective on October
20, 1994, subject to approval of a majority of the votes of holders of Class A
Common Stock and holders of Class B Common Stock present in person or
represented by proxy at a duly constituted meeting of the stockholders of the
Company voting together and not as separate classes. In the event that the
foregoing condition is not satisfied within twelve (12) months after the date
the Plan is adopted, the Plan and any options granted hereunder shall be null
and void. If, however, the Plan is so approved, subject to the provisions of
Section 11, no further stockholder approval shall be required with respect to
the granting of any options pursuant to the Plan.
4. Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall consist of no fewer than two (2) members, who
shall be designated by and be members of the Board. Each member of the Committee
shall be a "disinterested person" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 or any amendment of or successor to
such rule as may be in effect from time to time. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, or acts approved in writing by all of
the members, shall be acts of the Committee. Subject to the terms and conditions
of the Plan, the Committee shall have full and final authority in its absolute
discretion:
(a) To select the Key Employees to whom options will be granted;
(b) To determine the number of shares of Common Stock subject to any
option;
(c) To determine the time or times when options will be granted;
(d) To determine the option price of shares of Common Stock subject to
an option;
(e) To determine the time or times when each option may be exercised
and the duration of the exercise period;
(f) To determine at the time of grant of an option whether and to what
extent such option is an Incentive Stock Option under Section 422 of the
Code and regulations thereunder as the same or any successor statute or
regulations may at the time be in effect;
(g) To determine whether stock appreciation rights shall be made part
of any option grant pursuant to Section 8 hereof, the method of valuing the
stock appreciation rights and whether the stock appreciation rights may be
exercised in lieu of or in addition to the related option;
(h) To prescribe the form of the option agreements governing the
options which are granted under the Plan and to set the provisions of such
option agreements as the Committee may deem necessary or desirable provided
such provisions are not contrary to the terms and conditions of either the
Plan or, where the option is an Incentive Stock Option, Section 422 of the
Code and regulations thereunder as the same or any successor statute or
regulations may at the time be in effect;
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<PAGE> 40
(i) To adopt, amend and rescind such rules and regulations as, in the
Committee's opinion, may be advisable in the administration of the Plan;
and
(j) To construe and interpret the Plan, the rules and regulations and
the instruments evidencing options granted under the Plan and to make all
other determinations deemed necessary or advisable for the administration
of the Plan.
Any decision made or action taken by the Committee in connection with the
administration, interpretation, or implementation of the Plan and of its rules
and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all Optionees under the Plan and upon any person claiming under or
through such an Optionee. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
5. Persons Eligible for Options. Subject to the restrictions herein
contained, options may be granted from time to time in the discretion of the
Committee only to such Key Employees, as designated by the Committee, whose
initiative and efforts contribute or may be expected to contribute to the
continued growth and future success of the Company and/or its subsidiaries.
Notwithstanding the preceding sentence, a Key Employee who renounces in writing
any right he may have to receive stock options under the Plan shall not be
eligible to receive any stock options under the Plan. No option shall be granted
to any Key Employee during any period of time when he is on leave of absence.
The Committee may grant more than one option, with or without stock appreciation
rights, to the same Key Employee.
6. Shares Subject to the Plan. Subject to the provisions of Section 8
concerning payment for stock appreciation rights in shares of Common Stock and
subject to the provisions of the next succeeding paragraph of this Section 6,
the aggregate number of shares of Common Stock for which options may be granted
under the Plan shall be 1,500,000 shares of Common Stock. Either treasury or
authorized and unissued shares of Common Stock, or both, in such amounts, within
the maximum limits of the Plan, as the Committee shall from time to time
determine, may be so issued. All shares of Common Stock which are the subject of
any lapsed, expired or terminated options may be made available for reoffering
under the Plan to any Key Employee. If an option granted under this Plan is
exercised pursuant to the terms and conditions determined by the Committee under
Subsection 7(d), any shares of Common Stock which are the subject thereof shall
not thereafter be available for reoffering under the Plan to any Employee. If a
stock appreciation right granted in conjunction with an option pursuant to
Section 8 can only be exercised in lieu of exercise of the related option, and
the stock appreciation right is thereafter exercised in whole or in part, then
the option or the portion thereof with respect to which the stock appreciation
right was exercised shall be deemed to have been exercised and the shares of
Common Stock which otherwise would have been issued upon exercise of such
option, to the extent not used in payment for the stock appreciation right, may
be made available for reoffering under the Plan to any Key Employee, except as
provided in Subsection 7(f).
In the event that subsequent to the date of adoption of the Plan by the
Board the outstanding shares of Common Stock are, as a result of a stock split,
stock dividend, combination or exchange of shares, exchange for other
securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization, spin-off, split-off, split-up or other such
change (including, without limitation, any transaction described in Section
424(a) of the Code) or a special dividend or other distribution to the Company's
stockholders, increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company,
then (i) there shall automatically be
3
<PAGE> 41
substituted for each share of Common Stock subject to an unexercised option
granted under the Plan and each share of Common Stock available for additional
grants of options under the Plan the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be exchanged,
(ii) the option price per share of Common Stock or unit of securities shall be
increased or decreased proportionately so that the aggregate purchase price for
the securities subject to the option shall remain the same as immediately prior
to such event, and (iii) the Committee shall make such other adjustments to the
securities subject to options, the provisions of the Plan, and option agreements
as may be appropriate or equitable, in order to prevent dilution or enlargement
of option rights and in compliance with the provisions of Section 424(a) of the
Code to the extent applicable and any such adjustment shall be final, binding
and conclusive as to each Optionee. Any such adjustment may, in the discretion
of the Committee, provide for the elimination of fractional shares.
7. Option Provisions.
(a) Option Price. The option price per share of Common Stock which is
the subject of an Incentive Stock Option under the Plan shall be determined
by the Committee at the time of grant but shall not be less than one
hundred percent (100%) of the fair market value of a share of Common Stock
on the date the Incentive Stock Option is granted; provided, however, that
if an Employee to whom an Incentive Stock Option is granted is at the time
of the grant a Substantial Stockholder, the option price per share of
Common Stock shall be determined by the Committee but shall never be less
than one hundred ten percent (110%) of the fair market value of a share of
Common Stock on the date the option is granted. The option price per share
of Common Stock under each option granted pursuant to the Plan which is not
an Incentive Stock Option shall be determined by the Committee at the time
of grant, and may be above or below the fair market value of a share of
Common Stock on the date the option is granted. Such fair market value
shall be determined in accordance with procedures to be established by the
Committee. The date on which the Committee approves the granting of an
option shall be deemed for all purposes hereunder the date on which the
option is granted.
(b) Period of Option. The Committee shall determine when each option
is to expire but no option shall be exercisable after ten (10) years have
elapsed from the date upon which the option is granted; provided, however,
that no Incentive Stock Option granted to a person who is a Substantial
Stockholder at the time of the grant of such option shall be exercisable
after five (5) years have elapsed from the date upon which the option is
granted. Each option shall be subject to earlier termination as provided in
Subsection 7(e) hereunder.
(c) Limitation on Exercise and Transfer of Option. Except as
otherwise provided in the event of an Optionee's death, only the Optionee
may exercise an option, provided that a guardian or other legal
representative who has been duly appointed for such Optionee may exercise
an option on behalf of the Optionee. No option granted hereunder shall be
transferable other than (i) by the Last Will and Testament of the Optionee
or, if the Optionee dies intestate, by the applicable laws of descent and
distribution, or (ii) to the extent approved by the Committee, pursuant to
a qualified domestic relations order as defined by the Code or the rules
thereunder. No option granted hereunder may be pledged or hypothecated, nor
shall any such option be subject to execution, attachment or similar
process.
(d) Conditions Governing Exercise of Option. The Committee may, in
its absolute discretion, either require that, prior to the exercise of any
option granted hereunder, the Optionee shall have been an employee for a
specified period of time after the date such option was granted, or make
any
4
<PAGE> 42
option granted hereunder immediately exercisable. Each option shall be
subject to such additional restrictions or conditions with respect to the
right to exercise and the time and method of exercise as shall be
prescribed by the Committee. Upon satisfaction of any such conditions, the
option may be exercised in whole or in part at any time during the option
period, but this right of exercise shall be limited to whole shares, unless
the Committee shall otherwise provide. Options shall be exercised by the
Optionee giving written notice to the Secretary of the Company at its
principal office, by certified mail, return receipt requested, of the
Optionee's exercise of the option and the number of shares with respect to
which the option is being exercised, accompanied by full payment of the
purchase price either in cash or, with the consent of the Committee, in
whole or in part in shares of Common Stock having a fair market value on
the date the option is exercised equal to that portion of the purchase
price for which payment in cash is not made. Such notice shall be deemed
delivered when deposited in the mails. Notwithstanding anything in the
foregoing to the contrary, in the event of a "change in control" the
Committee shall have the authority and power: (i) to cause all outstanding
options to be immediately exercisable notwithstanding any vesting
limitation otherwise previously imposed on such options; and (ii) to
accelerate the termination date of all such options. Thereafter, upon the
exercise of the power in subparagraph (i) above, an Optionee may exercise
any and all outstanding options (in whole or in part), whether or not such
options are by their terms fully exercisable at such time). The term
"change in control" shall include, but not be limited to: (i) the first
purchase of shares pursuant to a tender offer or exchange (other than a
tender offer or exchange by the Company) for ten percent (10%) or more of
the Company's common stock of any class or any securities convertible into
such common stock; (ii) the receipt by the Company of a Schedule 13D or
other advice indicating that a person is the "beneficial owner" (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
twenty percent (20%) or more of the Company's Common Stock calculated as
provided in paragraph (d) of said Rule 13d-3; (iii) the date of approval by
stockholders of the Company of an agreement providing for any consolidation
or merger of the Company in which the Company will not be the continuing or
surviving corporation or pursuant to which shares of capital stock, of any
class or any securities convertible into such capital stock, of the Company
would be converted into cash, securities, or other property, other than a
merger of the Company in which the holders of common stock of all classes
of the Company immediately prior to the merger would have the same
proportion of ownership of common stock of the surviving corporation
immediately after the merger; (iv) the date of the approval by stockholders
of the Company of any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially
all the assets of the Company; (v) the adoption of any plan or proposal for
the liquidation (but not a partial liquidation) or dissolution of the
Company; or (vi) such other event as the Committee shall, in its sole and
absolute discretion, deem to be a "change in control." The manner of
application and interpretation of the foregoing provisions shall be
determined by the Committee in its sole and absolute discretion.
(e) Termination of Employment, Etc. If an Optionee ceases to be an
employee of the Company or any of its Subsidiaries, his or her Option shall
be exercisable as follows:
(i) the Optionee shall be able to exercise an option during the
three (3) months after the date the Optionee ceased to be an employee of
the Company or any of its Subsidiaries (but not beyond the original term
of the option) if the reason for the Optionee's cessation as an employee
was other than his death or his Disability; or
5
<PAGE> 43
(ii) the Optionee shall be able to exercise an option during the
one (1) year after the date the Optionee ceased to be an employee of the
Company or any of its Subsidiaries (but not beyond the original term of
the option) if the reason for the Optionee's cessation as an employee
was the Optionee's Disability; or
(iii) the Optionee's estate, or the person designated in the
Optionee's Last Will and Testament, or the person to whom the option was
transferred by the applicable laws of descent and distribution shall be
able to exercise an Option during the one (1) year after the date the
Optionee ceased to be an employee of the Company or any of its
Subsidiaries (but not beyond the original term of the option) if either
(A) the reason for the Optionee's cessation as an employee was his death
or (B) the Optionee died within three (3) months after ceasing to be an
employee of the Company or any of its Subsidiaries.
Notwithstanding the foregoing to the contrary, the Committee may in its
discretion provide in the option for shorter periods in which the Option can be
exercised after the Optionee's cessation as an employee or provide that the
Option shall not be exercisable at all after the Optionee's cessation as an
employee of the Company or any of its Subsidiaries.
An Optionee's employment shall not be deemed to have terminated while he or
she is on a temporary military, sick or other bona fide leave of absence from
the Company or a Subsidiary approved in writing by the Company, such as a leave
of absence as is described in Section 1.421-7(h) of the Federal Income Tax
Regulations or any lawful successor regulations thereto; provided, however, that
the Committee may impose such terms and conditions with respect to such leaves
as it deems proper as are consistent with such regulations.
(f) Limitations on Grant of Stock Options. During the calendar year in
which any Incentive Stock Options granted by the Company or any Subsidiary
first become exercisable by any Optionee, the aggregate fair market value
of the shares of Common Stock which are subject to such Incentive Stock
Options (determined as of the date the Incentive Stock Options were
granted) shall not exceed the sum of One Hundred Thousand Dollars
($100,000.00). Options which are not designated as Incentive Stock Options
shall not be subject to the limitation described in the preceding sentence
but are subject to a separate limitation so that the number of shares with
respect to which Options may be granted to an Optionee in any five-year
period will not exceed 750,000.
(g) Prohibition of Alternative Options. It is intended that Employees
may be granted, simultaneously or from time to time, Incentive Stock
Options or other stock options, but no Employees shall be granted
alternative rights in Incentive Stock Options and other stock options so as
to prevent options granted as Incentive Stock Options under the Plan from
qualifying as such within the meaning of Section 422 of the Code.
(h) Waiver by Committee of Conditions Governing Exercise of Option.
The Committee may, in its discretion, waive any restrictions or conditions
set forth in an option agreement concerning an Optionee's right to exercise
any option and/or the time and method of exercise.
8. Stock Appreciation Rights. The Committee may provide, at the time of the
grant of a stock option and upon such terms and conditions as it deems
appropriate, that an Optionee shall have the right with respect to all or a
portion of the options granted to him to elect to surrender such options in
exchange for the consideration set forth in this Section 8 in lieu of exercising
such options. Alternatively, the Committee may provide, at the time of the grant
of a stock option and upon such terms and conditions as it deems appropriate,
that an Optionee shall have the right with respect to all or a portion
6
<PAGE> 44
of the options granted to him to receive the consideration set forth in this
Section 8 upon exercising such options in addition to any Common Shares
purchased upon exercise thereof. Stock appreciation rights must be specifically
granted by the Committee; provided, however, the Committee shall have no
authority to grant stock appreciation rights except in connection with the grant
of a stock option pursuant to the Plan, and no Optionee shall be entitled to
such rights solely as a result of the grant of an option to him. Stock
appreciation rights, if granted, may be exercised either with respect to all or
a portion of the option to which they relate. Stock appreciation rights shall
not be transferable separate from the option with respect to which they were
granted and shall be subject to all of the restrictions on transfer applicable
to the said options. Stock appreciation rights shall be exercisable only at such
times and by such persons as are specified in the option agreement governing the
stock option with respect to which the stock appreciation rights were granted. A
stock appreciation right shall provide that an Optionee shall have the right to
receive a percentage, not greater than One Hundred Percent (100%), of the excess
over the option price, if any, of the fair market value of the shares of Common
Stock covered by the option, as determined by the Committee as of the date of
exercise of the stock appreciation right, in the manner provided for herein.
Such amount shall be payable in one or more of the following manners, as shall
be determined by the Committee;
(a) in cash;
(b) in shares of Common Stock having a fair market value equal to such
amount; or
(c) in a combination of cash and Common Stock.
If payment is made in whole or in part in shares of Common Stock, such payment
shall thereby reduce the number of shares available for the grant of options
under this Plan.
In no event may any Optionee exercise any stock appreciation rights granted
hereunder unless such Optionee is then permitted to exercise the option or the
portion thereof with respect to which such stock appreciation rights relate. If
the option agreement with the Optionee provides that exercise of the stock
appreciation right shall be in lieu of exercise of the option, then (i) upon the
exercise of any stock appreciation rights, the option or that portion thereof to
which the stock appreciation rights relate shall be cancelled, and (ii) upon the
exercise of the option or that portion thereof to which the stock appreciation
rights relate, the stock appreciation rights shall be cancelled, and the option
agreement governing such option shall be deemed amended as appropriate without
any further action by the Committee or the Optionee. If the option agreement
with the Optionee provides that exercise of the stock appreciation right shall
be in addition to exercise of the option, then (i) upon the exercise of any
stock appreciation rights, the option or that portion thereof to which the stock
appreciation rights relate shall be deemed exercised and (ii) upon the exercise
of the option, the stock appreciation rights corresponding thereto shall be
deemed exercised to the extent the option is exercised. The terms of any stock
appreciation rights granted hereunder shall be incorporated into the option
agreement which governs the option with respect to which the stock appreciation
rights are granted, and shall be such terms as the Committee shall prescribe
which are not inconsistent with this Plan. The granting of an option or stock
appreciation right shall impose no obligation upon the Optionee to exercise such
option or right. The Company's obligation to satisfy stock appreciation rights
shall not be funded or secured in any manner.
7
<PAGE> 45
9. Investment Representation, Approvals and Listing. The Committee may
condition its grant of any option hereunder upon receipt of an investment
representation from the Optionee which shall be substantially similar to the
following:
"Optionee agrees that any shares of Class A Common Stock of Figgie
International Inc. which Optionee may acquire by virtue of the exercise of
this option shall be acquired for investment purposes only and not with a
view to distribution or resale; provided, however, that this restriction
shall become inoperative in the event the shares of Class A Common Stock of
Figgie International Inc. which are subject to this option shall be
registered under the Securities Act of 1933, as amended, or in the event
Figgie International Inc. is otherwise satisfied that the offer or sale of
the shares of Class A Common Stock which are subject to this option may
lawfully be made without registration under the Securities Act of 1933, as
amended."
The Company shall not be required to issue any certificates for shares of Common
Stock upon the exercise of an option or a stock appreciation right granted under
the Plan prior to (i) obtaining any approval from any governmental agency which
the Committee shall, in its sole discretion, determine to be necessary or
advisable, (ii) the admission of such shares of Common Stock to listing on any
national securities exchange on which the shares of Common Stock may be listed,
(iii) completion of any registration or other qualification of the shares of
Common Stock under any state or federal law or ruling or regulations of any
governmental body which the Committee shall, in its sole discretion, determine
to be necessary or advisable, or the determination by the Committee, in its sole
discretion, that any registration or other qualification of the shares of Common
Stock is not necessary or advisable, and (iv) obtaining an investment
representation from the Optionee in the form set forth above or in such other
form as the Committee, in its sole discretion, shall determine to be adequate.
10. General Provisions.
(a) Option Agreements Need Not Be Identical. The form and substance of
option agreements and grants of stock appreciation rights, whether granted
at the same or different times, need not be identical.
(b) No Right To Be Employed, Etc. Nothing in the Plan or in any option
agreement shall confer upon any Optionee any right to continue in the
employ of the Company or a Subsidiary, or to serve as a member of the
Board, or to be entitled to receive any remuneration or benefits not set
forth in the Plan or such option agreement, or to interfere with or limit
either the right of the Company or a Subsidiary to terminate his or her
employment at any time or the right of the stockholders of the Company to
remove him or her as a member of the Board with or without cause.
(c) Optionee Does Not Have Rights Of Stockholder. Nothing contained in
the Plan or in any option agreement shall be construed as entitling any
Optionee to any rights of a stockholder as a result of the grant of an
option until such time as shares of Common Stock are actually issued to
such Optionee pursuant to the exercise of an option or stock appreciation
right.
(d) Successors In Interest. The Plan shall be binding upon the
successors and assigns of the Company.
(e) No Liability Upon Distribution Of Shares. The liability of the
Company under the Plan and any distribution of Common Stock made hereunder
is limited to the obligations set forth herein with respect to such
distribution and no term or provision of the Plan shall be construed to
impose
8
<PAGE> 46
any liability on the Company or the Committee in favor of any person with
respect to any loss, cost or expense which the person may incur in
connection with or arising out of any transaction in connection with the
Plan, including, but not limited to, any liability to any Federal, state,
or local tax authority and/or any securities regulatory authority.
(f) Taxes. Appropriate provisions shall be made for all taxes required
to be withheld and/or paid in connection with the options or the exercise
thereof, and the transfer of shares of Common Stock pursuant thereto, under
the applicable laws or other regulations of any governmental authority,
whether Federal, state or local and whether domestic or foreign.
(g) Use Of Proceeds. The cash proceeds received by the Company from
the issuance of shares of Common Stock pursuant to the Plan will be used
for general corporate purposes, or in such other manner as the Board of
Directors deems appropriate.
(h) Expenses. The expenses of administering the Plan shall be borne by
the Company.
(i) Captions. The captions and section numbers appearing in the Plan
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of the Plan.
(j) Number. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the
context may require.
(k) Gender. The use of the feminine, masculine or neuter pronoun shall
not be restrictive as to gender and shall be interpreted in all cases as
the context may require.
11. Amendments to the Plan. The Committee is authorized to interpret the
Plan and from time to time adopt any rules and regulations for carrying out the
Plan that it may deem advisable. Subject to the approval of the Board, the
Committee may at any time amend, modify, suspend or terminate the Plan. In no
event, however, without the approval of the Company's stockholders, shall any
action of the Committee or the Board result in:
(a) Amending, modifying or altering the eligibility requirements
provided in Section 5 hereof;
(b) Increasing or decreasing, except as provided in Section 6 hereof,
the maximum number of shares for which options may be granted;
(c) Decreasing the minimum option price per share at which options may
be granted under the Plan, as provided in Section 7(a) hereof;
(d) Extending either the maximum period during which an option is
exercisable as provided in Section 7(b) hereof or the date on which the
Plan shall terminate as provided in Section 12 hereof;
(e) Changing the requirements relating to the Committee; or
(f) Making any other change which would cause any option granted under
the Plan as an Incentive Stock Option not to qualify as an Incentive Stock
Option within the meaning of Section 422 of the Code;
except as necessary to conform the Plan and the option agreements to
changes in the Code or other governing law. No option may be granted during any
suspension of this Plan or after this Plan has terminated and no amendment,
suspension or termination shall, without the Optionee's consent, alter or
9
<PAGE> 47
impair any of the rights or obligations under an option theretofore granted to
such Optionee under this Plan.
12. Termination of the Plan. The Plan shall terminate on October 19, 2004,
and thereafter no options shall be granted under the Plan. All options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms of the option agreements governing such
options and the terms and conditions of the Plan.
13. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable federal
law.
14. Venue. The venue of any claim brought hereunder by an Employee shall be
Cleveland, Ohio.
15. Changes in Governing Rules and Regulations. All references herein to
the Code or sections thereof, or to rules and regulations of the Department of
Treasury or of the Securities and Exchange Commission, shall mean and include
the Code sections thereof and such rules and regulations as are now in effect or
as they may be subsequently amended, modified, substituted or superseded.
10
<PAGE> 48
PROXY
FIGGIE
INTERNATIONAL PROXY/VOTING INSTRUCTION CARD
FIGGIE INTERNATIONAL INC. CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON OCTOBER 19, 1994.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS CARD.
The undersigned hereby appoints Keith Mabee, L.A. Harthun, Robert D. Vilsack
and each of them, proxies, with full power of substitution to appear on behalf
of the undersigned and to vote all shares of Class A Common Stock of the
undersigned at the Annual Meeting of Stockholders to be held at Rawlings Hall
at the Corporation's Headquarters, 4420 Sherwin Road, Willoughby, Ohio 44094 on
October 19, 1994, at 10:00 a.m., E.D.S.T., and at any adjournment thereof, upon
all subjects that may properly come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side of this card, hereby revoking any and all proxies
heretofore given.
THE PROXIES WILL VOTE FOR (1) THE ELECTION OF ALL LISTED NOMINEES AND IN ACCORD
WITH DIRECTORS' RECOMMENDATIONS ON THE OTHER SUBJECTS LISTED ON THE REVERSE OF
THIS CARD IF THE APPLICABLE BOXES ARE NOT MARKED, AND (2) AT THEIR DISCRETION ON
ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Nominees for election as Directors are: Walter M. Vannoy, A.A. Sommer, Jr., C.B.
Robertson, III and Steven L. Siemborski.
PLEASE RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO
P.O. BOX 1628, BOSTON, MA 02105-1628, SO THAT YOUR SHARES CAN BE REPRESENTED AT
THE MEETING. _____________
| SEE REVERSE |
CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SIDE |
_____________
<PAGE> 49
[X]PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 1, 2 AND 3.
1. Election of all Directors.
NOMINEES: Walter M. Vannoy, A.A. Sommer, Jr.,
C.B. Robertson, III, Steven L. Siemborski
FOR WITHHELD MARK HERE
[ ] [ ] IF YOU PLAN [ ]
TO ATTEND
THE MEETING
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
[ ]____________________________________ NOTE BELOW
For all nominees except as noted above
2. Adoption of the Figgie International Inc. FOR AGAINST ABSTAIN
Key Employees' Stock Option Plan providing [ ] [ ] [ ]
for the issuance of options to purchase
Class A Common Stock to certain eligible
employees of the Corporation.
3. Ratification of the selection of Arthur FOR AGAINST ABSTAIN
Andersen & Co. as independent public [ ] [ ] [ ]
accountants.
Please sign and return this Proxy Card so that your shares can be represented at
the meeting. If signing for a corporation or partnership or as agent, attorney
or fiduciary, indicate the capacity in which you are signing. If you do attend
the meeting and decide to vote by ballot, such vote will supersede this proxy.
Signature:____________________________________Date:_____________
Signature:____________________________________Date:_____________
<PAGE> 50
PROXY
FIGGIE
INTERNATIONAL PROXY/VOTING INSTRUCTION CARD
FIGGIE INTERNATIONAL INC. CLASS B COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON OCTOBER 19, 1994.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS CARD.
The undersigned hereby appoints Keith Mabee, L.A. Harthun, Robert D. Vilsack
and each of them, proxies, with full power of substitution to appear on behalf
of the undersigned and to vote all shares of Class B Common Stock of the
undersigned at the Annual Meeting of Stockholders to be held at Rawlings Hall
at the Corporation's Headquarters, 4420 Sherwin Road, Willoughby, Ohio 44094 on
October 19, 1994, at 10:00 a.m., E.D.S.T., and at any adjournment thereof, upon
all subjects that may properly come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side of this card, hereby revoking any and all proxies
heretofore given.
THE PROXIES WILL VOTE FOR (1) THE ELECTION OF ALL LISTED NOMINEES AND IN ACCORD
WITH DIRECTORS' RECOMMENDATIONS ON THE OTHER SUBJECTS LISTED ON THE REVERSE OF
THIS CARD IF THE APPLICABLE BOXES ARE NOT MARKED, AND (2) AT THEIR DISCRETION ON
ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Nominees for election as Directors are: Walter M. Vannoy, A.A. Sommer, Jr., C.B.
Robertson, III and Steven L. Siemborski.
PLEASE RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO
P.O. BOX 1628, BOSTON, MA 02105-1628, SO THAT YOUR SHARES CAN BE REPRESENTED AT
THE MEETING. _____________
| SEE REVERSE |
CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SIDE |
_____________
<PAGE> 51
[X]PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 1, 2 AND 3.
1. Election of all Directors.
NOMINEES: Walter M. Vannoy, A.A. Sommer, Jr.,
C.B. Robertson, III, Steven L. Siemborski
FOR WITHHELD MARK HERE
[ ] [ ] IF YOU PLAN [ ]
TO ATTEND
THE MEETING
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
[ ]____________________________________ NOTE BELOW
For all nominees except as noted above
2. Adoption of the Figgie International Inc. FOR AGAINST ABSTAIN
Key Employees' Stock Option Plan providing [ ] [ ] [ ]
for the issuance of options to purchase
Class A Common Stock to certain eligible
employees of the Corporation.
3. Ratification of the selection of Arthur FOR AGAINST ABSTAIN
Andersen & Co. as independent public [ ] [ ] [ ]
accountants.
Please sign and return this Proxy Card so that your shares can be represented at
the meeting. If signing for a corporation or partnership or as agent, attorney
or fiduciary, indicate the capacity in which you are signing. If you do attend
the meeting and decide to vote by ballot, such vote will supersede this proxy.
Signature:____________________________________Date:_____________
Signature:____________________________________Date:_____________
