<PAGE>
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/
Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11 or Section240.14a-12
SCOTT TECHNOLOGIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SAME
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/
No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SCOTT TECHNOLOGIES, INC.
5875 LANDERBROOK DRIVE, SUITE 250
MAYFIELD HEIGHTS, OHIO 44124
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of common
stock, par value $.10 per share, of Scott Technologies, Inc. (the "Corporation")
will be held at Scott Technologies, Inc., 5875 Landerbrook Drive, Mayfield
Heights, Ohio, on Wednesday, May 26, 1999, at 1:00 p.m. local time, to consider
and take action with respect to the following:
1. To elect a class of two directors each for a term of three years, such
elected directors to serve until their successors shall be elected and
qualified.
2. To conduct such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Holders of common stock of record at the close of business on March 29, 1999
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors
Glen W. Lindemann
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: April 14, 1999
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY/VOTING
INSTRUCTION CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
SCOTT TECHNOLOGIES, INC.
5875 LANDERBROOK DRIVE, SUITE 250
MAYFIELD HEIGHTS, OHIO 44124
------------------------
PROXY STATEMENT
MAILED ON APRIL 14, 1999
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 26, 1999
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Scott Technologies, Inc. (the
"Corporation") to be used at the Annual Meeting of the holders of common stock,
par value $.10 per share (the "Common Stock"), of the Corporation to be held on
May 26, 1999 and at any adjournment 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 Board of Directors of the Corporation (the "Board") has fixed the close
of business on March 29, 1999 as the record date (the "Record Date") for
determining the stockholders of the Corporation entitled to notice of and to
vote at the Annual Meeting and any adjournment thereof.
The expense of soliciting proxy/voting instruction cards ("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 mail, proxies may be solicited personally or by telephone, facsimile or
telegraph. The Corporation may pay persons holding shares for others their
expenses in sending proxy material to their principals, and solicitation of
proxies may also be made on behalf of the Board by Morrow & Company for a fee of
$6,500 plus reasonable expenses.
VOTING RIGHTS
Only stockholders as of the Record Date are entitled to notice of and to
vote at the Annual Meeting. The proxy will also serve to instruct the trustees
of the Scott Technologies, Inc. 401(k) Savings Plan for Salaried Employees, the
Scott Technologies, Inc. 401(k) Savings Plan for Hourly Employees and the Scott
Technologies, Inc. 401(k) Savings Plan for Bargaining Unit Employees on how to
vote any shares of Common Stock held by the plans. The number of shares printed
on the proxy accompanying this Proxy Statement includes, when applicable, shares
allocated to the participants in any such plan.
As of the Record Date, there were 18,186,983 shares of Common Stock issued
and outstanding. There are no other outstanding classes of voting securities of
the Corporation. Each holder of a share of Common Stock is entitled to one vote
per share on each matter presented at the Annual Meeting. Pursuant to a capital
restructuring plan that was approved by the Corporation's stockholders on
December 15, 1998, each share of the Corporation's Class A Common Stock (par
value $.10 per share) and each share of the Corporation's Class B Common Stock
(par value $.10 per share) were
1
<PAGE>
automatically reclassified as and converted into one share of Common Stock (par
value $.10 per share).
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock in person or represented by duly executed proxies at the
Annual Meeting and entitled to vote is necessary to constitute a quorum for the
transaction of business at the Annual Meeting.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote is required for the election of directors.
Cumulative voting for the election of directors is not permitted.
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 nominees for director named in this Proxy Statement.
Shares represented by proxies which are marked "WITHHELD" with regard to the
election of the nominees for director will be excluded entirely from the vote
and will have no effect.
The Board 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. 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.
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 Common Stock.
Unless otherwise indicated, the information is as of March 29, 1998. 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 or has the right to acquire
shares within sixty (60) days. Except as otherwise
2
<PAGE>
indicated, the Corporation believes that each owner listed below exercises sole
voting and dispositive power over its shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK(1)
- --------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Richard C. Blum & Associates, L.P. and Affiliates
909 Montgomery Street, Suite 400
San Francisco, CA 94133................................ 3,829,276(2) 21.0%
Reich & Tang Asset Management, LP
600 Fifth Avenue
New York, NY 10020..................................... 2,726,200(3) 14.9%
Southeastern Asset Management, Inc.
6410 Poplar Avenue, Suite 900
Memphis, TN 38119...................................... 1,823,000(4) 10.0%
NewSouth Capital Management, Inc.
1000 Ridgeway Loop Road, Suite 233
Memphis, TN 38120...................................... 1,248,478(4) 6.8%
</TABLE>
- ------------------------
(1) Based upon the number of shares outstanding as of the Record Date.
(2) These shares are owned, as of April 7, 1999, by (i) five investment advisory
clients for which Richard C. Blum & Associates, L.P. ("Blum L.P.") is the
investment manager with voting and investment discretion; (ii) three limited
partnerships for which Blum L.P. is the general partner; and (iii) one
limited partnership for which RCBA GP, L.L.C. ("RCBA GP") is the general
partner. Richard C. Blum is a significant stockholder and chairman of
Richard C. Blum & Associates, Inc. ("RCBA Inc."), the general partner of
Blum L.P., and a managing member of RCBA GP. Mr. Blum, Blum L.P., RCBA Inc.
and RCBA GP disclaim beneficial ownership of these shares except to the
extent of any pecuniary interest therein.
(3) This amount, as reflected in a report on Schedule 13G dated February 11,
1999 and as of December 31, 1998, consists of 2,726,200 shares as to which
the reporting person claims shared voting and dispositive power. The
reporting person does not claim any sole voting or dispositive power.
(4) This amount, as reflected in a report on Schedule 13G dated April 7, 1999
and as of March 31, 1999, filed by Southeastern Asset Management, Inc.
("Southeastern"), Longleaf Partners Small-Cap Fund ("Longleaf") and O. Mason
Hawkins, as a group, consists of 1,823,000 shares as to which Southeastern
and Longleaf claim shared voting and dispositive power and no shares as to
which Mr. Hawkins claims shared or sole voting or dispositive power.
Southeastern and Longleaf do not claim any sole voting or dispositive power.
(5) This amount, as reflected in a report on Schedule 13G dated February 8, 1999
and as of December 31, 1998, consists of 1,230,978 shares as to which the
reporting person claims sole voting power; 17,500 shares as to which the
reporting person claims shared voting power; and 1,248,478 shares as to
which the reporting person claims sole dispositive power. The reporting
person does not claim any shared dispositive power.
3
<PAGE>
STOCK OWNERSHIP OF DIRECTORS,
NOMINEES FOR DIRECTOR, EXECUTIVE OFFICERS
AND ONE FORMER EXECUTIVE OFFICER
The following table and notes thereto set forth information, as of March 29,
1999 (except as specified below), with respect to the beneficial ownership of
shares of Common Stock by each director, each nominee for director and each
current and former executive officer named (the "Named Executive Officers") by
the Corporation in the Summary Compensation Table and, as a group, by the
directors and current executive officers of the Corporation, based upon
information furnished to the Corporation by such persons. Except as otherwise
indicated, the Corporation believes that each beneficial owner listed below
exercises sole voting and dispositive power.
<TABLE>
<CAPTION>
AMOUNT OF BENEFICIAL
OWNERSHIP AS OF MARCH 29,
1999
---------------------------
NAME OF NUMBER OF PERCENTAGE OF
BENEFICIAL OWNER SHARES COMMON STOCK
- -------------------------------------------------------- ----------- --------------
<S> <C> <C>
Robert P. Collins....................................... 300 *
Richard DeLisle......................................... 14,257(1) *
N. Colin Lind........................................... 3,829,276(2) 21%
Glen W. Lindemann....................................... 98,246(3) *
Frank N. Linsalata...................................... 5,000 *
F. Rush McKnight........................................ 7,896(4) *
Harrison Nesbit, II..................................... 616(5) *
John P. Reilly.......................................... 46,389 *
Debra L. Kackley........................................ 5,666(6) *
Mark A. Kirk............................................ 1,800(7) *
William J. Sickman...................................... 82,958(8) *
All Directors and Current Executive Officers as a Group
(10 persons).......................................... 4,009,446(9) 22%
</TABLE>
- ------------------------
* Less than one percent (1%).
(1) This amount includes 13,668 shares that may be acquired beneficially within
60 days by exercising stock options.
(2) Mr. Lind is a director and officer of RCBA Inc., an officer of Blum L.P.,
and a managing member of RCBA GP (see note 2 to the preceding table). Mr.
Lind disclaims beneficial ownership of these shares except to the extent of
any pecuniary interest therein.
(3) This amount includes 85,334 shares that may be acquired beneficially within
60 days by exercising stock options.
(4) This amount does not include 1,150 shares owned by Mr. McKnight's wife.
4
<PAGE>
(5) This amount does not include 251 shares owned by Mr. Nesbit's wife.
(6) This amount includes 5,666 shares that may be acquired beneficially within
60 days by exercising stock options.
(7) This amount does not include 1,200 shares owned by Mr. Kirk's wife.
(8) This amount includes 76,000 shares that may be acquired beneficially within
60 days by exercising stock options.
(9) The shares of Common Stock include 104,668 shares with respect to which
certain current and former executive officers have a right to acquire
beneficial ownership within 60 days.
PROPOSAL 1
NOMINATION AND ELECTION OF DIRECTORS
The bylaws of the Corporation provide that the Board shall consist of not
less than five nor more than eleven members and that, within such limits, the
Board 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.
Effective April 1, 1998, the Board fixed the size of the Board at six directors.
On May 7, 1998, Harry E. Figgie, Jr., the Corporation's founder, and his
affiliates sold their shares of the Corporation's common stock to Blum L.P. and
its affiliates. In connection with this event, the Board fixed the number of
directors at seven, effective May 7, 1998, and appointed N. Colin Lind, a
managing director of Blum L.P., as a director of the Corporation. Mr. Lind is
Blum L.P.'s representative on the Board. SEE "Certain Transactions--Agreements
with Blum L.P. or Affiliates."
The Board currently is divided into three classes of three, two and two
directors each. The term of office of one class of directors expires each year
and at each annual meeting the successors to the directors of the class whose
term is expiring in that year are elected to hold office for a term of three
years and until their successors shall be elected and qualified.
The two directorships expiring this year are presently filled by Glen W.
Lindemann and Harrison Nesbit, II. Mr. Lindemann has stated that he will stand
for re-election as a director, but Mr. Nesbit is retiring from the Board and
will not stand for re-election. Mr. Nesbit will become a Director Emeritus upon
expiration of his current term. The Board has fixed the number of directors at
six, divided into three classes of two directors each, effective upon the
expiration of Mr. Nesbit's term on May 26, 1999.
The Board has nominated N. Colin Lind and Glen W. Lindemann as nominees for
election at this Annual Meeting to the class of directors whose term expires in
2002. Mr. Lind, whose current term expires in 2000, has been nominated for the
class of directors whose term expires in 2002 in order for each class of
directors to have two members.
Each nominee has informed the Corporation that he is willing to serve for
the term to which he is nominated if he is 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.
5
<PAGE>
The information appearing in the following tables 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 nominee and each continuing director
and, if such principal occupation or employment has not been carried on during
the past five 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 five 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
FOR A TERM OF THREE YEARS
<TABLE>
<CAPTION>
IF ELECTED, TERM
SERVED AS EXPIRES AT ANNUAL
DIRECTOR MEETING OF
NAME AND PRINCIPAL OCCUPATION SINCE STOCKHOLDERS IN
- ------------------------------------------------------------------------------ ----------- -------------------
<S> <C> <C>
N. COLIN LIND, age 43 1998 2002
Director, since 1988, and Managing Director, since 1987, of Richard C.
Blum and Associates, Inc., the general partner of Blum L.P., an investment
manager; Managing Director of Blum L.P. since 1994; Director of
Haemonetics Corporation.
GLEN W. LINDEMANN, age 59 1996 2002
President and Chief Executive Officer, Scott Technologies, Inc., since
September 22, 1997; Member of Office of the Chairman, Scott Technologies,
Inc., from January 24, 1997 to September 22, 1997; President of Scott
Technologies, Inc.'s Scott Aviation division from 1989 to September 22,
1997; President, Paxall Circle Machinery from 1986 to 1989; President,
Telesis Controls Corp. from 1983 to 1986; General Manager, Norton Company,
Safety Equipment Group from 1979 to 1983.
</TABLE>
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote is required for the election of the nominees as
directors of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR.
6
<PAGE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
SERVED AS TERM EXPIRES AT
DIRECTOR ANNUAL MEETING OF
NAME AND PRINCIPAL OCCUPATION SINCE STOCKHOLDERS IN
- ------------------------------------------------------------------------------ ----------- -------------------
<S> <C> <C>
F. RUSH McKNIGHT, age 69 1985 2001
Retired Partner, Calfee, Halter & Griswold LLP, Cleveland, Ohio, law firm;
Partner until December 31, 1996; Managing Partner from 1985 to 1991;
Director, Universal Electronics, Inc.
JOHN P. REILLY, age 55 1995 2001
Partner, Reilly, Erwin & Company, L.L.C., which works in partnership with
Bessemer Holdings L.P. to make acquisitions and equity investments, since
September 1997; President & CEO, Stant Corporation, a leading manufacturer
of parts and systems for the original and replacement automotive, heavy
duty and industrial markets, from January 1997 to September 1997;
non-employee Chairman of the Board, Scott Technologies, Inc., from January
24, 1997 to November 3, 1998; Member of Office of the Chairman, Scott
Technologies, Inc., from January 24, 1997 to September 22, 1997; Chairman
of the Board, Scott Technologies, Inc., from May 16, 1995 to January 24,
1997; President and Chief Executive Officer, Scott Technologies, Inc.,
from January 3, 1995 to January 24, 1997; President and Chief Executive
Officer, Brunswick Corporation, the world leader in marine power, pleasure
boating and recreation, from 1993 to 1994; President and Chief Executive
Officer, Tenneco Automotive, from 1987 to 1993; Director of
Aeroquip-Vickers, Inc. (formerly known as Trinova Corporation).
ROBERT P. COLLINS, age 61 1997 2000
Chairman of the Board, Scott Technologies Inc., since November 3, 1998;
Chief Executive Officer, Capstone Partners, Inc., a management consulting
firm which assists international companies to design and implement
strategic expansion programs, since May 1, 1998; President and Chief
Executive Officer, GE Fanuc Automation North America, Inc., a manufacturer
of industrial control systems, from January 1, 1987 to 1998; Director of
Comdial Corporation and Director of CSE Systems & Engineering Ltd.
FRANK N. LINSALATA, age 56 1998 2000
President, FNL Management Corp., fund sponsor of leveraged buy-out funds,
since 1990; General Partner, Linsalata Capital Partners Fund I, since
1990, Linsalata Capital Partners Fund II, since 1995, and Linsalata
Capital Partners Fund III, since 1998; Chairman of Tranzonic Companies,
CMS Hartzell Inc. and Highland Group Industries; and Vice Chairman of
America's Body Company.
</TABLE>
7
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held 11 meetings and seven telephonic meetings during the year
ended December 31, 1998. During the year, no incumbent director attended fewer
than 75% of the aggregate of (i) the total number of meetings of the Board 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.
The committees of the Board, their principal functions and their respective
memberships are as follows:
AUDIT COMMITTEE
Frank N. Linsalata, Chairman
N. Colin Lind
John P. Reilly
The Audit Committee's principal assignment is the oversight and review of
the internal and external audit functions of the Corporation.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
F. Rush McKnight, Chairman
Robert P. Collins
N. Colin Lind
Frank N. Linsalata
Harrison Nesbit, II
John P. Reilly
The Management Development and Compensation Committee (the "Compensation
Committee") exercises overall authority with respect to the compensation,
development and succession of executive personnel.
NOMINATING COMMITTEE
F. Rush McKnight, Chairman
Glen W. Lindemann
John P. Reilly
The Nominating Committee evaluates candidates for Board membership, makes
recommendations with respect to the number of directors and candidates to be
included in the annual proxy materials, and recommends candidates to fill
Board vacancies. The Nominating Committee has not addressed whether it will
consider recommendations of stockholders for director candidates.
8
<PAGE>
STOCK OPTION COMMITTEE
Harrison Nesbit, II, Chairman
N. Colin Lind
Frank N. Linsalata
The Stock Option Committee administers the Scott Technologies, Inc. Key
Employees' Stock Option Plan (the "Stock Option Plan").
The Board committees held the following numbers of meetings during 1998:
Audit Committee, 2; Compensation Committee, 3; Nominating Committee, 0; and
Stock Option Committee, 2. Not included in these totals are those instances in
which the committees took action by written unanimous consent.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert P. Collins has served as the Corporation's Chairman of the Board
since November 3, 1998. Prior to that date, he was not an employee of the
Corporation. Mr. Collins serves as a member of the Compensation Committee, of
which he was the Chairman until he became the Chairman of the Board.
BOARD COMMITTEE REPORTS ON EXECUTIVE COMPENSATION
The Compensation Committee has overall authority with respect to, among
other things, 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
stock options are awarded to key employees, including executives.
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,
including the chief executive officer (the "CEO"), 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 provide an incentive for executive officers to achieve the
Corporation's goals by relating a substantial portion of executive compensation
directly to the Corporation's performance.
Until the Annual Meeting of Stockholders on May 20, 1998, the Compensation
Committee included Fred J. Brinkman, who served as Chairman and who did not
stand for re-election as a director. Robert P. Collins served as Chairman of the
Compensation Committee until he assumed the position of Chairman of the Board on
November 3, 1998.
9
<PAGE>
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 based upon its review of national surveys of executive
compensation which include peer data for diversified corporations of a similar
size.
BASE SALARY. The Compensation Committee establishes base salary ranges for
executive officers at amounts that, in general, are substantially similar to the
base salary amounts expected to be paid by comparable companies to executives
having comparable positions. The Compensation Committee believes that the
Corporation must pay competitive base salaries in order to attract and retain
qualified executives.
ANNUAL CASH INCENTIVE AMOUNTS. The Corporation has an incentive program
under which the officers have the opportunity to receive a bonus which is
directly related to the performance of the Corporation. A bonus pool for
officers and other key executives is established based upon actual performance
against the Corporation's business plan. The bonus amount for each participant
is then calculated in two components: a formula-based component and a
discretionary component.
Seventy-five percent of the bonus pool is used for the formula-based
component, which is based upon the Corporation achieving a specified amount of
net income. The target bonus is a percent of base salary, which varies by salary
grade, but is the same for all participants within a salary grade.
Twenty-five percent of the bonus pool is reserved for the discretionary
component. The CEO recommends the amount of the discretionary component for each
executive officer, 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 maximum
percentage of base salary for such award. The discretionary component is based
upon 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.
In 1998, the Corporation did not achieve the target level of net income.
Bonuses were paid only to Richard DeLisle, President of the Corporation's Scott
Aviation division, based upon the performance of the Scott Aviation division,
and Mark Kirk, the Corporation's chief financial officer, pursuant to the
provisions of his employment agreement.
EMPLOYMENT AGREEMENTS. The Corporation has entered into employment
agreements with its executive officers at the corporate level. These agreements
provide for certain severance benefits in addition to setting forth employment
periods and compensation terms which the Compensation Committee believes are
appropriate in order to attract, retain and provide incentives to the
executives.
CEO COMPENSATION
The Corporation entered into an amended and restated management agreement
dated August 17, 1998 with Glen W. Lindemann, which replaced the amended and
restated management
10
<PAGE>
agreement dated June 9, 1997. The agreement provides for an annual base salary
of $350,000. In determining the CEO's base salary, the Compensation Committee
evaluated the compensation paid to chief executive officers of comparable
companies.
<TABLE>
<S> <C> <C>
F. Rush McKnight Robert P. Collins N. Colin Lind
Frank N. Linsalata Harrison Nesbit, John P. Reilly
II
</TABLE>
STOCK OPTION COMMITTEE REPORT
ON LONG-TERM EXECUTIVE COMPENSATION
The Stock Option Committee administers the Corporation's long-term incentive
program, the Key Employees' Stock Option Plan (the "Stock Option Plan"), under
which executive officers and other senior executives of the Corporation are
provided the opportunity to buy shares of Common Stock. In December 1998, the
Stock Option Plan was amended to increase the number of shares authorized for
issuance from 1,500,000 to 3,000,000, and revise the provisions relating to
transferability of options, a change in control of the Corporation, amendments
of the terms of an option and the provisions referring to Class A Common Stock.
Under the Stock Option Plan, the Corporation may issue non-qualified stock
options, "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and
stock appreciation rights (giving the right to elect a payment equal to the
appreciation of the stock value over the option price) to executives and other
key employees. The Stock Option Plan is intended to provide 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.
The Stock Option Committee, assisted by both an independent consultant and
data generated by independent executive compensation analysts, annually
establishes stock option grants for executive officers.
In 1998, the Stock Option Committee granted options for 127,000 shares to
three of the Named Executive Officers other than the CEO.
In connection with Robert P. Collins' employment as Chairman of the Board as
of November 3, 1998, the Stock Option Committee granted Mr. Collins options to
purchase 186,335 shares of Class A Common Stock (now Common Stock) at an
exercise price of $14.4375 per share and 149,665 shares of Class A Common Stock
(now Common Stock) at an exercise price of $14.9375 per share. The options will
become exercisable as to 46,584 and 37,416, respectively, shares of Common Stock
on the first anniversary of the date of grant and as to the remaining shares on
the fifth anniversary of the dates of grant, except that the options will be
become exercisable earlier in the following three stages: one third of the
remaining shares if the market price of a share of Common Stock is at least
$18.00 for a period of 20 consecutive trading days, an additional one third of
the remaining shares if the market price of a share of Common Stock is at least
$24.00 for 20 consecutive trading days, and the remaining one third of the
remaining shares if the market price of a share of Common Stock is at least
$30.00 for 20 consecutive trading days. The options expire seven years from the
date of the
11
<PAGE>
grant. The Stock Option Committee believes that the terms of these options
provide an incentive to the Chairman of the Board that is appropriately aligned
with the interests of stockholders.
The Stock Option Committee believes that stock options granted under the
Stock Option Plan will not be subject to the $1,000,000 limit contained in
Section 162(m) of the Internal Revenue Code as it is intended that the option
price will be at least the fair market value on the date of grant and that the
composition of the committee will meet certain requirements as to independence
contained in regulations adopted pursuant to Section 162(m) of the Internal
Revenue Code.
Harrison Nesbit, II N. Colin Lind Frank N. Linsalata
12
<PAGE>
EXECUTIVE AND DIRECTOR COMPENSATION
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION. The following table shows information concerning
the annual and long-term compensation earned by the CEO, each of the
Corporation's other executive officers as of December 31, 1998, and each former
executive officer during 1998 whose total annual salary and bonus exceeded
$100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
----------------------------------------- UNDERLYING
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS/ ALL OTHER
POSITION DURING 1998 YEAR SALARY BONUS COMPENSATION SARS(#) COMPENSATION(1)
- ----------------------------- --------- --------- --------- ------------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard DeLisle 1998 $ 136,250 $ 132,900 -- 16,000 $ 12,524
President, Scott Aviation
Division(2)
Debra L. Kackley 1998 112,416 0 -- 41,000 9,838
Vice President, General
Counsel and Secretary(3)
Mark A. Kirk 1998 100,000 50,000 -- 70,000 1,833
Senior Vice President and
Chief Financial Officer(4)
Glen W. Lindemann 1998 350,000 0 -- 0 33,907
President and CEO(5) 1997 221,417 203,800 -- 220,000 28,219
William J. Sickman 1998 144,317 0 -- 0 8,310
Vice President, Corporate 1997 141,917 30,000 -- 50,000 5,010
Relations(6)
</TABLE>
- --------------------------
(1) (a) Includes the discounted value of the benefit to each of the Named
Executive Officers of the premium paid by the Corporation 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.
The Named 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 in 1998 are as follows: Richard DeLisle, $8,624; Debra L. Kackley,
$7,110; Glen W. Lindemann, $24,831; and William J. Sickman, $5,110.
(b) Includes the Corporation's contribution in 1998 of the following amounts
under the Corporation's 401(k) plans: Richard DeLisle, $3,900; Debra L.
Kackley, $2,728; Mark A. Kirk, $1,833; Glen W. Lindemann, $9,076; and
William J. Sickman, $3,200.
(2) Mr. DeLisle became an executive officer of the Corporation on October 21,
1998. He has been President of the Scott Aviation division since September
22, 1997.
(3) Ms. Kackley became Vice President, General Counsel and Secretary on April
20, 1998. She previously served as Corporate General Attorney since December
2, 1996.
13
<PAGE>
(4) Mr. Kirk became Senior Vice President and Chief Financial Officer on July 6,
1998.
(5) Mr. Lindemann became President and CEO on September 22, 1997. Prior to that
time, he served as a member of the Office of the Chairman of the Board from
January 24, 1997 to September 22, 1997 and President of the Corporation's
Scott Aviation division.
(6) Mr. Sickman became an executive officer of the Corporation on February 1,
1997. He resigned as Vice President, Corporate Relations, on December 21,
1998.
STOCK OPTIONS. The following table provides information related to options
for shares of Common Stock granted to the Named Executive Officers during 1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------------
NAME GRANTED# FISCAL YEAR ($/ SHARE) GRANT DATE DATE 0% 5% 10%
- -------------------------- ----------- ------------- ----------- ----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard DeLisle(2)........ 16,000 2.7% $ 13.125 03/09/98 03/09/05 0 $ 85,491 $ 199,231
Debra L. Kackley(3)....... 10,000 1.7 13.125 03/09/98 03/09/05 0 53,432 124,519
7,000 1.2 14.75 04/20/98 04/20/05 0 42,033 97,955
24,000 4.1 14.875 07/22/98 07/22/05 0 145,335 338,692
Mark A. Kirk(4)........... 50,000 8.6 15.00 07/07/98 07/07/05 0 305,325 711,538
20,000 3.4 15.00 07/07/98 07/05/99 0 15,000 30,000
Glen W. Lindemann......... -- -- -- -- -- -- -- --
William J. Sickman........ -- -- -- -- -- -- -- --
All Optionees............. 579,000 100 Various Various Various N/A -- --
</TABLE>
- --------------------------
(1) The dollar amounts under these columns are the results of calculations at
assumed annual rates of stock price appreciation of 0%, 5% and 10%. These
assumed rates of growth were selected by the SEC for illustration purposes
only. They are not intended to forecast possible future appreciation, if
any, of the Corporation's stock price. Since optionees received options with
an exercise price equal to the market value on the date of grant, no gain is
possible without an increase in stock prices, which will benefit all
stockholders. A 0% gain in stock price will result in a 0% benefit to such
optionees.
(2) Mr. DeLisle's option to purchase 16,000 shares of Common Stock is scheduled
to vest in 1/3 cumulative installments on each of March 9, 1999, March 9,
2000 and March 9, 2001.
(3) Ms. Kackley's option to purchase 10,000 shares of Common Stock is scheduled
to vest in 1/3 cumulative installments on each of March 9, 1999, March 9,
2000 and March 9, 2001; her option to purchase 7,000 shares of Common Stock
is scheduled to vest in 1/3 cumulative installments on each of April 20,
1999, April 20, 2000 and April 20, 2001; and her option to purchase 24,000
shares of Common Stock is scheduled to vest in 1/5 cumulative installments
on each of July 22, 1999, July 22, 2000, July 22, 2001, July 22, 2002 and
July 22, 2003.
(4) Mr. Kirk's option to purchase 50,000 shares of Common Stock is scheduled to
vest in 1/5 cumulative installments on each of July 7, 1999, July 7, 2000,
July 7, 2001, July 7, 2002 and July 7, 2003; his option to purchase 20,000
shares of Common Stock becomes exercisable upon a change in control of the
Corporation if such change in control takes place prior to July 6, 1999.
14
<PAGE>
The following table provides information related to any stock options for
shares of Common Stock exercised by the Named Executive Officers during 1998 and
certain information about unexercised options held by the Named Executive
Officers at December 31, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
AT OPTIONS AT VALUE OF UNEXERCISED
FY-END ($) IN-THE-MONEY ($)
SHARES ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE (1)
- -------------------------------- ----------------------- ----------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
Richard DeLisle................. 0 0 5,001/ 20,999 $ 18,701/$ 74,236
Debra L. Kackley................ 0 0 0/ 41,000 0/ 84,283
Mark A. Kirk.................... 0 0 0/ 70,000 0/ 107,191
Glen W. Lindemann............... 0 0 74,001/177,999 349,737/ 525,649
William J. Sickman.............. 0 0 76,000/ 0 397,378/ 0
</TABLE>
- ------------------------
(1) "In-the-money" options are options whose base (or exercise) price was less
than the market price of the Common Stock at December 31, 1998. The value of
such options is calculated assuming a stock price of $16.5313, which was the
closing price of the Common Stock on the Nasdaq Stock Market on December 31,
1998.
COMPENSATION OF DIRECTORS
Effective April 1, 1998, the directors, except for those who are also
employees of the Corporation, receive an annual stipend of $15,000, an
attendance fee of $1,000 for each meeting of the Board and $750 for each
telephonic meeting of the Board. In addition, the non-employee members of the
Audit Committee and the Compensation Committee receive $3,000 per year, and an
attendance fee of $500 for each separate meeting (including telephonic
meetings). Non-employee members of the Nominating Committee and the Stock Option
Committee receive an attendance fee of $500 for each meeting (including
telephonic meetings). The directors also receive travel and lodging expenses in
connection with their attendance at Board and committee meetings.
Under the Directors' Stock Option Plan, the non-employee directors receive
non-qualified options to purchase shares of Common Stock at an exercise price
equal to the fair market value of a share of Common Stock on the grant date. The
Directors' Stock Option Plan provides for the grant of options for 2,500 shares
of Common Stock on July 1 of each year.
Under the Corporation's Directors' Death Benefit Plan, the Corporation has
agreed to pay a death benefit, in the amount of $200,000, to the estate of each
non-employee director and any director who is an employee of the Corporation but
is not entitled to participate in the Corporation's regular benefit plans for
salaried employees. This benefit is provided to a director while in office, or
15
<PAGE>
after leaving office if he ceased to be a director after the later of completing
five years of service as a director and attaining age 65, or after leaving
office under certain other circumstances specified in the Directors' Death
Benefit Plan.
A director who does not stand for re-election because he is age 72 or older
or a director who does not stand for re-election and who was a director in 1976,
is designated a "Director Emeritus," is entitled to attend Board meetings, is
reimbursed for his travel expenses incurred in attending such Board meetings and
is paid the annual fee to which directors are entitled for a period ending upon
the earlier of his death or the third anniversary of the date upon which he
ceased to be a director.
RETIREMENT PLANS
RETIREMENT INCOME PLAN II. All of the executive officers of the Corporation
are currently accruing retirement income credits under, or will accrue such
credits upon their satisfaction of the eligibility requirements set forth in,
the Salaried Employee Retirement Income Provisions of the Scott Technologies,
Inc. Retirement Income Plan II (the "Salaried Provisions"), a defined benefit
pension plan. The Salaried Provisions cover the salaried employees of the
Corporation. Directors who are not employees are not entitled to receive
retirement benefits under the Salaried Provisions.
In general, the Salaried Provisions 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 table sets forth the percentage Annual
Pensionable Earnings which is accrued as a retirement income credit under the
Salaried Provisions based upon 1998 compensation:
<TABLE>
<CAPTION>
ANNUAL PENSIONABLE EARNINGS(1)
----------------------------------------
OVER 100% OF
0-100% OF COVERED COVERED
COMPENSATION (2) COMPENSATION (2)
------------------- -------------------
<S> <C> <C>
Retirement Income Credit........................ 0.7% 1.2%
</TABLE>
- ------------------------
(1) "Annual Pensionable Earnings" includes cash salaries and bonuses received by
the participant but excludes any such earnings in excess of $160,000 for
calendar year 1998 and 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 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 such
calendar year. For calendar year 1998, Covered Compensation equals $29,304.
Generally, any salaried employee of the Corporation 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
16
<PAGE>
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.
As of December 31, 1998, the annual benefits payable upon retirement under
the Salaried Provisions, including accrued benefits from the predecessor plan to
the Salaried Provisions, to the Named Executive Officers are stated below. These
amounts have been calculated based upon the assumptions that the executives'
earnings for 1998 and the covered compensation level of $29,304 will not
increase after 1998 and will continue until retirement, and that the executives
will continue working until age 65 and become fully vested. Based upon the
preceding assumptions, the annual benefits payable as a result of voluntary
contributions and the accrued benefits from the predecessor plan to the Salaried
Provisions are as follows: Richard DeLisle, $17,720; Debra L. Kackley, $34,707;
Mark A. Kirk, $43,000; Glen W. Lindemann, $27,006; and William J. Sickman,
$11,369 (as a result of his resignation).
SENIOR EXECUTIVE BENEFITS PROGRAM. Upon retirement at age 65, William J.
Sickman will be entitled to receive up to $3,369 annually under the
Corporation's Senior Executive Benefits Program (the "SEBP"), subject to
reduction for any benefits payable to Mr. Sickman under any other defined
benefit plan. Mr. Sickman is the only Named Executive Officer entitled to
receive benefits under the SEBP.
NON-QUALIFIED RETIREMENT INCOME PLAN II. In April 1998, the Board approved
a new retirement plan for senior executives which provides to them the benefits
under the Salaried Provisions that they would have received if the Salaried
Provisions covered compensation equal to more than the amount specified by the
Secretary of the Treasury of the United States ($160,000 for calendar year
1998). The new plan covers all excess earnings beginning on January 1, 1998 for
participants identified by the Corporation. Individual participants have not
been identified as of the date of this proxy statement.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Corporation entered into a management agreement (the "Management
Agreement") with Robert P. Collins, dated as of December 18, 1998. The
Management Agreement provides for Mr. Collins' employment as Chairman of the
Board from November 3, 1998 to December 16, 1999, and automatic extensions for
successive one-year terms thereafter unless either the Corporation or Mr.
Collins terminates the Management Agreement after the initial period or at the
end of any successive one-year term thereafter. During the initial period, Mr.
Collins will receive an annual base salary of $200,000 and will be required to
devote 25% of full business time to the discharge of his duties as Chairman of
the Board. Mr. Collins is not entitled to participate in any of the
Corporation's employee benefit plans or receive any perquisites, except that he
is entitled to reimbursement for reasonable expenses incurred in performing his
duties. In the event that Mr. Collins becomes disabled, the Corporation will
have the right to terminate Mr. Collins' continued active service as Chairman of
the Board and the payment of compensation under the Management Agreement. If Mr.
Collins voluntarily terminates his employment without good reason (as defined in
the Management Agreement), the Corporation will pay his full base salary through
the effective date of
17
<PAGE>
termination. In the event of a change in control (as defined in the Management
Agreement), all options granted to Mr. Collins will become immediately
exercisable, except that options that would otherwise have become exercisable
earlier than five years after the date of grant upon the attainment of a
specified price per share of Common Stock (the "Performance-Based Options) will
become exercisable to the extent that the sales price in the change in control
transaction satisfies the applicable price targets (without regard to the 20-day
price maintenance requirement). In addition, to the extent that the sales price
in the change in control is above $14.4375 per share, is below $30 per share and
is not equal to $18 or $24 per share, a part of the Performance-Based Option
will become exercisable equal to the number of shares which would have become
exercisable had the sales price been at the next highest price target multiplied
by a fraction the numerator of which will equal the amount by which the sales
price in the change in control exceeds the next lower price target and the
denominator of which will equal the amount by which the next highest price
target exceeds the next lower price target. The Stock Option Committee may waive
any or all remaining higher stock option price targets and determine to make any
or all of such remaining shares exercisable. Stock options that become
exercisable in connection with a change in control will remain exercisable until
their expiration. SEE "Stock Option Committee Report on Long-Term Executive
Compensation--Stock Option Plan." The Corporation has agreed to indemnify Mr.
Collins for the amount of any excise tax payable under the Management Agreement,
as well as costs incurred in appealing a determination of the Internal Revenue
Service as to the applicability of such excise tax.
The Corporation entered into an amended and restated management agreement
dated August 17, 1998 (the "Restated Agreement") with Glen W. Lindemann, which
replaced the amended and restated management agreement dated June 9, 1997 which
it had entered into with Mr. Lindemann previously. The Restated Agreement
provides for Mr. Lindemann's employment as President and Chief Executive Officer
of the Corporation from January 1, 1998 to December 31, 2000, and automatic
extensions for successive one-year terms thereafter unless either the
Corporation or Mr. Lindemann terminates the Restated Agreement on December 31,
2000 or at the end of any successive one-year term thereafter. Mr. Lindemann
will receive an annual base salary of $350,000 during the initial term of the
Restated Agreement, plus any increases that the Compensation Committee of the
Board may approve. Provided that he satisfies any applicable eligibility
requirements, Mr. Lindemann is entitled to participate in all employee benefit
plans and receive any perquisites provided to senior executives, and will be
reimbursed for all reasonable expenses incurred by him in performing his duties.
If Mr. Lindemann's employment terminates due to his retirement or death, his
benefits will be determined in accordance with the Corporation's retirement and
other applicable programs then in effect. In addition, in the event Mr.
Lindemann dies, the Corporation will pay to his spouse or the executor or
administrator of his estate a pro-rata portion of any bonus which would have
been payable to him. In the event Mr. Lindemann becomes disabled, the
Corporation can terminate his continued active service as President and Chief
Executive Officer and the payment of any compensation and benefits under the
Restated Agreement. In such event, the Corporation will pay Mr. Lindemann's
benefits in accordance with the Corporation's disability and other applicable
plans and programs then in effect, and will pay a pro-rata portion of any bonus
which would have been payable to him. If Mr. Lindemann voluntarily terminates
his employment without good reason (as defined in the Restated Agreement), the
Corporation will pay his full base salary plus all other benefits to which he
has a vested right through the effective date of termination.
18
<PAGE>
Mr. Lindemann may, in lieu of receiving any other severance payment, receive the
following severance benefits if he voluntarily terminates his employment with
good reason or the Corporation terminates his employment other than for cause
(as defined in the Restated Agreement): (i) a pro-rata bonus calculated under
the Corporation's Bonus Plan for the year in which employment is terminated;
(ii) payment for the cost of outplacement services in an amount equal to up to
17% of his annual base salary; (iii) payment, net of taxes, of the equivalent of
12 months of the applicable monthly car allowance; (iv) immediate exercisability
of all stock options, which will remain fully exercisable until the earlier of
their expiration or one year after the date of termination; (v) assistance in
obtaining the necessary financing to exercise the stock options; (vi) tax and/or
legal consultation in connection with the benefits granted under the Restated
Agreement, in an amount up to $5,000; and (vii) continued payment of all other
benefits to which Mr. Lindemann has a vested right according to any applicable
retirement or other benefit program. Having executed a non-competition
agreement, Mr. Lindemann will be eligible to receive severance pay in the amount
of his monthly base salary in effect on the date of termination by Mr. Lindemann
with good reason or by the Corporation other than for cause, as well as life
insurance and health care benefits (unless comparable benefits are provided by a
subsequent employer), for 24 calendar months following the date of his
termination. The Corporation has agreed to indemnify Mr. Lindemann for the
amount of any excise tax payable under the Restated Agreement, as well as costs
incurred in appealing a determination of the Internal Revenue Service as to the
applicability of such excise tax. In the event of a change in control (as
defined in the Restated Agreement), all stock options granted to Mr. Lindemann
pursuant to the Stock Option Plan will become immediately exercisable and will
remain so until their expiration. In the event the Corporation uses the proceeds
from a sale or disposition of any of the Corporation's affiliates (as defined in
the Restated Agreement) to provide a dividend to the stockholders of the
Corporation, the stock options granted to Mr. Lindemann pursuant to the Stock
Option Plan will become immediately exercisable in full upon the effective date
of such sale or disposition, so that Mr. Lindemann will be entitled to receive
the dividend if he exercises the options.
The Corporation entered into a management agreement dated August 25, 1998
(the "CFO Agreement") with Mark A. Kirk. The CFO Agreement provides for Mr.
Kirk's employment as Senior Vice President and Chief Financial Officer of the
Corporation from July 6, 1998 to July 5, 2001, and automatic extensions for
successive one-year terms thereafter unless either the Corporation or Mr. Kirk
terminates the CFO Agreement at the end of the initial three-year term or at the
end of any successive one-year term thereafter. Mr. Kirk will receive an annual
base salary of $200,000 during the initial term of the CFO Agreement, plus any
increases that the Compensation Committee of the Board may approve. Under the
CFO Agreement, Mr. Kirk also received a hiring bonus of $50,000, and was
guaranteed a 1998 bonus of $50,000 under the Corporation's Bonus Plan. Provided
that he satisfies any applicable eligibility requirements, Mr. Kirk is entitled
to participate in all employee benefit plans and receive any perquisites
provided to senior executives, and will be reimbursed for all reasonable
expenses incurred by him in performing his duties. If Mr. Kirk's employment
terminates due to his retirement or death, his benefits will be determined in
accordance with the Corporation's retirement and other applicable programs then
in effect. In addition, in the event Mr. Kirk dies, the Corporation will pay to
his spouse or the executor or administrator of his estate a pro-rata portion of
any bonus which would have been payable to him. In the event Mr. Kirk becomes
disabled, the
19
<PAGE>
Corporation can terminate his continued active service as Senior Vice President
and Chief Financial Officer and the payment of any compensation and benefits
under the CFO Agreement. In such event, the Corporation will pay Mr. Kirk's
benefits in accordance with the Corporation's disability and other applicable
plans and programs then in effect, and will pay a pro-rata portion of any bonus
which would have been payable to him. If Mr. Kirk voluntarily terminates his
employment without good reason (as defined in the CFO Agreement), the
Corporation will pay his full base salary plus all other benefits to which he
has a vested right through the effective date of termination. Mr. Kirk may, in
lieu of receiving any other severance payment, receive the following severance
benefits if he voluntarily terminates his employment with good reason or the
Corporation terminates his employment other than for cause (as defined in the
CFO Agreement): (i) a pro-rata bonus calculated under the Corporation's Bonus
Plan for the year in which employment is terminated; (ii) payment for the cost
of outplacement services in an amount equal to up to 17% of his annual base
salary; (iii) payment, net of taxes, of the equivalent of 12 months of the
applicable monthly car allowance; (iv) immediate exercisability of all stock
options (except the option to purchase 20,000 shares if there is a change in
control (as defined in the CFO Agreement) prior to July 6, 1999), which will
remain fully exercisable until the earlier of their expiration or one year after
the date of termination; (v) assistance in obtaining the necessary financing to
exercise the stock options; (vi) tax and/or legal consultation in connection
with the benefits granted under the CFO Agreement, in an amount up to $5,000;
and (vii) continued payment of all other benefits to which Mr. Kirk has a vested
right according to any applicable retirement or other benefit program. Having
executed a non-competition agreement, Mr. Kirk will be eligible to receive
severance pay in the amount of his monthly base salary in effect on the date of
termination by Mr. Kirk with good reason or by the Corporation other than for
cause, as well as life insurance and health care benefits (unless comparable
benefits are provided by a subsequent employer), for 24 calendar months
following the date of his termination. The Corporation has agreed to indemnify
Mr. Kirk for the amount of any excise tax payable under the CFO Agreement, as
well as costs incurred in appealing a determination of the Internal Revenue
Service as to the applicability of such excise tax. In the event of a change in
control, all stock options granted to Mr. Kirk pursuant to the Stock Option Plan
will become immediately exercisable and will remain so until their expiration.
In the event the Corporation uses the proceeds from a sale or disposition of any
of the Corporation's affiliates (as defined in the CFO Agreement) to provide a
dividend to the stockholders of the Corporation, the stock options granted to
Mr. Kirk pursuant to the Stock Option Plan (except the option to purchase 20,000
shares if there is a change in control prior to July 6, 1999) will become
immediately exercisable in full upon the effective date of such sale or
disposition, so that Mr. Kirk will be entitled to receive the dividend if he
exercises the options. In the event a change in control occurs after the date
such a dividend is provided and Mr. Kirk exercises his option to purchase 20,000
shares if there is a change in control prior to July 6, 1999, the Corporation
will pay Mr. Kirk an amount in cash equal to the dividend which would have been
paid to him if he had been a stockholder of record at the time such a dividend
was paid to stockholders.
The Corporation entered into a management agreement dated September 10, 1998
(the "Employment Agreement") with Debra L. Kackley. The Employment Agreement
provides for Ms. Kackley's employment as Vice President, General Counsel and
Secretary of the Corporation from August 10, 1998 to August 9, 2001, and
automatic extensions for successive one-year terms thereafter unless either the
Corporation or Ms. Kackley terminates the Employment Agreement at
20
<PAGE>
the end of the initial three-year term or at the end of any successive one-year
term thereafter. Ms. Kackley will receive an annual base salary of $120,000
during the initial term of the Employment Agreement, plus any increases that the
Compensation Committee of the Board may approve. Provided that she satisfies any
applicable eligibility requirements, Ms. Kackley is entitled to participate in
all employee benefit plans and receive any perquisites provided to senior
executives, and will be reimbursed for all reasonable expenses incurred by her
in performing her duties. If Ms. Kackley's employment terminates due to her
retirement or death, her benefits will be determined in accordance with the
Corporation's retirement and other applicable programs then in effect. In
addition, in the event Ms. Kackley dies, the Corporation will pay to her spouse
or the executor or administrator of her estate a pro-rata portion of any bonus
which would have been payable to her. In the event Ms. Kackley becomes disabled,
the Corporation can terminate her continued active service as Vice President,
General Counsel and Secretary and the payment of any compensation and benefits
under the Employment Agreement. In such event, the Corporation will pay Ms.
Kackley's benefits in accordance with the Corporation's disability and other
applicable plans and programs then in effect, and will pay a pro-rata portion of
any bonus which would have been payable to her. If Ms. Kackley voluntarily
terminates her employment without good reason (as defined in the Employment
Agreement), the Corporation will pay her full base salary plus all other
benefits to which she has a vested right through the effective date of
termination. Ms. Kackley may, in lieu of receiving any other severance payment,
receive the following severance benefits if she voluntarily terminates her
employment with good reason or the Corporation terminates her employment other
than for cause (as defined in the Employment Agreement): (i) a pro-rata bonus
calculated under the Corporation's Bonus Plan for the year in which employment
is terminated; (ii) payment for the cost of outplacement services in an amount
equal to up to 17% of her annual base salary; (iii) payment, net of taxes, of
the equivalent of 12 months of the applicable monthly car allowance; (iv)
immediate exercisability of all stock options, which will remain fully
exercisable until the earlier of their expiration or one year after the date of
termination; (v) assistance in obtaining the necessary financing to exercise the
stock options; (vi) tax and/or legal consultation in connection with the
benefits granted under the Employment Agreement, in an amount up to $5,000; and
(vii) continued payment of all other benefits to which Ms. Kackley has a vested
right according to any applicable retirement or other benefit program. Having
executed a non-competition agreement, Ms. Kackley will be eligible to receive
severance pay in the amount of her monthly base salary in effect on the date of
termination by Ms. Kackley with good reason or by the Corporation other than for
cause, as well as life insurance and health care benefits (unless comparable
benefits are provided by a subsequent employer), for 24 calendar months
following the date of her termination. The Corporation has agreed to indemnify
Ms. Kackley for the amount of any excise tax payable under the Employment
Agreement, as well as costs incurred in appealing a determination of the
Internal Revenue Service as to the applicability of such excise tax. In the
event of a change in control (as defined in the Employment Agreement), all stock
options granted to Ms. Kackley pursuant to the Stock Option Plan will become
immediately exercisable and will remain so until their expiration. In the event
the Corporation uses the proceeds from a sale or disposition of any of the
Corporation's affiliates (as defined in the Employment Agreement) to provide a
dividend to the stockholders of the Corporation, the stock options granted to
Ms. Kackley pursuant to the Stock Option Plan will become immediately
exercisable in full upon the effective date of such sale or disposition, so that
Ms. Kackley will be entitled to receive the dividend if she exercises the
options.
21
<PAGE>
The Corporation entered into an amended and restated management agreement
dated June 11, 1997 (the "1997 Agreement") with William J. Sickman. On November
6, 1998, Mr. Sickman gave notice of his resignation effective on December 21,
1998. The 1997 Agreement provides for Mr. Sickman's employment as Vice
President--Corporate Relations for a three-year term, and automatic extensions
for successive one-year terms thereafter unless either the Corporation or Mr.
Sickman terminates the 1997 Agreement at the end of the initial three-year term
or at the end of any successive one-year term thereafter. If Mr. Sickman's
employment is terminated due to his retirement or death, his benefits will be
determined in accordance with the Corporation's retirement and benefits plans
then in effect. In the event Mr. Sickman becomes disabled, the Corporation can
terminate Mr. Sickman's 1997 Agreement (but not Mr. Sickman's employment), and
Mr. Sickman's benefits will be determined in accordance with the Corporation's
disability and other applicable plans then in effect. If the Corporation
terminates Mr. Sickman's employment other than for cause (as defined in the 1997
Agreement) or Mr. Sickman terminates his employment for good reason (as defined
in the 1997 Agreement and the Addendum described below), the Corporation will,
at Mr. Sickman's election, either continue to pay Mr. Sickman his monthly base
salary then in effect for 24 full calendar months following the date of such
termination or make a lump-sum payment to Mr. Sickman of the amount due. In
addition, the Corporation will make a payment to Mr. Sickman of an amount equal
to 12 months of the monthly vehicle allowance payments being received at the
time of termination; will pay a performance bonus, pro-rated for the current
year up to the date of termination; and all options previously granted to Mr.
Sickman pursuant to the Stock Option Plan will become immediately vested and the
period to exercise such options will be extended to the earlier of one year from
the date of termination or the expiration date of the grant. The Corporation
also will be obligated to continue to provide Mr. Sickman with his life
insurance and health care benefits (unless comparable benefits are provided by a
subsequent employer) for 24 months on the same terms and at the same cost as
provided to a similarly situated full-time employee; the period of severance
will be counted towards vesting in the SEBP; and Mr. Sickman will be entitled to
outplacement services in an amount equal to up to 17% of his annual base salary.
In the event of any termination, the Corporation will be obligated to pay when
due all other benefits to which Mr. Sickman has a vested right.
The Corporation and Mr. Sickman entered into an addendum to the 1997
Agreement dated August 13, 1998, and modified on October 30, 1998 (the
"Addendum"). The Addendum provides that effective November 16, 1998, if Mr.
Sickman has not given notice of his intent to terminate his employment, Mr.
Sickman's benefits under the SEBP will be eliminated in exchange for the
issuance, on that date, of an option to purchase 3,760 shares of Class A Common
Stock under the Stock Option Plan at an exercise price equal to the fair market
value of a share of Class A Common Stock at the close of business on November
16, 1998. The Addendum modifies the 1997 Agreement to provide that Mr. Sickman's
termination of his employment for "good reason" will include his termination of
employment prior to December 31, 1998 if Mr. Sickman gives the Corporation
advance written notice at least 45 days prior to termination and, in any event,
by November 16, 1998. Mr. Sickman so notified the Corporation. The Addendum
further provides that a restated management agreement will become effective as
of November 16, 1998 unless Mr. Sickman provides written notice on or before
November 16, 1998 of his intention to terminate his employment.
22
<PAGE>
STOCK PERFORMANCE GRAPH
The graph reflects a cumulative five-year total return on an investment of
$100 on December 31, 1993 in the Corporation's Class A and Class B Common Stock,
through December 15, 1998, the Corporation's Common Stock, from December 16,
1998 through December 31, 1999, the Nasdaq Market Index, the peer group used by
the Corporation in its 1998 proxy statement (the "Old Peer Group") and a newly
constructed peer group (the "New Peer Group") and assumes dividend reinvestment
through the fiscal year ending December 31, 1998. The New Peer Group was
constructed to reflect the companies in the Corporation's industry. The returns
of each company in the peer group are weighted based upon market capitalization.
Pursuant to a capital restructuring plan that was approved by the Corporation's
stockholders on December 15, 1998, each share of Class A Common Stock and each
share of Class B Common Stock was automatically reclassified as and converted
into one share of Common Stock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG SCOTT TECHNOLOGIES, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX,
A NEW PEER GROUP AND AN OLD PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SCOTT TECHNOLOGIES, INC. CLASS A NEW PEER GROUP NASDAQ STOCK MARKET (U.S.)
<S> <C> <C> <C>
12/31/93 $100 $100 $100
12/31/94 $44 $75 $98
12/31/95 $76 $100 $138
12/31/96 $88 $154 $170
12/31/97 $96 $164 $208
12/15/98
12/31/98 $121 $165 $294
<CAPTION>
SCOTT TECHNOLOGIES, INC. CLASS B** OLD PEER GROUP
<S> <C> <C>
12/31/93 $100 $100
12/31/94 $45 $84
12/31/95 $72 $81
12/31/96 $75 $95
12/31/97 $85 $114
12/15/98 $105
12/31/98 $108
</TABLE>
* $100 invested on 12/31/93 in stock or index, including reinvestment of
dividends; fiscal year ending December 31.
** This stock was combined with Class A Common Stock, effective 12/16/98.
23
<PAGE>
The Old Peer Group was constructed to closely resemble the Corporation's
market capitalization. The companies in the Corporation's Old Peer Group were
companies included on the Fortune 500 Industrial and Farm Equipment companies
list and the Corporation intended for the selected companies to have a market
capitalization of between $50 million and $600 million. The Old Peer Group
consisted of the companies set forth below:
Detroit Diesel Corporation
Fedders Corporation
IMO Industries Inc.
National Presto Industries Inc.
Scott Technologies, Inc. Class A
Terex Corp.
The Toro Company
The New Peer Group was adjusted in 1998 to include only those companies that
compete in markets similar to those of the Corporation. The New Peer Group
consists of the companies set forth below:
Bacou, USA Inc.
BE Aerospace Inc.
Mine Safety Appliances Co.
Scott Technologies, Inc.
CERTAIN TRANSACTIONS
AGREEMENTS WITH BLUM L.P. OR AFFILIATES
In connection with the Board's consideration of a stockholder rights
agreement (the "Rights Agreement"), the Corporation entered into an agreement
with Blum L.P. and its affiliates, Richard C. Blum & Associates, Inc. and
Richard C. Blum (the "Blum Stockholders"), as of November 6, 1998 (the
"Standstill Agreement"). Under the Standstill Agreement, the Blum Stockholders
agreed that, absent prior written consent of the Board, they will not facilitate
an election contest relating to the election or removal of members of the Board
or the deposit of any voting securities in a voting trust or similar
arrangement, they will not take any action to acquire or affect the control of
the Corporation, and, for as long as the Blum Stockholders have a designee on
the Board, they will not sell or purchase any securities of the Corporation
without fully complying with the Corporation's insider trading policies and
procedures. In return, the Corporation agreed that it will not amend the Rights
Agreement to alter or delete the exclusion applicable to certain shares owned by
the Blum Stockholders and will include such exclusion in each five-year renewal
of the Rights Agreement, unless otherwise approved by the Blum Stockholders. The
Standstill Agreement is effective for as long as the Blum Stockholders
beneficially own more than 5% of the Corporation's voting securities.
The Corporation entered into an agreement with RCBA Strategic Partners,
L.P., an affiliate of Blum L.P., as of December 15, 1998 (the "Stockholder
Agreement"), under which the Corporation agreed to use its best efforts to
ensure that N. Colin Lind or, if he is not available, Jeffrey W. Ubben, another
managing member of RCBA Strategic Partners, L.P., serves as a director on the
Board for as long as RCBA Strategic Partners, L.P. and its affiliates
beneficially own at least 8% of the outstanding
24
<PAGE>
shares of Common Stock. The Corporation has the right to terminate its
obligations under the Stockholder Agreement beginning one year after the
effective date of the Stockholder Agreement.
The Corporation entered into a an agreement with Blum L.P., dated as of
December 16, 1998, under which the Corporation agreed to file, upon the request
of Blum L.P. made at any time after May 11, 2000, up to two registration
statements for underwritten offerings by Blum L.P. and its affiliates of their
shares of Common Stock, provided that such a filing would not be inconsistent
with the Corporation's interests. In exchange, Blum L.P. agreed to sell its
shares of Common Stock generally only pursuant to such registration statements
as long as Blum L.P. and its affiliates beneficially own 10% or more of the
Corporation's voting power.
CONSULTING AGREEMENT WITH WILLIAM J. SICKMAN
The Corporation entered into a consulting agreement with William J. Sickman,
dated as of December 21, 1998 (the "Consulting Agreement"), under which Mr.
Sickman, as an independent contractor, agreed to provide the Corporation with
consulting services and advice regarding investor relations and human resources.
The Consulting Agreement has a term of 12 months, and may be terminated by
either party, with or without cause, upon 30 days' written notice. The
Corporation agreed to pay Mr. Sickman $150.00 per hour, plus reasonable
expenses.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's directors and executive officers and
persons who own more than ten percent (10%) of the Corporation's outstanding
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership in the Corporation's Common
Stock and other equity securities. Specific due dates for these records have
been established and the Corporation is required to report in this proxy
statement any failure to file by these dates in 1998. Harrison Nesbit, II was
required to report transactions on a Form 4 no later than May 10, 1998, and the
form was filed on May 14, 1998. Glen W. Lindemann filed an amended Form 5 on
April 9, 1999 to report option grants he received in 1997. John P. Reilly filed
a Form 4 on December 10, 1998 that reports the withholding of shares in
connection with an option exercise in January 1997 and amended Form 4s on April
9, 1999 to correct and reflect the number of shares sold in November 1998.
INDEPENDENT ACCOUNTANTS
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they so
desire, and to respond to appropriate questions from those attending the
meeting.
CERTAIN DEADLINES FOR THE 2000 ANNUAL MEETING
Any stockholder proposal submitted to the Corporation pursuant to SEC Rule
14a-8 under the Exchange Act for inclusion in the Corporation's proxy statement
and proxy relating to the Corporation's 2000 Annual Meeting of Stockholders must
be received by the Corporation no later than December 16, 1999. Any stockholder
intending to nominate an individual for election to the Board at
25
<PAGE>
the Corporation's 2000 Annual Meeting of Stockholders must provide written
notice to the Corporation no later than February 29, 2000. If the Corporation
does not receive notice of any other non-Rule 14a-8 matter that a stockholder
wishes to raise at the Annual Meeting in 2000 by February 29, 2000, the proxy
holders will retain discretionary authority to vote proxies on such matters if
they are raised at the 2000 Annual Meeting of Stockholders.
OTHER MATTERS
The Board 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 Annual 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 within
the knowledge of persons other than the management of the Corporation, the
Corporation 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:
Investor Relations Department
Scott Technologies, Inc.
5875 Landerbrook Drive, Suite 250
Mayfield Heights, Ohio 44124
For directions to the Annual Meeting, please call Toni Kendrick at
440/684-3402.
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
Glen W. Lindemann
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: April 14, 1999
26
<PAGE>
[LOGO]
DETACH HERE
SCOTT TECHNOLOGIES, INC.
COMMON STOCK
[LOGO]
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON MAY 26, 1999.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS
CARD.
P
THE UNDERSIGNED HEREBY APPOINTS DEBRA L. KACKLEY AND MARK A. KIRK, AND
EACH OF THEM, PROXIES, WITH FULL POWER OF SUBSTITUTION TO APPEAR ON BEHALF
OF THE UNDERSIGNED AND TO VOTE ALL SHARES OF COMMON STOCK OF THE
UNDERSIGNED AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AT THE
EXECUTIVE OFFICE OF SCOTT TECHNOLOGIES, INC., 5875 LANDERBROOK DRIVE,
MAYFIELD HEIGHTS, OHIO 44124, ON WEDNESDAY, MAY 26, 1999 AT 1:00 P.M.
LOCAL TIME, AND AT ANY ADJOURNMENT R
THEREOF, UPON ALL SUBJECTS THAT MAY PROPERLY COME BEFORE THE MEETING,
INCLUDING THE MATTER 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.
O
THE PROXIES WILL VOTE "FOR" THE ELECTION OF ALL NOMINEES AS DIRECTORS IF
THE APPLICABLE BOX IS NOT MARKED, AND AT THEIR DISCRETION ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
X
NOMINEES FOR ELECTION AS DIRECTORS ARE: N. COLIN LIND AND GLEN W.
LINDEMANN
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Y
SEE REVERSE SIDE SEE REVERSE SIDE
<PAGE>
DETACH HERE
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. ELECTION OF ALL NOMINEES AS DIRECTORS. / / FOR ALL
NOMINEES / / WITHHELD FROM ALL NOMINEES
NOMINEES: N. COLIN LIND AND GLEN W. LINDEMANN / /
- -----------------------------------------------
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
DATE: _________________, 1999
-----------------------------
SIGNATURE
-----------------------------
SIGNATURE (IF JOINTLY HELD)
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 VOTE BY
BALLOT, SUCH VOTE WILL
SUPERSEDE THIS PROXY.
/ / MARK HERE IF YOU PLAN TO ATTEND
THE MEETING
/ / MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT
PLEASE RETURN THIS CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
OTHERWISE TO P.O. BOX 92301, CLEVELAND, OH 44197-1200, SO THAT YOUR SHARES CAN
BE REPRESENTED AT THE MEETING.
