1
EXHIBIT 10(f)
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered
into this 4th day of March, 1997 by and between ▇▇▇▇ ▇. ▇▇▇▇ ("Executive") and
GST ACQUISITION CORP., a Delaware corporation. This Agreement shall only take
effect on the date of the closing (the "Closing") of the merger (the "Merger")
between GST Acquisition Corp. and Group. In this Agreement, the term "Group"
shall mean TELEX COMMUNICATIONS GROUP, INC., a Delaware corporation and the
surviving corporation of the Merger, the term the "Company" shall mean TELEX
COMMUNICATIONS, INC., a Delaware corporation and a wholly-owned subsidiary of
Group, and the term "Employer" shall mean collectively the Company and Group.
1. Employment.
For the period set forth in paragraph 2 below (the Period of
Employment), and upon the other terms and conditions set forth in this
Agreement: (i) Group hereby employs Executive, and Executive hereby accepts
employment with Group, as Group's Chairman of the Board and Chief Executive
Officer; (ii) the Company hereby employs Executive, and Executive hereby accepts
employment with the Company, as the Company's Chairman of the Board and Chief
Executive Officer; and (iii) Executive shall be elected to Group's Board of
Directors and Group shall cause Executive to be elected to the Company's Board
of Directors.
2. Period of Employment.
The Period of Employment shall commence on the date of the
Closing and, subject only to the provisions of Paragraphs 9, 10 and 11 below,
shall continue until the close of business five (5) years from the date of the
Closing. If Executive's employment hereunder has not been previously terminated
prior to the expiration of the initial five-year Period of Employment, this
Agreement and the Period of Employment shall continue and extend for successive
annual periods and shall be subject to the terms and conditions of this
Agreement.
2
3. The Position.
During the Period of Employment Executive shall serve as the
principal executive officer of both the Company and Group, reporting directly to
and only to the Board of Directors of the Company and Group, respectively, and
shall have the duties and responsibilities appropriate to such offices.
4. Duties.
Throughout the Period of Employment, Executive agrees to
devote Executive's full time and undivided attention during normal business
hours to the business and affairs of Employer and, in particular, to performance
of all the duties and responsibilities as Chief Executive Officer and Chairman
of the Board of the Company and Chief Executive Officer and Chairman of the
Board of Group, except for reasonable vacations and except for illness; but
nothing in this Agreement shall preclude Executive from devoting reasonable
periods required for:
a. serving as a director, trustee, or member of a committee of
any organization involving no conflict of interest with the interests
of Employer or in direct competition with Employer;
b. delivering lectures, fulfilling speaking engagements,
teaching at educational institutions or business organizations;
c. engaging in charitable and community activities; and
d. managing Executive's personal investments;
provided that such activities do not, individually or together, interfere with
the regular performance of Executive's duties and responsibilities under this
Agreement and do not in any way conflict with Employer's interests.
5. Compensation.
2
3
a. For all services to be rendered by Executive pursuant to
this Agreement during the Period of Employment to the Company or Group:
i. Executive shall be paid as compensation a base annual
salary of $312,000 payable at the same intervals at which the Company's
executives are paid, but in no event less frequently than monthly, plus
any increase in base salary as determined by the Board of Directors of
the Company;
ii. Executive shall participate in a new Management Incentive
Compensation Plan to be approved by the Company's Board of Directors
immediately following the Closing, the terms of which shall be
substantially the same as the terms set forth in Schedule A;
iii. Executive shall be paid a special bonus of $157,928,
subject to adjustment as previously agreed by Executive, 30-days after
the Closing and on each of the next four (4) anniversaries of due date
of the initial payment, provided that on the date a payment is due,
Greenwich Street Capital Partners, Inc. or its Affiliates
(collectively, "GSCP") are in Control of Group and the Company and
there has not been an initial public offering of the Common Stock of
Group and provided further that Executive has not exercised his rights
under Section 2 of the Stockholders Agreement. "Affiliate" means an
Affiliate as defined in Section 19.1 of the Stockholders Agreement.
"Control" of a corporation means the direct or indirect ownership of
50% or more of the voting power, and of a partner ship or limited
liability company means the direct or indirect ownership of 50% or more
of the combined voting power of the company's outstanding voting
securities.
iv. Executive shall participate in the Cash Bonus Program to
be approved by the Company's Board of Directors immediately following
the Closing, the terms of which shall be substantially the same as the
terms set forth in Schedule B.
3
4
b. Any increase in base salary or in annual incentive awards
or other compensation shall in no way diminish any other obligations of Employer
under this Agreement.
c. The compensation provided for in paragraph (a) above is in
addition to all other benefits, perquisites and other compensation provided for
in this Agreement.
6. Provisions for Perquisites.
During the Period of Employment, Executive shall be entitled
to perquisites including an appropriate office, secretarial and clerical staff,
and fringe benefits accorded generally to executive officers of Employer
pursuant to their policies, as well as to reimbursement, upon proper accounting,
of reasonable expenses and disbursements incurred by Executive in the course of
Executive's duties. In addition, Employer shall pay or provide the following:
a. Executive will be reimbursed for actual expenses incurred
by him in obtaining tax and investment assistance and advice, not to
exceed $2,000 in any calendar year during the Period of Employment.
b. During the Period of Employment, Employer shall pay to
Executive $700 per month as an automobile allowance and shall reimburse
Executive for actual expenses incurred in purchasing gasoline,
maintenance and insurance for such automobile.
c. During the Period of Employment, Executive shall be
entitled to four weeks' vacation per year. Executive may take such
vacation at such time so as not to interfere unreasonably with the
business of Employer. Annual unused vacation shall cumulate from year
to year.
7. Employment Benefit Plans.
a. Executive, Executive's dependents and beneficiaries,
including, without limitation, any beneficiary of a joint and survivor annuity
or other optional method of payment applicable to the payment of benefits under
the defined benefit or other pension plans of Employer, or any
4
5
successor plans, shall be entitled to all payments and benefits and service
credit for benefits during the Period of Employment to which officers of
Employer, their dependents, and beneficiaries are entitled as the result of
their employment under the terms of employee benefit plans and practices of
Employer. Executive, and Executive's dependents, shall also be entitled to
participate in, be covered by and receive benefits under, Employer's long-term
disability, medical, dental, health, welfare, accidental death and
dismemberment, and life insurance plans, other present or equivalent successor
plans and practices of Employer, for which officers, their dependents, and
beneficiaries are eligible, if any, and its 401(k) Plan. Executive, his spouse
and his dependents shall also be entitled to all payments or other benefits
under any such plan or practice subsequent to the Period of Employment as a
result of participation in such plan or practice during the Period of
Employment, as provided in such plans. In addition, the Company shall reimburse
Executive pursuant to Executive Medical Reimbursement Plan for actual medical
and dental expenses incurred by Executive and his dependents during the Period
of Employment which are not covered by the Company's medical or dental plans;
provided, however, that in no event shall the Company be obligated to reimburse
Executive for more than $20,000 for such medical or dental expenses in any
calendar year.
b. Nothing in this Agreement shall preclude Employer from
amending or terminating any employee benefit plan or practice other than the
perquisites set forth in paragraphs 6(a), (b) and (c) and Executive Medical
Reimbursement Plan.
8. Stock Options.
Group shall grant to Executive options (the "Options") to
purchase shares of the Group's common stock, par value $.01 per share under the
Group's Management Stock Option Plan (the "Stock Option Plan"), to be adopted by
Group immediately following the Closing. The Stock Option Plan shall specify the
number of Options to be granted and dates on which and the terms and conditions
under which Options shall be awarded substantially in accordance with the terms
set forth in Schedule C.
5
6
9. Effect of Death.
If Executive dies during the Period of Employment, the legal
representative of Executive shall be entitled to (i) the base salary provided
for in paragraph 5(a)(i) above for the month in which Executive's death shall
have occurred and the following month plus all accrued and unpaid vacation, at
the rate being paid at the time of death, (ii) the remaining installments of the
Special Bonus provided for in paragraph 5(a)(iii) above, payable only to the
extent and at such times as Executive would otherwise be entitled to the Special
Bonus in accordance with the terms of such paragraph, and (iii) a pro rata
portion of any bonus which would have been payable under the Management
Incentive Compensation Plan for the year in which Executive's death occurs
payable on the date bonuses under such Plan are otherwise payable. The Period of
Employment shall be deemed to have ended as of the close of business on the last
day of the month following the month in which death shall have occurred but
without prejudice to any payments otherwise due in respect of Executive's death.
10. Effect of Disability.
a. In the event of the Disability of Executive during the
Period of Employment, Executive shall be entitled to (i) all compensation,
benefits and perquisites hereunder through the effective date of his termination
of employment, (ii) an amount equal to the base salary provided for in paragraph
5(a)(i) above, at the rate being paid at the time of the commencement of
Disability, for the period of such Disability plus six (6) months from the end
of the period that establishes such Disability, as described in paragraph 10(c)
below, (iii) the remaining installments of the Special Bonus provided for in
paragraph 5(a)(iii) above, payable only to the extent and at such times as
Executive would otherwise be entitled to the Special Bonus in accordance with
the terms of such paragraph, and (iv) a pro rata portion of any bonus which
would have been payable under the Management Incentive Compensation Plan for the
year in which Executive's Disability occurs payable on the date bonuses under
such Plan are otherwise payable. The Period of Employment shall be deemed to
have ended as of the last day of the period that establishes Disability.
6
7
b. The amount of any payments due under paragraph 10(a)(i)
shall be reduced by any payments to which Executive may be entitled for the same
period because of disability under any disability plan or insurance of Employer
or as the result of workers' compensation or non-occupational disability
payments.
c. The term "Disability", as used in this Agreement, shall
mean an illness or accident occurring during the Period of Employment which
prevents Executive from performing Executive's duties under this Agreement for
a period in excess of 270 days (whether or not consecutive) or 180 consecutive
days, as the case may be, in any twelve-month period during the Period of
Employment. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of such period (either the 270th or 180th day,
as the case may be) but without prejudice to any payments due Executive in
respect of disability under paragraph 11(a) or otherwise due to Executive or
Executive's legal representative or beneficiary and without prejudice to
continue any medical insurance coverage, subject to the terms of the plan or
applicable law.
11. Provision of Severance Allowance.
a. Either Group or the Company may terminate the Period of
Employment and Executive's employment at any time during the Period of
Employment (i) for any reason upon thirty (30) days' notice to Executive and
(ii) immediately for Cause, as defined in paragraph 12(c) below. Executive may
terminate his employment hereunder at any time during the Period of Employment
upon sixty (60) days' written notice to the Company. If Executive's employment
is terminated by either Group or the Company during the Period of Employment
for any reason or if Executive terminates his employment hereunder during the
Employment Period, Employer shall pay Executive (i) all compensation, benefits
and per quisites accrued hereunder through the effective date of his termination
of employment, (ii) the remaining installments of the Special Bonus provided for
in paragraph 5(a)(iii) above, payable only to the extent and at such times as
Executive would otherwise be entitled to the Special Bonus in accordance with
the terms of such paragraph, and (iii) three times the base salary provided for
in paragraph 5(a)(i) above, at the rate being paid at the date of termination,
7
8
plus three times the most recent fiscal year's incentive bonus compensation
provided for in paragraph 5(a)(ii) above, plus a pro rata portion of the highest
incentive bonus pay able under paragraph 5(a)(ii) above in the three most recent
fiscal years.
b. During the three-year period following a termination of
Executive's employment provided for in paragraph 11(a)(i) other than any
termination for Cause, Executive shall be entitled to: (i) receive the car
allowance and reimbursement of operating expenses, maintenance and insurance as
provided in paragraph 6(a) hereof; (ii) use of an office, appropriate for use by
an executive; and (iii) continued coverage under the Company's health, dental
and life insurance plans, as well as Executive Medical Reimbursement Plan,
providing reimbursement of up to $20,000 medical or dental expense not otherwise
covered by insurance. If and to the extent that such benefits shall not be
payable under any such plan by reason of Executive's no longer being an
employee, Group or the Company shall pay or provide for payment of such benefits
to Executive, Executive's dependents, and beneficiaries.
c. For the purpose of paragraph 11(a) above and any other
provision of this Agreement, termination of Executive's employment shall be
deemed to have been for Cause only
i. if termination of Executive's employment shall have been
the result of an act or acts of fraud, theft, or embezzlement on the
part of Executive which, if convicted, would constitute a felony, or
ii. if termination of Executive's employment results from
Executive's refusal to perform the duties appropriate to Executive's
position or a material breach by Executive of Paragraphs 13, 14 or 15
of this Agreement and Executive has been given written notice by the
Board of Directors of the Company with respect to such refusal or such
material breach and Executive continues to refuse unreasonably the
performance of the duties specified or to materially breach the
provisions of Paragraphs 13, 14 or 15 of this Agreement.
8
9
12. Resignation.
If Executive's employment hereunder terminates (except due to
his death), Executive agrees to resign effective immediately upon termination of
the Period of Employment all positions as an officer or director of Group or the
Company. If Executive fails to deliver such resignation, the Boards of Directors
of Employer may deem Executive to have resigned pursuant to this paragraph 12
effective upon the termination of his employment.
13. Non-Disclosure.
Executive shall not at any time after the date hereof divulge,
provide, or make assessable to anyone, other than in connection with the
business of the Company, any knowledge or information with respect to
confidential or secret processes, inventions, discoveries, improvements,
formulae, plans, materials, devises, materials, devices or ideas or other
know-how, whether patentable or not, with respect to any confidential or secret
aspects of the Company's business (including without limitation customer lists,
supplier lists and pricing arrangements with customers or suppliers or any
similar lists, arrangements or understandings, marketing plans, sales plans,
manufacturing plans, management organization information, data and other
information relating to members of the Board of Directors of Group and the
Company, management and GSCP), operating policies or manuals, business plans,
financial records, packaging designs or other financial, commercial, business or
technical information relating to the Employer or any of their subsidiaries or
information designated as confidential or proprietary that the Employer or any
of their subsidiaries may receive belonging to suppliers, customers or others
who do business with the Employer or any of their subsidiaries (collectively,
"Confidential Information"); provided, however, that Executive may disclose such
information (i) at the request of any governmental regulatory authority or in
connection with an examination of Executive by any such authority, (ii) pursuant
to subpoena or other court process, (iii) when required to do so in accordance
with the provisions of any applicable law or regulation, or (iv) if such
information has otherwise been made generally available to the public other than
by reason of Executive's breach of this paragraph 13. Upon the expiration of the
9
10
Period of Employment or upon termination of Executive's employment, Executive or
his legal representative shall promptly deliver to the Company all property
relating to the business of the Company, including all Confidential Information,
and all copies thereof that are in the possession or control of Executive.
14. Inventions.
Executive shall promptly disclose to the Company all
processes, trademarks, inventions, improvements and discoveries related to the
business of the Company (collectively, "Developments") conceived or developed by
him or with others during the Period of Employment, if such Developments were
conceived or developed during the Company's business hours or through the use of
the Company's resources. All such Developments shall be the sole and exclusive
property of the Company. Executive, upon the request of and at the Company's
expense, shall assist the Company in obtaining patents thereon and execute all
documents and other instruments necessary or proper to obtain letters patent and
to vest the Company with full title thereto.
15. Post-Employment Activities
a. Covenant Not to Compete. Following termination of
Executive's employment by the Company or Group for Cause or by Executive for any
reason, Executive shall not compete, directly or indirectly, in any area of the
continental United States, with the business conducted by the Company or any of
its subsidiaries, whether as an employee, director, agent, principal,
stockholder or limited partner owning more than 5% of any class of securities or
equity of a corporation, association or partnership, or by maintaining any
other type of interest in or affiliation with or providing any assistance
whatsoever to, any other person, firm, corporation or entity in any business
located or doing business within the continental United States which at the time
of Executive's affiliation therewith is in direct competition with any facet of
the business then being conducted by the Company or any of its subsidiaries, for
a one-year period beginning on the date of Executive's departure and terminating
on the first anniversary of the date of his departure (the "Non-Compete
Period").
10
11
b. Non-Solicitation of Employees. During (i) Executive's
employment with the Company or any of its subsidiaries or Affiliates and (ii)
for a two-year period beginning on the date of Executive's departure and
terminating on the second anniversary of the date of his departure, Executive
shall not directly or indirectly induce any employee of the Company or any of
its subsidiaries to terminate employment with such entity, and shall not
directly or indirectly, either individually or as owner, agent, employee,
consultant or otherwise, employ or offer employment to any person who is or was
employed by the Company or any of its subsidiaries, unless such person shall
have ceased to be employed by such entity for a period of at least six months.
c. Non-Solicitation of Customers and Suppliers. During (i)
Executive's employment with the Company or Group and (ii) the Non-Compete
Period, Executive shall not, directly or indirectly, interfere with the business
relationship of the Company or any of its subsidiaries, with any customer or
supplier, or prospective customer or supplier, with respect to which Executive
has had access to Confidential Information or with which Executive dealt in
connection with Executive's duties for Group, the Company or any of its
subsidiaries.
d. Injunctive Relief with Respect to Covenants. Executive
acknowledges that irreparable damage would result to Group and the Company if
the provisions of paragraphs 13, 14 and 15(a) through (c) were not specifically
enforced, and agrees that Group and the Company shall be entitled to any
appropriate legal, equitable or other remedy, including injunctive relief, a
restraining order or other equitable relief (without the requirement to post
bond) with respect to any failure of Executive to comply with the provisions of
such sections.
e. Severability; Reformation. In the event that one or more of
the provisions of this paragraph 15 shall become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining pro visions contained herein shall not be affected thereby. In the
event any provision of paragraph 13 or 15(a) through (c) is not enforceable in
accordance with its terms, such paragraph shall be reformed to make such
paragraph enforceable
11
12
in a manner which provides the Company or any of its subsidiaries the maximum
rights permitted at law.
f. Waiver. Waiver by Group, the Company or any of its
subsidiaries of any breach or default by Executive of any of the terms of
paragraphs 13, 14 or 15(a) through (c) shall not operate as a waiver of any
other breach or default, whether similar to or different from the breach or
default waived. No waiver of any provision of paragraph 13, 14 or 15(a) through
(c) shall be implied from any course of dealing between the Company or any of
its subsidiaries and Executive or from any failure by the Company or any of its
subsidiaries to assert its rights hereunder on any occasion or series of
occasions.
16. Insurance.
The Company shall have the right at its own cost and expense
to apply for and to secure in its own name, or otherwise, life, health or
accident insurance or any or all of them covering Executive, and Executive
agrees to submit to usual and customary medical examination and otherwise to
cooperate with the Company in connection with the procurement of any such
insurance and any claims thereunder.
17. Notices.
All notices, requests and other communications pursuant to
this Agreement shall be in writing and shall be deemed to have been given if
delivered in person or by courier, the date delivered, and if sent by telegraph,
telex, facsimile transmission, the date sent, or if mailed by registered or
certified mail, postage prepaid, the date mailed, if sent, delivered or mailed
to the parties at the following addresses:
If to Executive:
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
12
13
If to the Employer:
Telex Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
Greenwich Street Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Any party may, by written notice to the other, change the
address to which notices to such party are to be delivered, sent or mailed.
18. No Trust Created.
Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust fund of any kind. Any funds which may be set aside or provided
for in this Agreement shall continue for all purposes to be a part of the
general funds of Employer and no person other than Employer shall by virtue of
the provisions of this Agreement have any interest in such funds. To the extent
that any person acquires a right to receive payments from Employer under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of Employer.
19. Successor In Interest.
This Agreement and the rights and obligations hereunder shall
be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, and shall also bind and inure to the benefit
of any successor of Employer by merger or consolidation or any purchaser or
assignee of all or substantially all of its assets, but, except to any such
successor, purchaser, or assignee of Employer, neither this Agreement nor any
rights or benefits hereunder may be assigned by either party hereto.
13
14
20. Full Discharge of Company Obligations.
The amounts payable to Executive pursuant to paragraph 9, 10
and 11 following termination of his employment shall be in full and complete
satisfaction of Executive's rights under this Agreement but shall not affect
Executive's rights under any other agreement with Group or the Company. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon Executive's receipt of such amounts, the Employer
shall be released and discharged from any and all liability to Executive in
connection with this Agreement or otherwise in connection with Executive's
employment with the Employer and their subsidiaries.
21. Arbitration of Disputes.
The parties agree that any controversy or claim arising out of
or relating to this Agreement, or any dispute arising out of the interpretation
or application of this Agreement, which the parties hereto are unable to
resolve, shall be finally resolved and settled exclusively by arbitration in
Minnesota by a single arbitrator under the American Arbitration Association's
Commercial Arbitration Rules then obtaining and in accordance with the
substantive laws of the State of Minnesota. If the parties cannot agree upon an
arbitrator out of the panel, then for the sole purpose of selecting an
arbitrator, each party (the Company and Group shall be considered collectively
one party) shall choose its own independent representative and those inde-
pendent representatives shall in turn choose the single arbitrator within thirty
(30) days of the date of the selection of the first independent representative.
The parties severally recognize and consent to the jurisdiction over each of
them by the courts of the State of Minnesota. The legal expenses of Executive
shall be reimbursed to Executive if an award is rendered in favor of Executive
or if the arbitrator finds that Executive acted reasonably and exercised good
faith in demanding arbitration of any such dispute.
22. Governing Laws.
This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of
14
15
Minnesota applicable to agreements made and to be performed entirely in
Minneapolis, Minnesota.
23. Entire Agreement.
This Agreement shall constitute the entire agreement between
the parties superseding all prior agreements, other than the letter agreement,
dated April 15, 1992, between Group or the Company and Executive, and may not be
modified or amended and no waiver shall be effective unless by written document
signed by both parties hereto; provided, however, that any increase in base
salary, as provided in paragraph 5 hereof, shall become an amendment to this
Agreement when approved by the Board of Directors of the Company and recorded in
the approved minutes of such meeting.
IN WITNESS WHEREOF, the parties execute this Employment
Agreement as of the date first above written.
EXECUTIVE: GST ACQUISITION CORP.
_______________________________ By:_______________________________
▇▇▇▇ ▇. ▇▇▇▇
15
16
[Letterhead of Telex]
April 15, 1992
▇▇▇▇ ▇. ▇▇▇▇, President
Telex Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Retirement Benefits
Dear ▇▇▇▇:
This letter ("Agreement") will serve to confirm the
understanding between you and Telex Communications, Inc. (the "Company") as to
your eligibility to receive the benefit of coverage under the Company's
retirement plans, a defined benefit pension plan and a 401(k) plan, from your
employment start date of October 25, 1991.
Under the Company's qualified retirement plans, participation
eligibility begins after completion of twelve full months of service with the
Company.
In order to provide you with the reasonable equivalent of
immediate service credit and eligibility under these retirement plans from the
date of hire, the Company hereby agrees to the following:
1. Upon your termination of eligibility under the Company's
defined benefit pension plan (as defined in such plan), a hypothetical
pension benefit calculation shall be made crediting one (1) additional
year of service to your pension service calculation. The difference
between the actual pension benefit lump sum payment option and the
hypothetical pension benefit lump sum payment option (subject to then
current IRS rules on maximum qualified pension plan benefits) shall
17
be paid to you at the time of your leaving the pension plan.
2. With respect to the Company's 401(k) plan, a one-time
payment shall be made to you after calendar year 1992 to compensate you
for the lost tax benefit opportunity in not being able to contribute
funds up to the IRS 1992 maximum amount of $8,728 as a result of your
ineligibility until November 1, 1992. This one-time payment shall be
calculated as follows:
IRS Maximum Contribution Allowed $8,728.00
Less ▇▇▇▇ ▇. ▇▇▇▇ actual 1992
401(k) contribution, estimated
at 2,917.00
---------
$5,811.00
Multiplied by 40% marginal
income tax rate x .40
---------
One-time payment (estimated) $2,324.40
=========
If this Agreement accurately represents our understanding,
please indicate your acceptance by signing and returning the enclosed extra copy
of this Agreement.
Sincerely,
TELEX COMMUNICATIONS, INC.
By __________________________________
Its__________________________________
* * * * *
ACCEPTED:
______________________________ Dated:_________________ , 1992
▇▇▇▇ ▇. ▇▇▇▇
2
18
Schedule A
Telex Communications Group, Inc.
Management Cash Compensation Plan
Management Incentive Compensation (the "MIC Plan")
- Objective: The MIC Plan is intended to motivate key management
to achieve company objectives by providing a direct link
between the company objectives and incentive compensation
awards.
- Incentive Compensation Awards: Awards are
calculated as a percent of base salary based on
achieving certain performance hurdles as defined
below.
a. Threshold: 90% of objectives equal to 25% of
base salary
b. Target: 100% of objectives equal to 50% of
base salary
c. Upside: 110% of objectives equal to 75% of
base salary
d. Maximum: 120% of objectives equal to 100% of
base salary
- Performance Measurement: For top three senior
officers, there are two weighted components upon
which an award is based:
- 75% - quantitative comparison of objectives
against AOP
- corporate revenue
- corporate EBITDA
19
- 25% - qualitative judgment by the CEO and Board of
Directors.
- For SBU executives, there are three weighted
components upon which an aware is based:
- 30% - quantitative comparison of objectives
against total company AOP
- 40% - quantitative comparison against SBU AOP
- SBU Revenue
- SBU Gross Profit
- SBU Operating Income
- 30% - qualitative judgment by CEO and Board
of Directors
- Other Participants - based on total company performance,
business unit performance, if applicable, and an evaluation of
individual performance.
- General Guidelines for MIC Plan
- Awards are earned based on company's audited
results
- AOP is to include an accrual for possible
award payout
- Awards are pro-rated for results between the
specified breakpoints (i.e. target, maximum,
upside and threshold)
- Awards above maximum are at the specified
maximum and there is no award below threshold
amount.
- Only with the recommendation of the CEO and
approval of the Board of Directors can a
participant be added.
2
20
- Officers terminating due to death, disability,
retirement or for good reason are eligible to receive
a pro-rata award for the year, paid at the normal
date.
- Officers terminating voluntarily or terminated for
performance reasons or cause prior to the date of
payout are not eligible to receive an award.
3
21
SCHEDULE B
Telex Communications Group, Inc.
Cash Bonus Plan
INITIAL INCENTIVE AWARD:
A cash bonus shall be paid to the following individuals no later than the first
anniversary of the Effective Time (as defined in the Recapitalization Agreement
and Plan of Merger, dated as of March __, 1997, by and among Greenwich II LLC,
GST Acquisition Corp. and Telex Communications Group, Inc.) in the amounts set
forth below:
80% of AOP Achieved
-------------------
▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
ADDITIONAL AWARDS:
An additional cash bonus shall be paid to the following individuals on each of
the first five anniversaries of the Effective Time in the amounts set forth
below:
22
100% of AOP 105% of AOP
Achieved Achieved
----------- -----------
▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
AOP shall be determined under the Management Incentive Compensation Plan.
An additional cash bonus shall be paid to the following individuals on the
earlier of the fifth anniversary of the Effective Time or a Change in Control
(as defined in the 1997 Telex Communications Group, Inc, Stock Option Plan) in
the amounts set forth below:
110% of LTP 120% of LTP
Achieved Achieved
----------- -----------
▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
LTP shall be determined as set forth in Schedule B to the Stock Option Plan.
2
23
SCHEDULE C
Number of Shares Number of Shares Number of Shares
Available under Available under Available under
the Initial Option the Performance the Super
Grant Option Grant Performance
Option ▇▇▇▇▇
▇▇▇▇ 6,658 6,593 5,356
All numbers are subject to adjustment based on the final Merger Consideration
payable pursuant to Section 1.3(a) of the Merger Agreement and to reflect a
twenty-to-one stock split to become effective upon the Merger.