EXHIBIT 10.40
1996 FORM 10-K
BUCYRUS INTERNATIONAL, INC.
1996 EMPLOYEES' STOCK INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT, made and entered into as of this 7th day of November,
1996, by and between BUCYRUS INTERNATIONAL, INC., a Delaware corporation (the
"Company"), and XXXXXX X. SMOKE (the "Grantee").
WITNESSETH:
WHEREAS, the Company has adopted the 1996 Employees' Stock Incentive
Plan (the "Plan"), the terms of which, to the extent not stated herein, are
specifically incorporated by reference in this Agreement; and
WHEREAS, one of the purposes of the Plan is to permit the granting of
stock appreciation rights ("Stock Appreciation Rights") with respect to shares
of the Company's common Stock, $.01 par value (the "Common Stock"), to certain
key employees of the Company and its affiliates; and
WHEREAS, the Grantee is now employed by the Company or an affiliate of
the Company in a key capacity, and the Company desires the Grantee to remain
in such employ, and to receive incentive compensation based on the
appreciation in value of the stock of the Company in order to increase his
incentive and personal interest in the welfare of the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein set forth, the parties hereby mutually covenant and
agree as follows:
1. Grant of Stock Appreciation Rights. Subject to the terms and
conditions of the Plan and this Agreement, the Company grants to the Grantee
Stock Appreciation Rights (as defined in the Plan) with respect to the
aggregate amount of Fifty Thousand (50,000) shares of Common Stock (the "SAR
Shares").
2. Xxxxx Xxxxx. The xxxxx xxxxx for the SAR Shares shall be $8.75
per share, which is equal to 100% of the last sale price for the Common Stock
on the Nasdaq National Market System on the trading date next preceding the
date Grantee commenced employment with the Company.
3. Exercisability and Termination of Stock Appreciation Rights.
Except as otherwise provided herein, the Stock Appreciation Rights may be
exercised only while the Grantee is an employee of either the Company or an
affiliate of the Company and only if the Grantee has been continuously so
employed since the date of grant of the Stock Appreciation Rights. Subject to
the vesting provisions of this Paragraph 3 and Paragraph 6, the Stock
Appreciation Rights may be exercised by the Grantee in whole, or in part from
time to time, during the 10-year period beginning on the date hereof, and
ending on November 6th, 2006.
Notwithstanding the above provisions of this Paragraph 3 regarding
the exercisability of the Stock Appreciation Rights, Grantee shall not have
the right to exercise the Stock Appreciation Rights hereunder until the sixth
anniversary of the date of this Agreement unless portions of the Stock
Appreciation Rights shall vest sooner based on the Company's achievement of
EBITDA (as hereinafter defined) goals for fiscal years ending prior to the
third, fourth and/or fifth anniversaries of the date of this Agreement,
pursuant to the provisions of this Paragraph 3.
The portion of Stock Appreciation Rights which shall vest sooner
than the sixth anniversary of the date of this Agreement shall be thirty-three
and one-third percent (33 1/3%) of the total number of SAR Shares on each of
the third, fourth and fifth anniversaries of the date of this Agreement if the
Company shall have achieved the EBITDA goal for the fiscal year of the Company
ending immediately prior to such anniversary date, as set forth in Schedule I
attached hereto. Such vesting shall occur if such EBITDA goal is achieved
notwithstanding the termination of Grantee's employment with the Company (i)
on or after the last day of the fiscal year to which such goal relates but
prior to the determination of EBITDA for such year or (ii) as of an
anniversary of the Employment Agreement pursuant to the second sentence of
Section 9(a) of the Employment Agreement. If such EBITDA goal for any fiscal
year is not achieved, the shares of SAR Shares which would otherwise have been
vested shall continue to be unvested until the vesting date hereinafter
specified, notwithstanding that an EBITDA goal may be met for a subsequent
fiscal year within the Period of Vesting (as hereinafter defined). For
purposes hereof, "EBITDA" shall mean the Company's earnings before interest,
taxes, depreciation and amortization determined in accordance with generally
accepted accounting principles in a manner consistent with the Company's past
practice. The determination of EBITDA for any fiscal year shall be made by
the firm of certified public accountants engaged to audit the Company's
financial statements for such fiscal year. In the event the Company shall
fail to achieve the EBITDA goal for any such year and the Board of Directors
of the Company shall determine that such failure was primarily due to
circumstances beyond the control of the Grantee, the Board of Directors shall
direct that the number of SAR Shares which would have vested if such EBITDA
goal had been achieved shall be vested; provided, however, that the
determination of the Board of Directors with respect to the primary cause of
such failure shall be final and nonappealable by the Grantee. To the extent
any SAR Shares have not been previously vested pursuant to the provisions of
this Paragraph 3, such SAR Shares shall be fully vested upon the sixth
anniversary of the date of this Agreement. Such six-year period is herein
referred to as the "Period of Vesting."
In the event of a Change of Control (as defined in Paragraph 10(b)
of the Employment Agreement), the Stock Appreciation Rights shall be
automatically fully vested and exercisable, subject to forfeiture to the
extent provided in Paragraph 10(c) of the Employment Agreement.
4. Manner of Exercise. Subject to the provisions of Paragraphs 3 and
6 hereof, the Stock Appreciation Rights may be exercised only by written
notice to the Company, served upon the Secretary of the Company at its office
at South Milwaukee, Wisconsin, specifying the number of shares in respect to
which the Stock Appreciation Rights are being exercised. In the discretion of
the Company, as determined by the Committee or the Board of Directors at the
time of exercise, the amount payable to Grantee by reason of the exercise of
the Stock Appreciation Rights, determined in accordance with the provisions of
the Plan, may be settled in cash or Common Stock or any combination of them.
5. Nontransferability of the Stock Appreciation Rights. The Stock
Appreciation Rights shall not be assignable, alienable, saleable or
transferable by the Grantee other than by will or the laws of descent and
distribution; provided, however, that the Grantee shall be entitled, in the
manner provided in Paragraph 9 hereof, to designate a beneficiary to exercise
his rights, and to receive any amounts payable with respect to the Stock
Appreciation Rights upon the death of the Grantee. The Stock Appreciation
Rights may be exercised during the lifetime of the Grantee only by the Grantee
or, if permitted by applicable law, the Grantee's guardian or legal
representative.
6. Exercisability After Termination of Employment.
(a) Death or Disability; Retirement. In the event the Grantee dies
while he is in the employ of the Company or any affiliate or if his employment
is terminated by reason of his Retirement (as hereinafter defined) or by
reason of his Disability (as hereinafter defined) the Stock Appreciation
Rights, to the extent not theretofore exercised, may be exercised in full as
follows: (i) by the legal representative of the Grantee (who for purposes of
this Agreement may be the Grantee's beneficiary as designated pursuant to
Paragraph 9) at any time within twelve (12) months after the date of the
Grantee s death while in the employ of the Company or any affiliate; or (ii)
by the Grantee or his legal representative or guardian at any time within
twelve months after the termination of the Grantee's employment by reason of
Retirement (as hereinafter defined) or by reason of his Disability (as
hereinafter defined), but in no event under subparagraphs (i) or (ii) later
than ten years after the date of grant of the Stock Appreciation Rights. For
purposes of this Agreement, Grantee's employment shall be deemed to have been
terminated by reason of his "Retirement" if his employment is terminated
voluntarily or involuntarily for any reason other than Cause (as hereinafter
defined) on or after attaining age 65 or, voluntarily by Employee with the
consent of the Board of Directors of the Company after not less than five (5)
years of service with the Company, which consent will not be unreasonably
withheld. For purposes hereof, "Disability" shall mean "Disability" as
defined in Paragraph 9(c) of the Employment Agreement between Grantee and the
Company dated the date hereof ("Employment Agreement").
(b) Change of Control. In the event of a Qualifying Termination of
Grantee's employment in connection with a Change of Control (as defined in
Paragraph 10(b) of the Employment Agreement), the Stock Appreciation Rights
shall be automatically fully vested and Grantee shall have the right at any
time within the three (3) months after the date of Grantee's Qualifying
Termination, but in no event later than ten years after the grant of the Stock
Appreciation Rights, to exercise the Stock Appreciation Rights, provided that
the accelerated vesting of the Stock Appreciation Rights shall be subject to
forfeiture to the extent provided in Paragraph 10(c) of the Employment
Agreement.
(c) Termination for Cause. In the event the Grantee's employment is
terminated for Cause (as hereinafter defined), the Stock Appreciation Rights,
to the extent not theretofore exercised, shall immediately terminate upon such
termination of employment. For purposes of this Agreement, the definition of
the term Cause shall mean "Cause" as defined in Section 9(e) of the Employment
Agreement.
(d) Other. In the event that the Grantee is discharged or leaves the
employ of the Company and its affiliates for any reason (other than the death
or Disability of the Grantee, the Retirement of the Grantee as defined in
Paragraph 6(a) hereof, a Qualifying Termination in connection with a Change of
Control, or the termination of the Grantee for Cause), the Stock Appreciation
Rights, to the extent not theretofore exercised, may be exercised to the
extent vested by the Grantee or by his legal representative or guardian at any
time within three (3) months after the date of termination of employment, but
in no event later than ten years after the date of grant of the Stock
Appreciation Rights.
7. Tax Withholding. The Company may deduct and withhold from any
cash otherwise payable to the Grantee (whether payable as settlement for the
exercise of the Stock Appreciation Rights, salary, bonus or other
compensation) such amount as may be required for the purpose of satisfying the
Company's obligation to withhold Federal, state or local taxes. Further, in
the event the amount so withheld is insufficient for such purpose, the Company
may require that the Grantee pay to the Company upon its demand or otherwise
make arrangements satisfactory to the Company for payment of such amount as
may be requested by the Company in order to satisfy its obligation to withhold
any such taxes.
8. Capital Adjustments Affecting the Common Stock. The number of SAR
Shares subject hereto and the related per share exercise price shall be
subject to adjustment in accordance with Section 4(b) of the Plan.
9. Designation of Beneficiary. (a) The person whose name appears on
the signature page hereof after the caption "Beneficiary" or any successor
designated by the Grantee in accordance herewith (the person who is the
Grantee's beneficiary at the time of his death is herein referred to as the
"Beneficiary") shall be entitled to exercise the Stock Appreciation Rights to
the extent they are exercisable, after the death of the Grantee. The Grantee
may from time to time revoke or change his beneficiary without the consent of
any prior beneficiary by filing a new designation with the Committee. The
last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the Grantee's death,
and in no event shall any designation be effective as of a date prior to such
receipt.
(b) If no such Beneficiary designation is in effect at the time of the
Grantee's death, or if no designated Beneficiary survives, the Grantee or if
such designation conflicts with law, the Grantee's estate acting through his
legal representative, shall be entitled to exercise the Stock Appreciation
Rights, to the extent they are exercisable after the death of the Grantee. If
the Committee is in doubt as to the right of any person to exercise the Stock
Appreciation Rights, the Company may refuse to recognize such exercise,
without liability for any changes in value of the SAR Shares, until the
Committee determines the person entitled to exercise the Stock Appreciation
Rights, or the Company may apply to any court of appropriate jurisdiction and
such application shall be a complete discharge of the liability of the Company
therefor.
10. Restriction Exercise. In addition to other limitations on
exercise of the Stock Appreciation Rights provided hereunder, Grantee further
agrees that, to the extent necessary to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, the Stock Appreciation Rights
provided in this Agreement may not be exercised prior to the date six months
after the date on which the Plan was approved by the shareholders of the
Company.
11. Status of Grantee. The Grantee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any of the SAR
Shares or the Stock Appreciation Rights. Neither the Plan nor the Stock
Appreciation Rights shall confer upon the Grantee any right to continue in the
employ of the Company, nor to interfere in any way with the right of the
Company to terminate the employment of the Grantee at any time.
12. Powers of the Company Not Affected. The existence of the Stock
Appreciation Rights shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issuance of bonds, debentures, preferred or prior preference stock ahead
of or affecting the Common Stock or the rights thereof, or dissolution or
liquidation of the Company, or any sale or transfer of all or any part of the
Company's assets or business or any other corporate act or proceeding, whether
of a similar character or otherwise.
13. Interpretation by Committee. As a condition of the granting of
the Stock Appreciation Rights, the Grantee agrees, for himself and his legal
representatives or guardians, that this Agreement shall be interpreted by the
Committee and that any interpretation by the Committee of the terms of this
Agreement and any determination made by the Committee pursuant to this
Agreement shall be final, binding and conclusive.
14. Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
day and year first above written.
BUCYRUS INTERNATIONAL, INC.
("Company")
By: /s/X. X. Xxxxxxxxxx
Title: __________________________________
/s/Xxxxxx X. Smoke
XXXXXX X. SMOKE, Grantee
Beneficiary: Xxxx X. Xxxxxxx
Address of Beneficiary:745 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Beneficiary's Tax Identification
No.: ###-##-####
SCHEDULE I
to
STOCK APPRECIATION RIGHTS AGREEMENT
Dated November __, 1996
EBITDA GOALS
Fiscal Year
Ending EBITDA Goal
1998 $23,946,000
1999 $29,203,000
2000 $31,453,000
