RETENTION AGREEMENT
Exhibit
10
Execution
Version
This
Retention Agreement (the
“Agreement”), dated as of January 13, 2008 is made and entered into by
and between Xxxx X. Xxxxx (the “Employee”), Terex Corporation, a Delaware
corporation (the “Parent”) and A.S.V., Inc., a Minnesota corporation (the
“Company”).
WHEREAS,
by reason of the consummation
of the transactions contemplated by the Agreement and Plan of Merger (the
“Merger Agreement”), dated as of January 13, 2008, by and between the
Parent, the Company and Terex Minnesota, Inc., a Minnesota corporation and
a
wholly owned subsidiary of the Parent, the Parent will own all of the
outstanding shares of common stock of the Company;
WHEREAS,
the Employee is currently
employed by the Company;
WHEREAS,
the Parent wishes to ensure
that the Employee’s services are retained following the closing of the Merger,
under the terms and conditions set forth in this Agreement, and the Employee
wishes to obtain the benefits of those terms and conditions and remain employed
by the Company following the Effective Time;
WHEREAS,
in the event that the Merger
Agreement is terminated prior to the Effective Time, this Agreement shall be
void ab initio and of no force and effect; and
WHEREAS,
all capitalized terms used but not defined herein shall have the meaning set
forth in the Merger Agreement.
NOW,
THEREFORE, in consideration of the
promises and covenants hereinafter set forth, the continued employment by the
Company of the Employee, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the Employee, the parties
agree as follows.
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1.
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Retention
Bonus.
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1.1.
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The
Employee is eligible to receive a retention bonus (the “Retention
Bonus”) equal to $190,625, which shall be payable upon the
terms and conditions set forth in Section 1.2 and as otherwise provided
herein.
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1.2.
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Payment
of the Retention Bonus shall be made as follows: The Employee
shall be paid, as soon as practicable after the Closing Date, (a)
an
amount in cash representing a portion of the Retention Bonus equal
to
$50,000, less applicable withholding taxes, and (b) the balance of
the
Retention Bonus in restricted shares of common stock, par value $.01
per
share, of the Parent (the “Common Stock”) (the “Restricted Stock
Award”), provided that the Employee (x) is employed by the
Company on the Closing Date, and (y) executes (i) on the Closing
Date, the release attached hereto as Exhibit A and (ii) on the
date of grant, a restricted stock agreement and/or any other documents
required pursuant to the Parent plan under which the Restricted Stock
Award is made. The Restricted Stock Award shall vest in
equal installments on each of the first four anniversaries of the
Closing
Date (each such date, a “Vesting Date”), provided that the
Employee is employed by the Company on the Vesting Date. The
number of shares of the Common Stock subject to the Restricted Stock
Award
shall be based on the closing price of a share of the Common Stock
on the
Closing Date. In the event that (a) the Company terminates the
Employee’s employment with the Company without Cause (as defined below) or
(b) the Employee terminates the Employee’s employment with the Company for
Good Reason (as defined below), then an additional number of
shares of the Common Stock subject to the Restricted Stock Award
(such
additional shares, the “Fractional Vesting Number”) shall vest, and
no additional shares shall vest following termination. The
Fractional Vesting Number shall be an amount, rounded up or down
to the
nearest whole number, that is equal to (a) the total number of shares
of
the Common Stock subject to the Restricted Stock Award, multiplied
by (b)
a fraction, the numerator of which is the total number of days which
have
elapsed between the immediately prior Vesting Date and the date of
termination, and the denominator of which is 1460. The Employee
understands and agrees that the Retention Bonus does not constitute
eligible compensation under any pension or savings plan of the Parent
or
any of its subsidiaries or affiliates, including the
Company.
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2.
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Termination
of Employment.
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2.1.
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If
the Employee’s employment with the Company is terminated without Cause or
the Employee terminates the Employee’s employment with the Company for
Good Reason on a date (the “Termination Date”) prior to the second
anniversary of the Closing Date, the Company shall pay to the Employee
(a)
any unpaid base salary earned by the Employee through the Termination
Date, (b) any unpaid annual bonus amount with respect to the fiscal
year
preceding the fiscal year in which the Termination Date occurs, (c)
an
amount representing credit for any unpaid vacation time accrued but
unused
by the Employee as of the Termination Date, and (d) the Severance
Payment
(as defined below); provided that the Employee (x) executes the
release attached hereto as Exhibit A following the Termination Date
and
(y) has not violated Section 3 of this
Agreement.
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“Severance
Payment” means a lump sum cash payment equal to the sum of: (a)
an amount equal to (i) the annual bonus paid to the Employee with respect to
the
fiscal year preceding the fiscal year in which the Termination Date occurs,
multiplied by (ii) a fraction, the numerator of which is equal to the number
of
full months that have elapsed in the year of termination as of the Termination
Date and the denominator of which is twelve (12), plus (b) the
Employee’s monthly base salary for the month prior to the Termination Date,
multiplied by twenty-four (24).
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2.2.
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For
purposes of this Agreement, “Cause” means (i) the willful and
continued failure by the
Employee to substantially perform the Employee’s duties with the Company
(other than any such failure resulting from the Employee’s temporary
incapacity due to disability or physical or mental illness); (ii)
willful
and substantial misconduct on the part of the Employee in connection
with
the performance of such duties; (iii) the Employee’s conviction of a
felony, or a misdemeanor involving moral turpitude; or (iv) the Employee
engaging in conduct which is materially injurious to the Company
or its
affiliates including, without limitation, violating or breaching
the
Company’s code of ethics and
conduct.
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2.3.
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For
purposes of this Agreement, “Good Reason” means a reduction of the
Employee’s base salary by twenty-five percent (25%) or more, unless in
connection with a similar reduction for similarly situated employees
of
the Company.
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2.4.
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All
payments made to the Employee pursuant to Section 2.1 shall be subject
to
withholding for any applicable income, payroll, or other taxes as
required
by law.
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2.5.
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Notwithstanding
any other provision of this Agreement, if the Employee is a “specified
employee” as defined in Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”), and the regulations and interpretative
guidance thereunder at the time of the Employee’s Termination Date, the
payments provided pursuant to Section 2.1 of this Agreement shall
not be
made or commenced until the date that is six (6) months and one (1)
day
after the Termination Date. If the payments under this
Agreement would be subject to tax pursuant to Section 409A of the
Code,
the parties shall make reasonable efforts to restructure the payments
to
avoid imposition of such tax.
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3.
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Covenants.
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3.1.
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Unauthorized
Disclosure. The Employee agrees and understands that in the
Employee’s position with the Company, the Employee has been and will be
exposed to and has and will receive non-public information relating
to the
confidential affairs of the Company, the Parent, and their respective
subsidiaries and affiliates (collectively, the “Entities”),
including, without limitation, technical information, intellectual
property, business and marketing plans, strategies, customer information,
software, other information concerning the products, promotions,
development, financing, expansion plans, business policies and practices
of the Entities and other non-public forms of information considered
by
the Entities to be confidential and in the nature of trade secrets
(including, without limitation, ideas, research and development,
know-how,
technical data, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals) (collectively, the
“Confidential Information”). The Employee agrees that at
all times during the Employee’s employment with the Company, except as may
be required for the Employee to discharge the Employee’s duties, and
thereafter, the Employee shall not disclose Confidential Information,
either directly or indirectly, to any individual,
corporation, partnership, limited liability company, association,
trust or
other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof (each, a
“Person”) without the prior written consent of the Company and
shall not use or attempt to use any such information in any manner
other
than in connection with the Employee’s employment with the Company, unless
required by law to disclose such information, in which case the Employee
shall provide the Company with written notice of such requirement
as far
in advance of such anticipated disclosure as possible. This
confidentiality covenant has no temporal or geographical
restriction. Upon termination of the Employee’s employment with
the Company, the Employee shall promptly supply to the Company (or
destroy, at the Company’s option) all property, keys, notes, memoranda,
writings, lists, files, reports, customer lists, correspondence,
tapes,
disks, cards, surveys, maps, logs, machines, technical data and any
other
tangible product or document which has been produced by, received
by or
otherwise submitted to the Employee during or prior to the Employee’s
employment with the Company, and any copies thereof in the Employee’s (or
capable of being reduced to the Employee’s)
possession.
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3.2.
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Non-Competition. By
and in consideration of the Company’s entering into this Agreement and the
Merger Agreement, and the payments to be made by the Company hereunder,
and in further consideration of the Employee’s exposure to the
Confidential Information of the Entities, the Employee agrees that
the
Employee shall not, during the Employee’s employment with the Company and
thereafter for a period ending twenty-four (24) months following
the
termination of the Employee’s employment for any reason (the
“Restriction Period”), directly or indirectly, own, manage,
operate, join, control, be employed by, or participate in the ownership,
management, operation or control of, or be connected in any manner
with,
including, without limitation, holding any position as a stockholder,
director, officer, consultant, independent contractor, executive,
partner,
or investor in, any Restricted Enterprise (as defined below);
provided, that in no event shall ownership of three percent (3%)
or less of the outstanding securities of any class of any issuer
whose
securities are registered under the Securities Exchange Act of 1934,
as
amended, standing alone, be prohibited by this Section 3.2 so long
as the
Employee does not have, or exercise, any rights to manage or operate
the
business of such issuer other than rights as a stockholder
thereof. For purposes of this Section 3.2, “Restricted
Enterprise” shall mean any Person that is engaged, in any geographic
area in which the Parent, the Company or any of its or their subsidiaries
(the “Company Group”) operates or markets, in any business which is
in competition with the business of the Company Group (i) conducted
during
the preceding twelve (12) months (or following the Employee’s termination
of employment, the twelve (12) months preceding the date of termination
of
the Employee’s employment with the Company) or (ii) proposed to be
conducted by any member of the Company Group in its business plan
as in
effect at that time (or following the Employee’s termination of
employment, the business plan as in effect as of the date of termination
of the Employee’s employment with the Company). During the
Restriction Period, upon request
of the Company, the Employee shall notify the Company of the Employee’s
then-current employment
status.
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3.3.
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Non-Solicitation
of Employees. During the Restriction Period, the Employee
shall not directly or indirectly hire, contact, induce or solicit
(or
assist any Person to hire, contact, induce or solicit) for employment
any
person who is, or within six (6) months prior to the date of such
solicitation was, an employee of any
Entity.
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3.4.
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Interference
with Business Relationships. During the Restriction Period,
the Employee shall not directly or indirectly contact, induce or
solicit
(or assist any Person to contact, induce or solicit) any customer
or
client of any Entity to terminate its relationship or otherwise cease
doing business in whole or in part with the Entity, or directly or
indirectly interfere with (or assist any Person to interfere with)
any
material relationship between the Entities and any of its customers
or
clients.
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3.5.
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Extension
of Restriction Period. The Restriction Period shall be
tolled for any period during which the Employee is in breach of any
of
Section 3.2, 3.3 or 3.4 hereof.
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3.6.
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Remedies. The
Employee agrees that any breach of the terms of this Section 3 would
result in irreparable injury and damage to the Company Group for
which the
Company Group
would have no adequate remedy at law; the Employee therefore also
agrees
that in the event of said breach or any threat of breach, any member
of
the Company Group shall be entitled to an immediate injunction and
restraining order, from any court with jurisdiction over the Employee
and
the matter, to prevent such breach and/or threatened breach and/or
continued breach by the Employee and/or any and all Persons acting
for
and/or with the Employee, without having to prove damages, in addition
to
any other remedies to which the member of the Company Group may be
entitled at law or in equity. The terms of this Section 3.6
shall not prevent any member of the Company Group from pursuing any
other
available remedies for any breach or threatened breach hereof, including,
without limitation, the recovery of damages from the
Employee. The Employee further agree that the provisions of the
covenants contained in this Section 3 are reasonable and necessary
to
protect the businesses of the Entities because of the Employee’s access to
Confidential Information and the Employee’s material participation in the
operation of such
businesses.
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3.7.
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Acknowledgment. The
Employee acknowledges that the Parent and the Company would not have
entered into the Merger Agreement unless the Employee entered into
this
Agreement.
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4.
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Non-Disparagement. From
and after the Effective Time and following termination of the Employee’s
employment with the Company, the Employee shall not make any statement
that criticizes, ridicules, disparages, or is otherwise derogatory
of any
member of the Company Group or any of its employees, officers, directors,
or stockholders.
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5.
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Enforceability
of Covenants. The Company’s obligation to make any or all
of the payments provided for under this Agreement shall cease and
terminate in the event of a material breach by the Employee of
any of the
covenants contained herein. The Employee acknowledges that such
payments are full and adequate consideration for the Employee’s covenants
with the Company.
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6.
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Stock
Options. By executing this Agreement, the Employee consents
to the treatment of the Options held by the Employee that is described in
Section 3.6 of the Merger
Agreement.
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7.
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Severability. Whenever
possible, each provision or portion of any provision of this Agreement,
including those contained in Section 3 hereof, will be interpreted
in such
manner as to be effective and valid under applicable law. The
invalidity or unenforceability of any provision or portion of any
provision of this Agreement in any jurisdiction shall not affect
the validity
or enforceability of the remainder of this Agreement in that jurisdiction
or the validity or enforceability of this Agreement, including that
provision or portion of any provision, in any other
jurisdiction. In addition, should a court or arbitrator
determine that any provision or portion of any provision of this
Agreement, including those contained in Section
3 hereof, is not reasonable or valid, either in period of time,
geographical area, or otherwise,
the parties agree that such provision should be interpreted and enforced
to the maximum extent which such court or arbitrator deems reasonable
or
valid.
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8.
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Assignments,
etc. The Employee shall not transfer, assign, anticipate,
mortgage, or otherwise encumber in advance any of the benefits payable
hereunder. The Employee agrees that the Company may assign this
Agreement to the Parent or any of its subsidiaries, and this Agreement
shall be binding upon the parties hereto, their heirs, executors,
administrators, successors or
assigns.
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9.
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Amendments. This
Agreement may be amended or revoked at any time only by mutual written
agreement of the parties.
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10.
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Entire
Agreement. This Agreement represents the complete agreement
and understanding between the Employee and the Company pertaining
to the
Employee’s eligibility for a retention bonus and supersedes all prior
agreements or understandings, written or oral, between the parties
with
respect to such subject matters. In the event that the Merger
Agreement is terminated prior to the Effective Time, this Agreement
shall
be void ab initio and of no force and
effect.
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11.
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Governing
Law. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the
State
of New York without giving effect to the conflicts of laws principles
thereof.
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[signature
page follows]
IN
WITNESS WHEREOF, the parties have
exercised this Agreement as of the date first set forth above.
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TEREX
CORPORATION
By: /s/
Xxxx X
Xxxxx
Name:
Xxxx X Xxxxx
Title:
Senior Vice President
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A.S.V.,
INC.
By: /s/
Xxxxxxx X.
Xxxxxx
Name:
Title:
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XXXX
X. XXXXX
By: /s/ Xxxx
X. Xxxxx
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Exhibit
A
RELEASE
OF CLAIMS
This
RELEASE OF CLAIMS, dated as of _______________ is made and entered into by
and
between A.S.V., Inc., a Minnesota corporation (the “Company”), Terex
Corporation, a Delaware Corporation (the “Parent”) and Xxxx X. Xxxxx (the
“Employee”) (the “Release”).
WHEREAS,
the Company and the Employee
are parties to that certain Retention Agreement, dated as of January 13, 2008
(the “Retention Agreement”); and
WHEREAS,
the Company’s obligations to
make the payments described in Sections 1 and 2 of the Retention Agreement
are
conditioned upon the Employee’s execution, delivery, and non-revocation of a
valid and enforceable general release of claims.
NOW
THEREFORE, in consideration of the
mutual covenants contained herein and in the Retention Agreement and other
valid
consideration, the sufficiency of which is acknowledged, the parties hereto
agree as follows:
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1.
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General
Release of Claims.
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(a)
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Release. In
consideration of the payments and benefits to be made to the Employee
pursuant to the Retention Agreement, the Employee, with the intention
of
binding the Employee and the Employee’s heirs, executors, administrators
and assigns, does hereby release, remise, acquit and forever discharge
the
Parent, the Company and each of its and their subsidiaries and affiliates
(the “Company Affiliated Group”), their present and former
officers, directors, executives, agents, shareholders, attorneys,
employees and employee benefits plans (and the fiduciaries thereof),
and
the successors, predecessors and assigns of each of the foregoing
(collectively, the “Company Released Parties”), of and from any and
all claims, actions, causes of action, complaints, charges, demands,
rights, damages, debts, sums of money, accounts, financial obligations,
suits, expenses, attorneys’ fees and liabilities of whatever kind or
nature in law, equity or otherwise, whether accrued, absolute, contingent,
unliquidated or otherwise and whether now known, unknown, suspected
or
unsuspected which the Employee, individually or as a member of a
class,
now has, owns or holds, or has at any time heretofore had, owned
or held,
against any Company Released Party (an “Action”) arising on or
prior to the date hereof out of or in connection with the Employee’s
service as an employee, officer, shareholder and/or director to any
member
of the Company Affiliated Group (or the predecessors thereof), including
for breach of contract, impairment of economic opportunity, defamation,
intentional infliction of emotional harm or other tort and for any
violation of applicable state and local labor and employment laws
(including, without limitation, all laws concerning harassment,
discrimination, retaliation and other unlawful or unfair labor and
employment practices), any and all Actions based on the Employee
Retirement Income Security Act of 1974 (“ERISA”), and any and all
Actions arising under the civil rights laws of any federal, state
or local
jurisdiction, including, without limitation, Title VII of the Civil
Rights
Act of 1964 (“Title VII”), the Americans with Disabilities Act
(“ADA”), Sections 503 and 504 of the Rehabilitation Act, the Family
and Medical
Leave Act and the Age Discrimination in Employment Act (“ADEA”),
excepting only:
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i.
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any
Action by the Employee to enforce the Employee’s rights under the
Retention Agreement;
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ii.
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rights
to indemnification the Employee may have (A) under applicable corporate
law, (B) under the by-laws or certificate of incorporation of any
Company
Released Party or (C) as an insured under any director’s and officer’s
liability insurance policy now or previously in
force;
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iii.
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claims
(A) for benefits under any health, disability, retirement, deferred
compensation, life insurance or other, similar employee benefit plan
or
arrangement of any member of the Company Affiliated Group and (B)
for
earned but unpaid base salary through the date hereof;
and
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iv.
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claims
for the reimbursement of unreimbursed business expenses incurred
prior to
the date hereof.
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(b)
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No
Admissions, Complaints or Other Claims. The Employee
acknowledges and agrees that the release of claims set forth herein
is not
to be construed in any way as an admission of any liability whatsoever
by
any Company Released Party, any such liability being expressly
denied. The Employee also acknowledges and agrees that the
Employee has not, with respect to any transaction or state of facts
existing prior to the date hereof, filed any Actions against any
Company
Released Party with any governmental agency, court or
tribunal.
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(c)
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Application
to all Forms of Relief. This Release applies to any relief
no matter how called, including, without limitation, wages, back
pay,
front pay, compensatory damages, liquidated damages, punitive damages
for
pain or suffering, costs and attorney’s fees and
expenses.
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(d)
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Specific
Waiver. The Employee specifically acknowledges that the
Employee’s acceptance of the terms of this Release, is, among other
things, a specific waiver of any and all Actions under Title VII,
ADEA,
ADA and any state or local law or regulation in respect of discrimination
of any kind; provided, however, that nothing herein shall be
deemed, nor does anything herein purport, to be a waiver of any right
or
Action which by law the Employee is not permitted to
waive.
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2.
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Voluntariness. The
Employee acknowledges and agrees that the Employee is relying solely
upon
the Employee’s own judgment in deciding whether to execute this Release;
that the Employee is over eighteen years of age and is legally competent
to sign this Release; that the Employee is signing this Release of
the
Employee’s own free will; that the Employee has read and understood this
Release before signing it; and that the Employee is signing this
Release
in exchange for consideration that the Employee believes is satisfactory
and adequate. The
Employee also acknowledges and agrees that the Employee has been
informed
of the right to consult with legal counsel and has been encouraged
to do
so.
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3.
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Severability. If
any provision or portion of this Release or the application of any
provision or portion of this Release shall be determined to be invalid
or
unenforceable to any extent or for any reason, all other provisions
and
portions of this Release shall remain in full force and shall continue
to
be enforceable to the fullest and greatest extent permitted by
law.
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4.
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Governing
Law. Except for matters hereunder as to which federal law
is applicable, this Release shall be construed and enforced in accordance
with, and the rights and obligations of the parties hereto shall
be
governed by, the laws of the State of New York, without giving effect
to
the conflicts of law principles
thereof.
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[signature
page follows]
IN
WITNESS WHEREOF, the parties have executed this Release as of the date
first
set
forth above.
