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Exhibit 21
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 10th day of May, 1999, by and between
GRADALL INDUSTRIES, INC., a Delaware corporation (the "Company"), and XXXXX X.
XXXXXXXX ("Executive").
WITNESSETH THAT:
WHEREAS, the Executive has been employed by the Company as its
President pursuant to the terms of an employment agreement by and between The
Gradall Company and the Executive dated September 5, 1985, as restated and
amended by agreements dated July 21, 1987, January 19, 1988, July 20, 1988, July
17, 1989, February 5, 1993, October 13, 1995, and January 1, 1998 (the "Prior
Employment Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the
Prior Employment Agreement to provide for the continued employment of the
Executive after the sale of the Company to JLG Industries, Inc.
("JLG") upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive's services are of great value to the Company and
it is recognized that substantial inducement must be offered to the Executive in
order that the Company may retain his services.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties agree as follows:
SECTION 1. DUTIES. The Company hereby agrees to continue to employ the
Executive as President and Chief Executive Officer of the Company, and the
Executive hereby agrees to continue to serve the Company in that capacity in
accordance with the terms and conditions set forth herein:
(a) The Executive shall be vested with all powers and rights
attendant to the office of President and Chief Executive
Officer, and shall have full authority and responsibility,
subject to the general direction, approval and control of the
Board of Directors of the Company, to formulate policies and
administer the Company in all respects.
(b) If elected or appointed by the Board of Directors, the
Executive shall serve as a director of the Company without
additional compensation.
(c) During the term of this Agreement, the Executive shall devote
all of his business time, attention, energy and
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skill to the performance of the duties and services described
herein, and shall not engage directly or indirectly in any
other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage,
except with the written consent of the Company's Board of
Directors, provided, that the provisions of this Section 1(c)
shall not restrict the Executive's investment of his personal
assets or the Executive's participation in any professional,
academic or civic activity.
SECTION 2. TERM. Subject to prior termination as set forth in Section
10 hereof, the term of the Executive's employment under this Agreement shall be
for a period of three (3) years, beginning on the date this Agreement becomes
effective.
SECTION 3. COMPENSATION. The Company shall pay to the Executive as
compensation for his services hereunder a base salary of Two Hundred Twenty-five
Thousand Dollars ($225,000) per year, payable in equal semi-monthly
installments, subject to withholding and other applicable taxes. The salary
provided herein shall be subject to adjustment based on annual reviews conducted
by the Company (as so adjusted from time to time, "Base Salary"). Effective on
the date this Agreement becomes effective, "Base Salary" shall include an
additional $12,360 per year in lieu of the automobile allowance previously
provided.
SECTION 4. INCENTIVE COMPENSATION. The Executive shall be entitled to
participate in any incentive compensation plans established by the Company from
time to time. The amount payable to the Executive under existing management
incentive compensation plans for 1999 shall be payable on or before September
30, 1999 in an amount equal to 7/12 of the bonus that would be payable for
calendar year 1999 assuming that the Company would have achieved 24% growth in
earnings per share compared to 1998. Effective as of August 1, 1999, the
Executive shall participate in the management incentive compensation plans and
stock based compensation plans of JLG as approved by the JLG Compensation
Committee from time to time, and shall no longer participate in existing Company
management incentive compensation plans.
SECTION 5. EXPENSES. The Executive is authorized to incur reasonable
expenses in connection with the business of the Company and the performance of
his duties hereunder, including expenses for entertainment, travel and similar
items. The Company will pay or reimburse the Executive for all such expenses
upon the presentation by the Executive of an itemized account of such
expenditures and any other documentation or substantiation of expenses which may
be required for compliance with applicable state and federal tax laws.
SECTION 6. VACATIONS. The Executive shall be entitled to
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four (4) weeks of vacation each year, during which time his compensation shall
be paid in full.
SECTION 7. [Reserved]
SECTION 8. EXECUTIVE BENEFITS. (a) The Executive shall be entitled to
all benefits offered by the Company to any of its executive or salaried
employees including, but not limited to, major medical health insurance,
hospitalization insurance, life insurance, travel and accident insurance, and
disability insurance, including, but not limited to, those benefits the
Executive currently receives from the Company; provided, however, to the extent
that any benefit provided to the Executive under this Section 8 is, or is
equivalent to, a Broad-Based Benefit, the benefit provided to the Executive
shall reflect any generally applicable change to or reduction of such
Broad-Based Benefit. The term "Broad-Based Benefit" shall mean any applicable
benefit under any plan, program, or arrangement that is provided or made
available to employees generally and shall not include any benefit considered to
be an "executive" benefit that is provided or made available only to upper-level
management.
(b) DISABILITY. The Company shall maintain in full force and effect and
pay all premiums due under that certain disability insurance policy, insuring
the Executive and issued by The New England Insurance Companies under Policy No.
DO99437 (the "Disability Policy"). In the event that the Executive is unable to
perform his duties hereunder by reason of illness or incapacity, the Executive
shall continue to receive all amounts payable under this Agreement, until the
Executive receives payments under the Disability Policy. If the Executive
receives the full benefit amount payable under the Policy, the Company shall
have no further obligation to make payments under this Agreement to the
Executive during the period in which the Executive is receiving the full benefit
under the Disability Policy. During any such period of disability, the Executive
shall continue to receive all benefits theretofore received by the Executive.
Upon the termination of the Executive's disability and the Executive's right to
receive the full benefit payable under the Disability Policy, the Executive's
full compensation shall be reinstated in full, subject to the provisions of
Section 10(a).
SECTION 9. DEFERRAL OF COMPENSATION. The Executive shall be entitled to
participate in the Company's Supplemental Executive Retirement Plan, the Benefit
Restoration Plan and any other deferred compensation program maintained by the
Company.
SECTION 10. TERMINATION. The Executive's employment hereunder may be
terminated in accordance with the following terms and conditions:
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(a) The Company may terminate the Executive's employment hereunder
upon ninety (90) days written notice to the Executive, in the
event that the Executive has been unable to perform his duties
by reason of illness or incapacity, which inability continues
for a consecutive twelve month period, provided, that the
Executive is receiving the full benefit amount payable under
the Disability Policy.
(b) Notwithstanding anything herein to the contrary, the Company
shall have the right to terminate the Executive's employment
hereunder, effective upon written notice of such termination,
and shall not have an obligation to pay any amounts provided
under Section 10(d) hereof upon the happening of any of the
following events:
(i) the failure by the Executive to observe the
restrictive covenants set forth in Sections 11,
if applicable, and 12 hereof, as determined by a
court of competent jurisdiction;
(ii) the commission by the Executive of a material
theft or embezzlement of Company property;
(iii) the conviction of the Executive for a crime
resulting in injury to the business or property
of the Company; or
(iv) the commission of any act by the Executive in the
performance of his duties hereunder adjudged by a
court of competent jurisdiction to amount to
gross, willful or wanton negligence.
(c) The Executive may terminate his employment with the Company
upon ninety (90) days written notice to the Company. Upon the
effective date of such termination, the Company shall have no
further obligation to pay any amounts provided for in this
Agreement, except as set forth in Sections 10(d), 10(f) and
10(h) hereof.
(d) In the event the Executive's employment with the Company (or
any successor company) is terminated within three (3) years
following the date this Agreement becomes effective, and such
termination is due to the Executive's dismissal (other than
pursuant to Sections 10(a) or 10(b)), or the Executive's
resignation for Good Reason, as hereinafter defined, the
Company (or such successor company) shall:
(i) continue to pay the Executive for a period
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equal to the remaining term of this Agreement as
set forth in Section 2 (the "Continuation
Period") (A) his Base Salary, including any
portion thereof the receipt of which the
Executive may previously have elected to defer,
plus (B) for each month in the Continuation
Period, 1/12 of his incentive compensation
awarded with respect to services rendered during
the calendar year preceding such termination
(including any portion thereof which the
Executive elected to defer), which incentive
compensation shall in no event be less than forty
percent (40%) of his Base Salary for such year,
(ii) continue for the duration of the Continuation
Period the Executive's participation in the major
medical, health, hospitalization, life, travel
and accident and disability insurance plans or
programs provided to the Executive prior to the
date hereof, or provide equivalent benefits, at
no premium cost to him, provided, however, that
to the extent that any benefit provided to the
Executive under this Section 10(e)(ii) is, or is
equivalent to, a Broad-Based Benefit, the benefit
provided to the Executive shall reflect any
generally applicable change to or reduction of
such Broad-Based Benefit,
(iii) treat the Executive as if he had retired at the
expiration of the Continuation Period at age 60
for the purpose of determining benefits due and
payable to him under the Company's Employees'
Retirement Plan and The Gradall Company Benefit
Restoration Plan,
(iv) provide the Executive with outplacement services
by a firm selected by the Executive, at the
expense of the Company, in an amount up to
fifteen percent (15%) of the Executive's Base
Salary, and
(v) provide the Executive with the benefits set forth
in Section 15.
(e) The term "Good Reason" shall mean (i) a material breach of
this Agreement by the Company or its successor; (ii) a
reduction in the Executive's Base Salary or employee benefits
referred to in Sections 8 and 9 hereof; provided, however,
that any generally applicable change to or reduction of a
Broad-Based Benefit shall not be
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considered a reduction in employee benefits; (iii) a material
reduction in fringe benefits; (iv) a change of 5% or more in
the Bonus Target Percentage applicable to the Executive under
the JLG Management Incentive Plan as in effect for calendar
year 1999, or a variance of the range of the Company Modifier
Percentage or the Individual Performance Modifier from the
respective ranges thereof applicable to other officers of JLG;
(v) the assignment or demotion of the Executive to a position
that is not a senior executive management position or that
involves the performance of functions which are not senior
executive management functions; (vi) a change in the
Executive's reporting responsibility to someone other than the
President of JLG; (vii) a change in position, duties or
responsibilities that renders the Executive ineligible to
participate in JLG's stock option plans or reduces the number
of shares covered by options awarded to him thereunder from
the number of option shares he would have been awarded had
such change not been made; (viii) the relocation of the
Executive's principal work place without his consent to a
location outside the New Philadelphia, Ohio metropolitan area.
(f) In the event of termination pursuant to Sections 10(a), 10(b),
10(c), or 10(d) hereof, the Executive shall receive the entire
balance of any sums earned by him prior to termination and
such other benefits which may be due him including, but not
limited to, a prorata portion of amounts earned by the
Executive under any incentive compensation plans maintained by
the Company or JLG.
(g) Upon termination of his employment, for any reason, the
Executive shall promptly surrender to the Company all property
provided him by the Company for use in relation to his
employment, and, in addition, the Executive shall surrender to
the Company any and all documents, files, records or other
material and information of or pertaining to the Company or
its business operations.
(h) The Company (or any successor company) shall pay or reimburse
the Executive for all costs and expenses including, without
limitation, court costs and reasonable attorneys' fees,
incurred by Executive in connection with any claim, action or
proceeding brought to enforce or interpret any provision of
this Section 10 or challenging the validity or enforceability
of any provision thereof.
SECTION 11. NON-COMPETITION. During the period of his
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employment with the Company, the Executive covenants and agrees that he shall
not do any of the following:
(a) Own, manage, operate, join, control, be employed by,
participate in, or be connected in any manner with the
ownership, management, operation, or control of any business
that is competitive with the types of businesses conducted by
the Company at that time within any areas in which the Company
intends to conduct business, as known to Executive by reason
of Executive's affiliation with the Company. Nothing herein
shall prohibit Executive from owning stock or other securities
of a competitor, provided that Executive's equity interest
shall not exceed five percent (5%) of the total outstanding
stock of such competitor, and provided Executive, in fact,
does not have the power to control or direct the management or
policies of such competitor and does not serve as a director
or officer thereof, and is not otherwise associated with any
competitor, except as consented to by the Company.
(b) Induce or influence any employee, independent contractor,
agent, customer or supplier of the Company to terminate or
curtail his, her or its employment or business relationship
with the Company.
(c) Solicit or sell any product or service which is competitive
with those offered by the Company to any customer which did
business with the Company at any time during the term of
Executive's employment with the Company.
SECTION 12. CONFIDENTIALITY. During the period of his employment by the
Company and for a period of six (6) months following its termination, for any
reason, the Executive covenants and agrees that he shall not use, disseminate,
or disclose, for his own benefit, or for the benefit of any person, firm,
business, or other entity, any confidential information pertaining to the
Company unless such information is first made public by the Company; the Company
authorizes, in writing, the use, dissemination, or disclosure of such
information; or as otherwise required by law. For purposes of this subparagraph,
confidential information is information which is not generally known to the
Company's industry, and relates, by way of example and not by way of limitation,
to the Company's manufacturing process, cost and pricing data, supply sources,
contracts, and customer lists.
SECTION 13. MITIGATION. The Executive shall not be obligated to seek
other employment following termination of employment hereunder; however, any
amounts owing to Executive
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under Section 10(d)(other than subsection (ii) thereof) of this Agreement shall
be offset against all amounts earned by the Executive from other employment
(including self employment) beginning one year after termination of employment
hereunder. The Executive's entitlements under Section 10(d)(ii) shall terminate
immediately upon the Executive's becoming entitled to coverage of a similar
nature under benefit plans of a subsequent employer, subject to the Executive's
rights to continuation coverage under the Company's plans at his expense under
COBRA.
SECTION 14. GOLDEN PARACHUTE EXCISE TAX. (a) If any of the payments or
benefits received or to be received by the Executive in connection with a Change
in Control or the Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement) (such
payments or benefits, excluding the Gross-Up Payment defined below, being
hereinafter referred to as the "Total Payments") will be subject to the excise
tax imposed under Section 4999 (the "Excise Tax"), then the provisions of either
subclause (i) or (ii) of this section shall apply: (i) if the Total Payments are
less than 115% of the maximum amount of such payments that could be made without
imposition of Excise Tax (the "Safe Harbor Amount"), then the Total Payments
will be reduced to the Safe Harbor Amount; or (ii) if the Total Payments equal
or exceed 115% of the Safe Harbor Amount, the Company shall pay to the Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Total Payments and
any federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments.
(b) The calculations necessary to give effect to this section shall be
performed by the accounting firm which was immediately prior to the Change in
Control, the Company's independent auditor (the "Auditor"). For purposes of
determining whether any of the Total Payments will exceed the Safe Harbor Amount
and the amount of the Excise Tax, if any, (i) all of the Total Payments shall be
treated as "parachute payments" (within the meaning of section 280G(b)(2) of the
Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to the Executive and selected by the Auditor, such payments or
benefits (in whole or in part) do not constitute parachute payments, including
by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code) in excess of the Base Amount allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be
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determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the date of termination of employment, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.
(c) In the event that subclause (i) of this Section 14(a) applies, the
Executive and the Company shall jointly agree on the allocation of any reduction
in the Total Payments.
(d) The provisions of this Section 14 shall be applied without giving
effect to any cap or limitation on benefits under the Company's Supplemental
Executive Retirement Plan that is intended to avoid Excise Tax, and the Company
hereby waives the application of any such provision to the Executive.
SECTION 15. SUPPLEMENTAL RETIREMENT BENEFITS. In the event that the
Executive's employment is terminated under circumstances entitling him to the
payments and benefits set forth in Section 10(e), the Executive shall be
entitled to the following additional benefits:
(a) Under the Company's Supplemental Executive Retirement Plan (i)
three years of additional service credit for vesting purposes; and (ii) three
additional years of Company contributions, each in an amount not less than the
Company contribution for the year prior to the year of termination of
employment.
(b) Under the Deferred Compensation Agreement between the Executive and
the Company dated July 19, 1989, the Executive shall be treated as if he had
retired from the Company on or after age 65.
(c) The Company shall continue to pay all premiums due under The New
England Mutual Life Insurance Company Policy No. 6801161 insuring the life of
Executive in the amount of $500,000 and shall otherwise comply with the
provisions of the Split-Dollar Life Insurance Agreement between the Company and
the Executive dated August 30, 1995.
SECTION 16. NOTICES. Any notice required or desired to be given
pursuant to this Agreement shall be in writing and sent by certified mail to the
parties at the following addresses, or to such other addresses as either may
designate in writing to the other party:
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To the Company: Gradall Industries, Inc.
000 Xxxx Xxxxxx X.X.
Xxx Xxxxxxxxxxxx, Xxxx 00000
To Executive: Xxxxx X. Xxxxxxxx
000 Xxxxxxxxx Xxxxx X.X.
Xxx Xxxxxxxxxxxx, Xxxx 00000
SECTION 17. WAIVER. Failure to insist upon strict compliance with any
of the terms, covenants, or conditions hereof shall not be deemed a waiver of
such term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 18. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision. In the event that any part of a covenant contained herein is
determined by a court of law to be invalid, a judicially enforceable provision
shall be substituted in its place. Any covenant so modified shall be binding
upon the parties and shall have the same force and effect as if originally set
forth in this Agreement.
SECTION 19. MODIFICATION. This Agreement may be amended only in
writing, signed by both parties hereto.
SECTION 20. HEADINGS. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
thereof.
SECTION 21. ASSIGNMENT. The Executive acknowledges that the services to
be rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. However, the rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company including, but not limited to, any corporation which
may acquire all or substantially all of the Company's assets and business, or
which may be consolidated or merged with or into the Company.
SECTION 22. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Ohio.
SECTION 23. NOVATION. When it becomes effective, this Agreement will
terminate and supersede the Prior Employment Agreement.
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SECTION 24. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the Company and the Executive with regard to
all matters herein. There are no other agreements, conditions or
representations, oral or written, express or implied, with regard thereto.
SECTION 25. EFFECTIVENESS. This Amended and Restated Employment
Agreement shall become effective only upon the consummation of the merger
contemplated by the Agreement and Plan of Merger among Gradall Industries, Inc.,
JLG Acquisition Corp. and JLG Industries, Inc. dated as of May 10, 1999. Unless
and until such merger is consummated, the Amended and Restated Employment
Agreement between the Company and the Executive dated as January 1, 1998 shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
GRADALL INDUSTRIES, INC.
By: /s/ Xxxxxxx Xxx
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Xxxxxxx Xxx
Chairman
Xxxxx X. Xxxxxxxx
