SUPPLEMENT
TO
CONTRACT OF EMPLOYMENT
Supplement, dated as of April 1, 2000, to Contract of Employment dated
as of September 1, 1999 between Terex Corporation (the "Company") and Xxxxx
Xxxxxxx ("Executive").
WHEREAS, the Company and Executive entered into that certain
Contract of Employment dated as of September 1, 1999 (the "Original Contract").
WHEREAS, the Company and the Executive desire to supplement the
Original Contract as provided for in this Supplement.
NOW, THEREFORE, the Original Contract is supplemented by adding the
following additional provisions:
Sec. 13 Defined Terms
Unless otherwise defined herein, the definitions of capitalized terms used in
this contract are provided in Sec. 20 hereof.
Sec. 14 Change in Control
If the Executive's employment shall be terminated within twenty-four (24) months
following a Change in Control (defined below), unless such termination is (i) by
the Company for Cause, (ii) by reason of death or Permanent Disability, or (iii)
by the Executive without Good Reason, in lieu of the two year notice period
provided for termination of Executive in Sec. 11 and any other payments or
benefits to Executive provided for in the Original Contract, the Company shall
pay to the Executive an amount equal to the sum of (a) a lump sum equal to two
(2) times Executive's annual salary in effect at the time written notice of
termination is given to Executive; (b) two (2) times Executive's last paid
annual bonus for a calendar year preceding the calendar year in which the Date
of Termination occurs; and (c) any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (a),
(b) and (c) shall be hereinafter referred to as the "Severance"). The Company
shall pay to the Executive any Severance in a cash lump sum payment
simultaneously with the termination of Executive's employment following any
Change in Control. In addition, simultaneously with the termination of
Executive's employment following any Change in Control (x) all unvested stock
options and stock grants previously awarded to Executive shall immediately and
unconditionally vest and Executive shall have the right to exercise any stock
options held by him in accordance with their terms but in no event shall
Executive have less than six (6) months following the Date of Termination to
exercise said options; (y) all units granted to Executive pursuant to the
Company's 1999 Long Term Incentive Compensation Plan shall immediately and
unconditionally vest for their maximum cumulative value and be paid to Executive
simultaneously with the termination of employment following any Change in
Control; and (z) the Company shall provide Executive with continuing coverage
under the life, disability, accident and health insurance programs for employees
of the Company generally and under any supplemental programs covering executives
of the Company, as from time to time in effect, for the twenty four (24) month
period from such termination or until Executive becomes eligible for
substantially similar coverage under the employee welfare plans of a new
employer, whichever occurs earlier, provided that Executive's right to elect
continued medical coverage after termination of employment under Part 6 of Title
I of the Employee Retirement Income Security Act of 1974, as amended, shall be
deemed satisfied by the coverage provided in this clause (z). Executive shall
also be entitled to a continuation of all other benefits in effect at the time
of termination (including, without limitation, automobile, country club,
vacation and pension benefits, if applicable) for the twenty four (24) month
period following such termination or until Executive becomes eligible for
substantially similar benefits from a new employer.
Sec. 15 Excise Tax Gross-Up
1. Notwithstanding anything in this Agreement to the contrary and except
as set forth below, in the event it shall be determined that any
payment or distribution by the Company or its affiliates to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise,
but determined without regard to any additional payments required
under this Sec. 15) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") or any ---- interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing, if it shall be determined
that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 105% of the greatest amount (the "Reduced
Amount") that could be paid to the Executive such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.
2. Subject to the provisions of Paragraph 3 of this Sec. 15, all
determinations required to be made under this Sec. 15, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by PricewaterhouseCoopers LLP or
such other nationally recognized certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the
Executive simultaneously with any event giving rise to a Gross-Up
Payment. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Sec. 15, shall be paid by the Company to the Executive
simultaneously with any event giving rise to a Gross-Up Payment. Any
determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Paragraph 3 of this Sec. 15 and the Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.
3. The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment or the Underpayment.
Such notification shall be given as soon as practicable but no later
than ten (10) business days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive
shall:
(a) provide the Company any information reasonably requested by
the Company relating to such claim,
(b) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good faith in order effectively
to contest such claim, and
(d) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Paragraph 3 of Sec. 15, the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the Executive to pay
the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the
Company shall pay the amount of such payment to the Executive, along
with an additional Gross-Up Payment, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto)
imposed with respect to such payment or with respect to any imputed
income with respect to such payment; and further provided that any
extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
4. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Paragraph 3 of this Sec.15, the Executive receives
any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Paragraph 3 of this
Sec. 15) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto).
Sec. 16 Payment for Past Service
Notwithstanding any other provisions of this Agreement, if the Executive's
employment is terminated at any time following a Change in Control in accordance
with Sec. 14, the Company shall pay the Executive, in cash, an aggregate amount
not less than the sum of (a) Executive's annual bonus for the most recently
completed fiscal year to the extent such bonus has not been paid to Executive,
which bonus shall not be less than the annual bonus paid to Executive during the
preceding year, if any; (b) the product of (i) a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (ii) the annual bonus for
the calendar year preceding the Date of Termination that has most recently been
paid to the Executive; (c) any accrued vacation pay, to the extent not
theretofore paid to Executive; and (d) any other amounts earned by Executive
prior to the Date of Termination but not previously paid.
Sec. 17 Noncompete and Confidentiality
1. In consideration of the agreements and payments of the Company herein,
in the event Executive's employment with the Company is terminated and
Executive receives payment from the Company in accordance with Sec.
14, the Executive agrees that for a period of twenty-four (24) months
from the Date of Termination, he will not, without the prior written
permission of the Company, directly or indirectly, (i) enter into the
employ of or render any services to any person, firm, or corporation
engaged in the manufacture or sale of products currently manufactured
or distributed by the Company, or if Executive does not have Company
wide responsibility, the divisions and subsidiaries for which
Executive has management responsibility, which directly or indirectly
compete with the business of the Company or such divisions and
subsidiaries, as the case may be (a "Competitive Business"); (ii)
engage in any Competitive Business for his own account; (iii) become
associated with or interested in any Competitive Business as an
individual, partner, shareholder, creditor, director, officer,
principal, agent, employee, trustee, consultant, advisor or in any
other relationship or capacity; or (iv) solicit, induce or entice, or
cause any other person or entity to solicit, induce or entice to leave
the employ of the Company any person who was employed or retained by
the Company on the Date of Termination. However, nothing in this
Agreement shall preclude Executive from investing his personal assets
in the securities of any corporation or other business entity which is
engaged in a business competitive with that of the Company if such
securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in his
beneficially owning, at any time, more than five percent (5%) of the
publicly-traded equity securities of such competitor. Nothing in this
Agreement shall preclude Executive from retaining his position or
membership in trade associations and professional organizations.
2. In consideration of the agreements and payments of the Company herein,
the Executive shall keep confidential and not disclose to any person
any information relating to the Company's business and/or finances,
which information was obtained during and/or as incident to or in
connection with the Executive's employment with the company and which
otherwise is not public information. The Executive agrees he will
conduct himself in a professional manner and not make any disparaging,
negative or other statements regarding the Company, its affiliates or
any of the officers, directors or employees of the Company or its
affiliates which could in any way have an adverse affect on the
business or affairs of the Company or its affiliates or otherwise be
injurious to or not be in the best interests of the Company, its
affiliates or any such other persons.
3. The Executive agrees that this non-competition and non-solicitation
covenant is reasonable under the circumstances, and the Executive
further agrees that his services for and on behalf of the Company are
unique and irreplaceable. The Executive further agrees that any breach
of the covenants contained in Paragraphs 1 or 2 of this Sec. 17 would
irreparably injure the Company and/or its affiliates or subsidiaries.
Accordingly, the Executive agrees that the Company may, in addition to
pursuing any other remedies it may have at law or in equity, obtain an
injunction against the Executive from any court having jurisdiction
over the matter restraining any further violation of the covenants
contained in Paragraphs 1 or 2 of this Sec. 17.
4. Upon termination of Executive's employment with the Company, the
Company shall have the right to designate a reasonable amount of the
Severance to be allocated to this covenant not to compete and
confidentiality.
Sec. 18 Outplacement Services
In the event of the termination of the Executive's employment after a Change in
Control as provided for in Sec. 14, the Company agrees, at its sole cost and
expense, to provide the Executive with outplacement services for a period of at
least twelve (12) months following the Date of Termination. The Company and the
Executive shall use their good faith efforts to locate a provider, and determine
the scope of, outplacement services which is reasonably acceptable to both
parties taking into account the status of the Executive as a senior executive
officer.
Sec. 19 Legal Expenses
The Company agrees to pay all reasonable out-of-pocket costs and expenses,
including all reasonable attorneys' fees and disbursements, actually incurred by
the Executive in collecting or enforcing payments to which he is ultimately
determined to be entitled (whether by agreement among the parties, court order
or otherwise) pursuant to this Supplement in accordance with its terms.
Sec. 20 Definitions
For purposes of this Supplement, the following terms shall have the meanings
indicated below:
1. "Beneficial Owner" shall have the meaning defined in Rule 13d-3 under
the Securities and Exchange Act of 1934, as amended.
2. "Cause" for termination by the Company of the Executive's employment
shall mean (i) the willful, substantial and failure by the Executive
to substantially perform the Executive's duties with the Company
(other than any such failure resulting from the Executive's incapacity
due to physical or mental illness) in a manner reasonably satisfactory
to the Chief Executive Officer of the Company after written notice
detailing the reasons for such failure, (ii) the willful engaging by
the Executive in conduct which is demonstrably and materially
injurious to the Company or its subsidiaries, monetarily or otherwise,
or (iii) the entry by a court of competent jurisdiction of an order,
or the entering into by the Executive of a consent decree, barring the
Executive from serving as an officer or director of a public company.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful"
unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that the Executive's act, or failure to
act, was in the best interest of the Company.
3. A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have
been satisfied:
(a) any person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person
any securities acquired directly from the Company)
representing 35% or more of the combined voting power of the
Company's then outstanding securities, excluding any person
who becomes such a Beneficial Owner in connection with
transactions described in clauses (x), (y) or (z) of paragraph
(c) below; or
(b) there is a change in the composition of the Board
of Directors of the Company occurring within a rolling
two-year period, as a result of which fewer than a majority of
the directors are Incumbent Directors ("Incumbent Directors"
shall mean directors who either (x) are members of the Board
as of the date of this Agreement or (y) are elected, or
nominated for election, to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the
time of such election or nomination, but shall not include an
individual not otherwise an Incumbent Director whose election
or nomination is in connection with an actual or threatened
proxy contest, including but not limited to a consent
solicitation, relating to the election of directors to the
Board); or
(c) there is consummated, in any transaction or
series of transactions, of a complete liquidation or
dissolution of the Company or a merger, consolidation or sale
of all or substantially all of the Company's assets
(collectively, a "Business Combination") other than a Business
Combination after which (x) the stockholders of the Company
own more than 50 percent of the common stock or combined
voting power of the voting securities of the company resulting
from the Business Combination, (y) at least a majority of the
board of directors of the resulting corporation were Incumbent
Directors and (z) no individual, entity or group (excluding
any corporation resulting from the Business Combination or any
employee benefit plan of such corporation or of the Company)
becomes the Beneficial Owner of 35 percent or more of the
combined voting power of the securities of the resulting
corporation, who did not own such securities immediately
before the Business Combination; or
(d) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated a sale or disposition by the Company of all or
substantially all the Company's assets.
4. "Date of Termination," with respect to any purported termination of
the Executive's employment shall mean the later of (i) date specified
in the notice or (ii) thirty (30) days from the date of the notice
unless such notice is for a termination of Executive for Cause.
5. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
6. "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent) of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or
failure to act as described below, such act or failure to act is
corrected prior to the Date of Termination specified in the notice of
termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent
with the Executive's status as a senior executive officer of the
Company or a substantial adverse alteration in the nature of
Executive's authority, duties or responsibilities, or any other action
by the Company which results in a diminution in such status,
authority, duties or responsibilities (it being understood that a mere
change in authority, duties or responsibilities, or any other action
by the Company will not constitute Good Reason in and of itself unless
it results in a substantial adverse alteration or diminution of
Executive's authority, duties or responsibilities), excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(b) a reduction by the Company in Executive's base salary and/or
annual bonus as in effect on the date hereof or as the same may be
increased from time to time, except for across-the-board reductions
similarly affecting all senior executives of the Company, provided,
however, that such across-the-board reductions are not made as a
result of, or in contemplation of, a Change in Control;
(c) the failure by the Company to pay to Executive any portion of
Executive's current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all senior
executives of the Company, provided, however, that such
across-the-board compensation deferrals are not made as a result of,
or in contemplation of, a Change in Control;
(d) the failure by the Company to continue in effect any
compensation plan or other benefit in which Executive participates
which is material to Executive's total compensation, except pursuant
to an across-the-board compensation or benefit deferral or reduction
similarly affecting all senior executives of the Company, provided,
however, that such across-the-board compensation or benefit deferrals
are not made as a result of, or in contemplation of, a Change in
Control; or
(e) the failure by the Company to continue to provide Executive
with benefits substantially similar to those enjoyed by the Executive
under any of the Company's pension, life insurance, medical, health
and accident, disability plans or other benefits (including, without
limitation, automobile, country club, vacation, and pension benefits)
in which Executive was participating at the time, the taking of any
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by Executive at the time, (including, without
limitation, automobile, country club, vacation and pension benefits),
or the failure by the Company to provide Executive with the number of
paid vacation days to which Executive he is then entitled.
7. "Permanent Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment if, as a result of the
Executive's incapacity due to physical or mental illness, the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6)
consecutive months or nine (9) months out of any twelve (12) month
period, the Company shall have given the Executive a notice of
termination for Disability, and, within thirty (30) days after such
notice of termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
Sec. 21 Term of Agreement
1. The provisions contained in this Supplement shall be effective
immediately upon its execution by the parties hereto and shall remain
in effect until the earliest of (i) the termination of the Executive's
employment with the Company prior to a Change in Control (other than a
termination of Executive's employment in anticipation of a Change in
Control) for any of the following: by the Company for Cause, by
Executive for any reason other than Good Reason or by reason of
Executive's death or Permanent Disability; (ii) the termination of
Executive's employment with the Company following a Change in Control
by reason of death or Permanent Disability, by the Company for Cause
or by the Executive for any reason other than for a Good Reason; or
(iii) three (3) years after the date of a Change in Control.
Notwithstanding the foregoing, the provisions contained in this
Supplement shall terminate two (2) years after its effective date if
the Executive is still in the employ of the Company and a Change in
Control has not occurred and is not reasonably expected to occur
within the six (6) month period thereafter.
IN WITNESS WHEROF, the parties hereto have caused this Supplement to be
executed as of the day and year first above written.
TEREX CORPORATION
By:_______________________ _______________________
Xxxxxx X. XxXxx Xxxxx Xxxxxxx
Chairman and
Chief Executive Officer
