SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
Form 10-K
ANNUAL REPORT
PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Year Ended December 31, 1995
Commission File Number: 1-871
________________________________________________
BUCYRUS-ERIE COMPANY
DELAWARE 39-0188050
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN 53172
(414) 768-4000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each Class
Common Stock, par value $.01 per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 15, 1996, was approximately $49,536,226 (based on the
last sale price of the Company's Common Stock as reported by The NASDAQ Stock
Market).
Number of shares of the Company's Common Stock outstanding at March 15, 1996:
10,234,574 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1) 1995 Annual Report (incorporated by reference into Parts I, II and IV).
2) Portions of the Company's Proxy Statement for the Annual Meeting of the
Shareholders to be held May 23, 1996 are incorported by reference in Part
III.
<PAGE>
PART I
ITEM 1. BUSINESS
Bucyrus-Erie Company (the "Company") was incorporated in Delaware in 1927
as the successor to a business which commenced in 1880. On February 4, 1988,
the Company became a wholly-owned subsidiary of B-E Holdings, Inc.
("Holdings"), a Delaware corporation, pursuant to an Agreement and Plan of
Merger dated as of July 28, 1987, as amended, among Holdings, the Company and
B-E Merger Sub, Inc., a wholly-owned subsidiary of Holdings (the "1988
Merger"). The Company was a wholly-owned subsidiary of Holdings until
December 14, 1994 when Holdings was merged with and into the Company pursuant
to the terms of the Second Amended Joint Plan of Reorganization of B-E
Holdings, Inc. and Bucyrus-Erie Company under chapter 11 of the Bankruptcy
Code, as modified December 1, 1994 (the "Amended Plan"). The Company designs,
manufactures and markets large excavation machinery used for surface mining,
and supplies replacement parts and service for such machines. The Company's
principal products are large walking draglines, electric mining shovels and
blast hole drills, which are used by customers who mine coal, iron ore,
copper, phosphate, bauxite and other minerals throughout the world.
The Reorganization
On February 22, 1993, the Company and Holdings announced their intention
to pursue a reorganization of their capital structures (the "Reorganization")
and commenced negotiations for a prepackaged chapter 11 financial
reorganization with certain of their secured and unsecured creditors. On
February 18, 1994 (the "Petition Date"), Holdings and the Company commenced
voluntary petitions under chapter 11 of the Bankruptcy Code in the U.S.
Bankruptcy Court, Eastern District of Wisconsin (the "Bankruptcy Court"). The
solicitation process for acceptance of the Amended Plan was completed on
October 31, 1994 and on December 1, 1994 the Bankruptcy Court confirmed the
Amended Plan. On December 14, 1994 (the "Effective Date"), the Amended Plan
became effective and the Company and Holdings consummated the Reorganization
through the implementation of the Amended Plan. None of the Company's or
Holdings' subsidiaries were involved in the bankruptcy proceedings. The
Amended Plan provided for payment in full of the allowed claims of the
Company's vendors, suppliers and other trade creditors. The claims of current
and retired employees of the Company were not affected by the Amended Plan.
The purpose of the Reorganization was to improve and enhance the long-
term viability of the Company by adjusting its capitalization to reflect
current and projected operating performance levels. Specifically, the Amended
Plan was designed to reduce the Company's overall indebtedness and its
corresponding debt service obligations by exchanging all outstanding senior
unsecured debt securities for common equity.
On the Effective Date, Holdings merged with and into the Company pursuant
to the Amended Plan and the Agreement and Plan of Merger dated as of
December 14, 1994 between Holdings and the Company (the "Merger Agreement").
Pursuant to the Amended Plan and the Merger Agreement, the Company issued
10,170,417 shares of its common stock, par value $.01 per share (the "Common
Stock"). The Company issued 10,000,004 shares of Common Stock to holders of
Holdings' and the Company's unsecured debt securities and Holdings' equity
securities in exchange for such securities, and 170,413 shares of Common Stock
were issued to Bell Helicopter Textron, Inc. ("Bell Helicopter") in settlement
of a lawsuit against the Company. See ITEM 3. LEGAL PROCEEDINGS AND OTHER
CONTINGENCIES.
On the Effective Date pursuant to the Amended Plan, the Company issued an
aggregate principal amount of $52.1 million of Secured Notes due December 14,
1999 (the "Secured Notes") to South Street Corporate Recovery Fund I, L.P.,
South Street Leveraged Corporate Recovery Fund, L.P., and South Street
Corporate Recovery Fund I (International), L.P. (collectively, the "South
Street Funds") in exchange for the Company's outstanding Series A 10.65%
Senior Secured Notes due July 1, 1995 and Series B 16.5% Senior Secured Notes
due January 1, 1996 (collectively, the "Old South Street Notes")and the
Company's obligations under a sale and leaseback financing arrangement.
Pursuant to the Amended Plan, the Company entered into a Credit Agreement with
Bank One, Milwaukee, National Association ("Bank One"). See MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
LIQUIDITY AND CAPITAL RESOURCES on pages 40 through 44 of the Company's 1995
Annual Report.
Markets, Principal Products and Methods of Distribution
The surface mining industry consists of three primary markets: coal
mining, copper and iron ore mining and phosphate production. Coal mining
historically has accounted for a large percentage of industry demand for the
Company's machines and replacement parts. Recently, however, copper and iron
ore mining has accounted for approximately 75% of new machine activity. Steam
coal production for power generation represents approximately 85% of total
coal mining activity. The demand for steam coal is based largely on the
demand for electric power and the price and availability of competing sources
of power including oil, natural gas and nuclear power. Because steam coal is
mined both in underground and in surface mines, the relative cost of competing
mining methods is an important variable affecting equipment demand.
Prior to the 1973 Arab oil embargo, the mining machinery industry could
have been characterized as a cyclical, long-term growth industry. Its
cyclical characteristic resulted from the cost relationship among competing
fuel alternatives and mineral use and its long-term growth characteristic
resulted from increases in overall energy consumption and mineral use tied to
worldwide economic growth. However, with the oil embargo came an
unprecedented increase in the demand for coal mining equipment. As a result,
mining machinery production capacity was expanded dramatically, reflecting
expectations that oil prices would continue to rise and tend to increase
demand for substitute natural resources, including coal in particular.
Consequently, the industry experienced dramatic growth through the early and
mid-1970's. By the late 1970's, the installed base of mining machinery had
increased substantially. However, at that time, macroeconomic conditions
began to change. The effects of a worldwide recession, escalating interest
rates, energy conservation efforts and an increase in the world's supply of
oil, together with the large installed base of recently manufactured mining
machinery, resulted in a sharp drop in demand for new mining machinery. More
recently, the coal segment of the U.S. market has been severely impacted by
the Clean Air Act causing numerous mid-western higher sulfur coal mines to be
closed or to have outputs drastically curtailed; many machines have been shut
down while a few have been relocated to lower sulfur mines in eastern
Appalachia and Wyoming's Powder River Basin where excess production capacity
and stagnant demand has driven coal prices downward. Consequently, meaningful
new machine shipments to domestic coal customers cannot be expected until the
late 1990's. Major potential international coal mining markets for the
Company's equipment and replacement parts had been negatively impacted by the
worldwide economic slump as evidenced by Japanese steelmakers imposing price
cuts on Australian coking coal producers as well as tonnage reductions during
negotiations in 1993 and 1994. This is changing with the increase in coal
demand outside of North America. The Energy Information Administration is
forecasting an increase in world coal production to 6.551 billion tons by the
year 2010 and world energy demand is expected to increase 1.6% per year to the
year 2010. Coal is expected to account for 35% of the world electricity
generating market, the largest share for any fuel. The increase in coal
production should increase the demand for the Company's machines and
replacement parts.
While iron ore demand decreased with the worldwide recession of 1992 and
1993, and Japanese and European iron ore buyers lowered ore contract prices
significantly in 1992 and again in 1993, there was an increase in iron ore
production in late 1994 that was sustained through 1995. Furthermore, the
Company anticipates that some iron ore producers will continue to replace aged
electric mining shovel and blast hole drill fleets with new machines in an
effort to reduce iron ore production costs. Copper prices have decreased
somewhat recently from historically high levels. Nevertheless, copper prices
are expected to remain relatively firm through 1996 which should result in
continued demand from this market segment for electric mining shovels and
blast hole drills.
The Company's line of mining machinery includes a full range of large
walking draglines, electric mining shovels and blast hole drills. Walking
draglines and electric mining shovels are used in a broad range of
applications, including removal of overburden above the coal seams in surface
coal operations, assisting in land reclamation, mining of phosphate and
bauxite, and loading of coal, iron ore, copper, other mineral-bearing
materials, overburden and rock into some form of haulage system such as a
truck or conveyor. Blast hole drills are used for boring holes to be used in
blasting rock and ore in mines.
Draglines have the highest average price per unit of the Company's
machine categories. Draglines are primarily used to remove overburden located
over a coal or mineral deposit. To accomplish this, the machine drags a large
bucket through the overburden and deposits such overburden in a remote spoil
pile. Draglines are typically described in terms of their "bucket size",
which can range from 9 to 220 cubic yards. The Company's draglines weigh from
500 to 7,500 tons. The Company currently offers a full line of models ranging
in price from $5 million to $40 million per dragline.
Electric mining shovels are primarily used to load coal, copper ore, iron
ore, other mineral-bearing materials, overburden and rock into some form of
haulage system such as a truck or conveyor. Shovels are characterized in
terms of their weight and dipper capacity. The Company offers a full line of
electric mining shovels, weighing from 400 to 1,000 tons and having dipper
capacities from 12 to 80 cubic yards. Prices range from $3 million to
$8 million per shovel.
Most surface mines require breakage of rock, overburden or ore by
explosives. To accomplish this, it is necessary to bore out a pattern of
holes into which the explosives are placed. Blast hole drills are used to
drill the holes, and these machines are usually described in terms of the
diameter of the hole which they bore. The Company offers a line of blast hole
drills ranging in hole diameter size from 9.0 inches to 17.5 inches and in
selling price from approximately $1.25 million to $2.1 million per drill,
depending on machine size and variable features.
Because of their size and weight, the Company's mining machines are
shipped in sub-assembled units to the job site where they are assembled for
operation with the assistance of Company technicians. A number of the
Company's smaller dragline products are modular, permitting shortened machine
field assembly time and more economical teardown and movement of machines
between non-contiguous mine sites. The planning and on-site coordination of
machine erection is a critical component of the Company's service to its
customers.
In addition, the Company manufactures and sells replacement parts and
components for its mining machines and supplies comprehensive after-sales
service for its entire line of mining machinery. The average useful life of
the Company's machines is 20 to 30 years for walking draglines and up to
20 years for electric mining shovels and blast hole drills. The Company has a
large installed base of surface mining machinery which has provided a stream
of parts sales. These sales comprise a substantial portion of the Company's
revenues. The Company also provides after-sales service for certain equipment
of other original equipment manufacturers ("OEMs"). In general, the Company
realizes higher margins on sales of parts than it does on sales of new mining
machines. In recent years, gross margins on machines have been low to
negative because of lower prices resulting from overcapacity, although gross
margins on replacement parts have been positive. Accordingly, most or all of
the Company's operating profits are derived from parts sales.
In the United States, mining machinery is sold directly by Company
personnel and through a distributor. Outside of the United States, this
equipment is sold by Company personnel, through independent distributors and
through the Company's subsidiaries and offices located in Australia, Brazil,
Canada, Chile, China, England, India, Mauritius and South Africa. Typical
payment terms for large walking draglines and electric mining shovels require
a down payment and periodic progress payments so that a substantial portion of
the price is received by the time shipment is made to the customer. Sales
contracts for machines are predominantly at fixed prices which, where
possible, reflect estimated future cost increases. The primary market for the
Company's replacement parts and service is provided by the owners of the
Company's machines. Most sales of replacement parts call for prices in effect
at the time of order. During 1995, prices from the Company's vendors remained
stable and, coupled with fixed and stable prices to the Company's customers,
resulted in minor inflationary increases on the Company's reported net
shipments.
A wholly-owned subsidiary of the Company, Minserco, Inc. ("Minserco"),
provides mining services in the following areas: comprehensive structural and
mechanical engineering, non-destructive testing, repairs and rebuilds of
machine components, product and component upgrades, contract maintenance,
turnkey erections and machine moves.
Another wholly-owned subsidiary of the Company, Boonville Mining
Services, Inc. ("BMSI"), operates as a separate, independent enterprise and
provides replacement parts and repair and rebuild services for surface mining
equipment.
Competition
The Company encounters strong competition from a small number of
manufacturers in the sales of its mining machinery products in both domestic
and foreign markets. The Company manufactures walking draglines, with its
principal competitors being Harnischfeger Corporation and Marion Power Shovel
Company, a division of Global Industrial Technologies, Inc. The Company
manufactures electric mining shovels, with its principal competitor in this
line being Harnischfeger Corporation. The Company produces large diameter
rotary blast hole drills and has several competitors in this product line.
Methods of competition are diverse and include product design and performance,
service, delivery, application engineering, pricing, financing terms and other
commercial factors.
For most owners of Company machines, the Company is the primary source
for replacement parts. The Company, however, encounters strong competition in
parts sales in both domestic and foreign markets and intense competition in
some domestic markets. The Company's competition in parts sales consists
primarily of "will-fitters," which are smaller firms that produce copies of
the parts manufactured by the Company and other OEMs, and which generally sell
such parts at prices lower than those of the OEMs. The Company has a variety
of programs to attract large volume customers for its replacement parts.
Although will-fitters engage in significant price competition in parts sales,
the Company believes that it possesses certain non-price advantages over will-
fitters because will-fitters are in many cases unable to duplicate the exact
specifications of genuine Company parts and because the use of parts not
manufactured by the Company can void the warranty on a Company machine. The
Company generally provides a one year warranty on its machines, with certain
components being under warranty for longer periods. The Company also believes
that its engineering and manufacturing technology and marketing expertise
exceeds that of its will-fit competitors.
Customers
The Company's customers include most of the large surface mining
operators around the world. Customers include companies engaged in the
surface mining of coal, iron ore, copper, phosphate, bauxite and other
minerals. In 1995 and 1994, one customer, BHP Minerals International Inc.,
received approximately 22% and 20%, respectively, of the Company's
consolidated net shipments. In 1993, no customer received shipments of
greater than 10% of the Company's consolidated net shipments. The Company is
not dependent upon any one customer.
Backlog
The backlog of firm orders for the Company was $118.0 million at
December 31, 1995 and $72.3 million at December 31, 1994. Approximately 20%
of the backlog at December 31, 1995 is not expected to be filled during 1996.
Materials
The Company purchases from outside vendors the semi- and fully-processed
materials (principally structural steel, castings and forgings) required for
its manufacturing operations, and other items, such as electrical equipment,
which are incorporated directly into the end product. The Company's foreign
subsidiaries purchase components and manufacturing services from local
subcontractors and some components from the Company. Certain additional
components are sometimes purchased from subcontractors, either to improve
deliveries in times of high demand or to reduce costs. Because of numerous
factors resulting in preference for local content in certain countries, local
subcontractors are normally used to manufacture a substantial portion of the
components required in the Company's foreign manufacturing operations. The
Company believes that its competitors are subject to the same conditions as
the Company.
Inventories
Inventories of the Company at December 31, 1995 were $73.6 million (32%
of net shipments) compared with $82.4 million (42% of net shipments) at
December 31, 1994. In accordance with the principles of fresh start reporting
as required by AICPA Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code", inventory as of the
Effective Date was recorded at estimated fair value. The fair value
adjustment remaining in the December 31, 1994 inventory balance was $10.1
million. All of this amount was charged to cost of products sold in 1995 as
the inventory was sold. At December 31, 1995 and December 31, 1994, $44.5
million and $51.9 million, respectively, were held as finished goods inventory
(primarily replacement parts) to meet delivery requirements of customers.
Patents, Licenses and Franchises
The Company has a number of United States and foreign patents, patent
applications and patent licensing agreements. It does not consider its
business to be materially dependent upon any patent, patent application,
patent license agreement or group thereof.
Research and Development
Expenditures by the Company for design and development of new products
and improvements of existing mining machinery products, including overhead,
aggregated $5.7 million in 1995, $4.2 million in 1994 and $6.2 million in
1993. All engineering and product development costs are charged to Product
Development Expense as incurred.
Environmental Factors
Environmental problems have not interfered in any material respect with
the Company's manufacturing operations. The Company believes that its
compliance with statutory requirements respecting environmental quality will
not materially affect its capital expenditures, earnings or competitive
position. The Company has an ongoing program to address any potential
environmental problems.
Current federal and state legislation regulating surface mining and
reclamation may affect some of the Company's customers, principally with
respect to the cost of complying with, and delays resulting from, reclamation
and environmental requirements. The Company's products are used for
reclamation as well as for mining, which has a positive effect on the demand
for such products and replacement parts therefor.
Employees
At December 31, 1995, the Company employed 1,166 persons. Three-year
contracts with unions representing hourly workers at the South Milwaukee,
Wisconsin and Memphis, Tennessee facilities expire in August, 1997 and August,
1998, respectively.
Seasonal Factors
The Company does not consider a material portion of its business to be
seasonal.
Foreign Operations
The Company's products are manufactured by subcontractors and licensees
in seven countries other than the United States and are sold internationally
by the Company's and its subsidiaries' sales personnel, manufacturers'
representatives and distributors. A substantial portion of the Company's
consolidated net shipments and operating earnings is attributable to
operations located abroad. In recent years, approximately 65% to 75% of the
Company's consolidated net shipments were to customers located outside the
United States. Foreign operations are subject to special risks that can
materially affect sales and earnings of the Company, including currency
exchange rate fluctuations, government expropriation, exchange controls,
political instability and other risks.
In 1981, the Company entered into a licensing agreement with Mitsui
Engineering and Shipbuilding Co., Ltd. ("M.E.S."), a leading Japanese
shipbuilder and manufacturer of steel structures, heavy machinery and chemical
plants, for the manufacture and sale by M.E.S. of Company designed electric
mining shovels. In recent years, there has been no activity with M.E.S. under
this agreement. In December, 1985, the Company entered into a licensing
agreement with China National Non-Ferrous Metals Industry Corporation
("C.N.N.C.") which provides for the manufacture and sale by C.N.N.C. of the
Company's 195-BI electric mining shovel. This agreement was amended in April,
1994 to include certain components of the 195-BII model.
In 1995, the Company's foreign sales in all segments, consisting of
exports from the United States and sales by consolidated foreign subsidiaries,
totaled $169.1 million. The corresponding figures in 1994 and in 1993 were
$131.8 million and $139.4 million, respectively. Approximately $94.6 million
of the Company's backlog of firm orders on December 31, 1995 represented
orders for export shipments, compared with $60.3 million at December 31, 1994
and $60.2 million at December 31, 1993. The Company and its U.S. subsidiaries
normally price their products in U.S. dollars. Foreign subsidiaries normally
procure and price their products in their local currency. Accordingly, in the
usual case there are no material foreign currency transaction gains and losses
borne by the Company. The value, in U.S. dollars, of the Company's
investments in its foreign subsidiaries and of dividends paid to the Company
by those subsidiaries will be affected by changes in exchange rates. Further
information regarding foreign operations is contained in Note N of the Notes
to Consolidated Financial Statements on pages 32 through 35 of the Company's
1995 Annual Report and such information is incorporated herein by reference.
Classes of Similar Products
Net shipments by the Company by class of similar products for the past
three years were as follows:
1995 1994 1993
(Dollars in Millions)
Shovels and
Draglines $177.3 76% $164.5 85% $167.7 84%
Drills 53.2 23 27.5 14 29.1 15
Executive Officers of the Company
Set forth below are the names and ages of all executive officers of the
Company, the period of service of each with the Company, positions and offices
with the Company presently held by each, the period during which each officer
has served in his present office and the business experience of each.
JAMES D. ANNAND, 52, is currently serving as the Interim Vice President-
Finance, Treasurer and Chief Financial Officer. Mr. Annand has been an
associate with Miller Associates, Inc. ("Miller Associates") (a management
consulting and private investment corporation established in January, 1995)
since June, 1995. From 1982 to June, 1995, Mr. Annand was Vice President of
Finance, Secretary and Treasurer of Valley Forge Investment Corporation,
Valley Forge, Pennsylvania, a private investment company.
WILLARD R. HILDEBRAND, 56, Director, President and Chief Executive
Officer of the Company, effective March 11, 1996. Mr. Hildebrand was
President and Chief Executive Officer of Great Dane Trailers, Inc. (a
privately held manufacturer of a variety of truck trailers) from 1991-1996.
Prior to 1991, Mr. Hildebrand held a variety of sales and marketing positions
with Fiat-Allis North America, Inc. and was President and Chief Operating
Officer from 1985-1991.
CRAIG R. MACKUS, 44, Controller of the Company since February 4, 1988.
Mr. Mackus was Division Controller and Assistant Corporate Controller from
1985 to February 4, 1988, Manager of Corporate Accounting from 1981 to 1982
and 1984 to 1985, and Assistant Corporate Controller of Western Gear
Corporation from 1982 to 1984. Mr. Mackus joined the Company in 1974.
Mr. Mackus was Controller at the time that the Company filed its petition
under chapter 11 of the Bankruptcy Code on February 18, 1994.
THOMAS B. PHILLIPS, 50, Vice President - Materials effective March 1,
1996. Mr. Phillips was Director of Materials from 1986 to February 29, 1996,
Manufacturing Manager from June, 1986 to October, 1986 and Materials Manager
from 1983 to 1986. Mr. Phillips joined the Company in 1970.
ELROY W. SCHWEITZER, 59, Vice President - Engineering of the Company
since February 4, 1988. Mr. Schweitzer was Chief Engineer - Walking Draglines
from 1984 to February 4, 1988, Chief Engineer - Intermediate Draglines/Blast
Hole Drills from 1983 to 1984, and Chief Development Engineer from 1982 to
1983. Mr. Schweitzer joined the Company in 1955. Mr. Schweitzer was Vice
President - Engineering at the time that the Company filed its petition under
chapter 11 of the Bankruptcy Code on February 18, 1994.
TIMOTHY W. SULLIVAN, 42, Vice President - Marketing of the Company since
April 1, 1995. Mr. Sullivan was the Director of Business Development in 1994,
Director of Parts Sales and Subsidiary Operations from 1990 to 1994, and
Product Manager of Electric Mining Shovels and International Sales from 1986
to 1990. Mr. Sullivan joined the Company in 1976.
Except with regard to Mr. Hildebrand and Mr. Annand, all of the above-
named executive officers are elected annually and serve at the pleasure of the
Board of Directors. Mr. Hildebrand is employed under a three-year employment
agreement, with two one-year annual renewals.
ITEM 2. PROPERTIES
The Company's principal manufacturing plant in the United States is
located in South Milwaukee, Wisconsin and is owned in fee. This plant
comprises approximately 1,038,000 square feet of floor space. A portion of
this facility houses the corporate offices of the Company. The major
buildings at this facility are constructed principally of structural steel,
concrete and brick and have sprinkler systems and other devices for protection
against fire. The buildings and equipment therein, which include machine
tools and equipment for fabrication and assembly of the Company's mining
machinery, including walking draglines, electric mining shovels and blast hole
drills, are well maintained, in good condition and in regular use.
The Company leases a facility in Memphis, Tennessee, which has
approximately 110,000 square feet of floor space and is used as a central
parts warehouse. The current lease is for five years commencing in July, 1991
and contains an option to renew for an additional ten years.
BMSI leases a facility in Boonville, Indiana which has approximately
60,000 square feet of floor space on a 5.84 acre parcel of land. The facility
has the manufacturing capability of large machining, gear cutting, heavy
fabricating, rebuilding, and stress relieving. The major manufacturing
buildings are constructed principally of structural steel with metal siding.
ITEM 3. LEGAL PROCEEDINGS AND OTHER CONTINGENCIES
Chapter 11 Plan of Reorganization
On February 18, 1994, the Company and Holdings commenced voluntary
petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On
December 1, 1994, the Bankruptcy Court issued an order confirming the Amended
Plan, and on December 14, 1994, the Amended Plan became effective and the
Company and Holdings consummated the Reorganization contemplated by the
Amended Plan.
Bankruptcy Code Section 503(b) Claim for Reimbursement of Professional Fees
Jackson National Life Insurance Company ("JNL"), the holder of
approximately 41.31% of the Company's Common Stock, has filed a claim (the
"JNL 503(b) Claim") against the Company for reimbursement of approximately
$3.3 million for professional fees and disbursements incurred in connection
with the Company's chapter 11 proceedings pursuant to Section 503(b) of the
Bankruptcy Code. The basis of the claim by JNL is the asserted benefit which
the work of the professionals retained by JNL in the Company's chapter 11 case
conferred upon the creditors of the Company generally. Pursuant to a
Settlement Agreement dated May 23, 1995, JNL agreed that, in the event that
the JNL 503(b) Claim is allowed in whole or in part by the Bankruptcy Court,
in lieu of requiring payment of any award in cash, JNL will accept payment in
Common Stock at a price equal to $5.6375 per share (the average closing price
of such stock on the NASDAQ Stock Market on June 20, 21, 22, 23 and 26, 1995).
The Company has filed an objection to the JNL 503(b) Claim and a trial was
scheduled by the Bankruptcy Court and began on November 29, 1995. Closing
arguments are scheduled to be held on April 18, 1996. The Company has been
advised by legal counsel that in said counsel's opinion the JNL 503(b) Claim
is without merit; however, the ultimate outcome of this matter cannot
presently be determined. Accordingly, no provision for any loss that may
result upon resolution of this matter has been made in the Company's
consolidated financial statements.
Contingent Liabilities Relating to Sales of Assets and Subsidiaries and
Product Liability
The Company has assumed or retained certain liabilities relating to
divested assets and subsidiaries, including, among others, product liability
claims relating to Brad Foote Gear Works, Inc., Western Gear Machinery Co.,
Sky Climber, Inc. and its former construction machinery business.
The Company is normally subject to numerous product liability claims,
many of which relate to products no longer manufactured by the Company or its
subsidiaries, and other claims arising in the ordinary course of business.
The Company has insurance covering most of said claims, subject to varying
deductibles ranging from $300,000 to $3 million, and has various limits of
liability depending on the insurance policy year in question. It is the view
of management that the final resolution of said claims and other similar
claims which are likely to arise in the future will not individually or in the
aggregate have a material effect on the Company's financial position or
results of operations, although no assurance to that effect can be given.
Contingent Environmental Claims
The Company is one of 53 entities who have been named by the U.S.
Environmental Protection Agency ("EPA") as potentially responsible parties
("PRPs") with regard to the Millcreek dumpsite, Erie County, Pennsylvania,
which is on the National Priorities List of sites for cleanup under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"). The Company was so named as a result of allegations
that it disposed of foundry sand at said site in the 1970's. The U.S.
Department of Justice ("DOJ") filed suit in the U.S. District Court for the
Western District of Pennsylvania (the "Court") in October, 1989, against the
Millcreek site owners and the haulers who allegedly transported waste to the
site for recovery of past cleanup costs incurred at the site. The Company has
entered into a Consent Decree with the United States government in connection
with the aforementioned cost recovery action which will obligate the Company
to pay $600,000. This amount has been recorded as a liability in the
Company's consolidated financial statements. The Consent Decree has been
filed with the Court pending solicitation of public comment. The public
comment period closed on February 22, 1996. Thirty-seven PRPs, including the
Company, have received Administrative Orders issued by the EPA pursuant to
Section 106(a) of CERCLA to perform the soil capping portion of the
remediation at the Millcreek site. Based on the number of substantial
corporations among the PRPs identified by the EPA as being connected with the
Millcreek dump site and the potential availability of at least some insurance
coverage, the Company believes that it will have no material liability with
respect to resolution of this situation, although no assurance to that effect
can be given.
In December, 1990, the Wisconsin Department of Natural Resources ("WDNR")
conducted a pre-remedial screening site inspection on property owned by the
Company located at 1100 Milwaukee Avenue in South Milwaukee, Wisconsin.
Approximately 35 acres of this site were allegedly used as a landfill by the
Company until approximately 1983. The Company disposed of certain
manufacturing wastes at the site, including primarily foundry sand. The
results of the site inspection did not indicate that the site presented a
substantial threat to health, safety or to the environment. To date, the
Company has received no further communications from the WDNR regarding this
site and is not aware of any initiative by the WDNR to require any further
action with respect to this site. Consequently, the Company has not regarded,
and does not regard, this site as presenting a material contingent liability.
There can be no assurance, however, that additional investigation by the WDNR
will not be conducted with respect to this site at some later date or that
this site will not in the future require removal or remedial actions to be
performed by the Company, the costs of which could, depending on the
circumstances, be significant.
Dresser Industries Lawsuit
BMSI is a defendant in an amended complaint filed in the Marion County
Common Pleas Court, Marion County, Ohio on September 24, 1992 by Dresser
Industries, Inc. and Global Industrial Technologies, Inc. (the "Plaintiffs"),
alleging that BMSI's purchase of drawings and other assets of C&M of Indiana,
a division of Construction and Mining Services, Inc., and BMSI's use of these
and other drawings allegedly acquired subsequently, constitute a
misappropriation of the Plaintiffs' trade secrets relating to Marion Power
Shovel Company, a division of Global Industrial Technologies, Inc. The
Plaintiffs seek $40 million in compensatory damages, $80 million in punitive
damages, an injunction against future use of the Plaintiffs' trade secrets,
and costs and reasonable attorneys fees. The Company has been advised by
counsel to BMSI that in said counsel's opinion the claims against BMSI can be
said to be greatly exaggerated. No claim has been asserted directly against
the Company. BMSI has denied all of the claims asserted in the Plaintiffs'
amended complaint and intends to vigorously defend against those claims. The
Company has been informed by counsel to BMSI that in said counsel's opinion
BMSI will be able to assert meritorious defenses to this action; however, the
outcome of this matter cannot currently be determined. The Company believes
that it will have no material liability with respect to resolution of this
situation, although no assurance to that effect can be given.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by Item 5 is incorporated herein by reference
from "Stock Information" on page 47 of the Company's 1995 Annual Report.
The Credit Agreement, as defined on page 22 of the Company's 1995 Annual
Report, prohibits the Company from making any dividends or other distributions
upon the Common Stock, other than dividends payable solely in Common Stock or
other equity securities of the Company. The Indenture relating to the Secured
Notes prohibits the Company from declaring or paying any dividend or making
any distribution in respect of Common Stock (other than dividends or
distributions payable solely in shares of Common Stock or in options, warrants
or other rights to acquire Common Stock), if at the time thereof an Event of
Default (as defined in such Indenture) or an event that with the lapse of time
or the giving of notice, or both, would constitute an Event of Default (as
defined in such Indenture) shall have occurred and be continuing.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is incorporated herein by reference
from page 47 of the Company's 1995 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by Item 7 is incorporated herein by reference
from pages 40 through 46 of the Company's 1995 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 is incorporated herein by reference
from pages 6 through 39 of the Company's 1995 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The information required by Item 9 is not applicable since it has been
"previously reported" as that term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information required by Item 10 (with respect to the directors of the
Company) and the information required under Rule 405 of Regulation S-K with
respect to executive officers are incorporated herein by reference from the
Company's definitive Proxy Statement involving the election of directors filed
or to be filed pursuant to Regulation 14A not later than 120 days after
December 31, 1995. In accordance with General Instruction G (3) to Form 10-K,
the information with respect to executive officers of the Company required by
Item 10 (other than required pursuant to Rule 405 of Regulation S-K) has been
included in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference
from the Company's definitive Proxy Statement involving the election of
directors filed or to be filed pursuant to Regulation 14A not later than 120
days after December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated herein by reference
from the Company's definitive Proxy Statement involving the election of
directors filed or to be filed pursuant to Regulation 14A not later than 120
days after December 31, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated herein by reference
from the Company's definitive Proxy Statement involving the election of
directors filed or to be filed pursuant to Regulation 14A not later than 120
days after December 31, 1995.<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page
Annual Report
Form 10-K to Shareholders
(a) 1. FINANCIAL STATEMENTS
The following consolidated financial
statements of the Company are
incorporated herein by reference
from pages 6 through 39 of the
Company's 1995 Annual Report.
Consolidated Statements of Operations
for the year ended December 31, 1995,
periods ended December 31, 1994
and December 13, 1994 and the year
ended December 31, 1993. - 6
Consolidated Balance Sheets as
of December 31, 1995 and 1994. - 8
Consolidated Statements of Common
Shareholders' Investment (Deficiency
in Assets) for the year ended December 31,
1995, periods ended December 31, 1994
and December 13, 1994 and the year ended
December 31, 1993. - 10
Consolidated Statements of Cash Flows
for the year ended December 31, 1995,
periods ended December 31, 1994
and December 13, 1994 and the year
ended December 31, 1993. - 13
Notes to Consolidated Financial
Statements for the year ended December 31,
1995, periods ended December 31, 1994
and December 13, 1994 and the year ended
December 31, 1993. - 16
Report of Arthur Andersen LLP - 38
Report of Deloitte & Touche LLP - 39
2. FINANCIAL STATEMENT SCHEDULE
Report of Arthur Andersen LLP 15 -
Report of Deloitte & Touche LLP 16 -
Schedule II - Valuation and Qualifying
Accounts and Reserves 17 -
All other schedules are omitted because they are inapplicable, not
required by the instructions or the information is included in the
consolidated financial statements or notes thereto.
3. EXHIBITS
The exhibits listed in the accompanying Exhibit Index are filed as a
part of this Annual Report on Form 10-K.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during or relating to the fourth
quarter of 1995.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTARY SCHEDULE
To the Board of Directors and
Shareholders of Bucyrus-Erie Company:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in the Bucyrus-Erie Company annual
report to shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated January 29, 1996. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in the index at Item 14(a)(2) is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule for the year ended
December 31, 1995, has been subjected to the auditing procedures applied in
the audit of the basic consolidated financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 29, 1996.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Bucyrus-Erie Company:
We have audited the consolidated financial statements of Bucyrus-Erie Company
and subsidiaries as of December 31, 1994, and for the period from December 14,
1994 to December 31, 1994 and the period from January 1, 1994 to December 13,
1994 and the year ended December 31, 1993 (Predecessor Company operations) and
have issued our report thereon dated April 10, 1995; such consolidated
financial statements and report are included in your 1995 Annual Report to
Shareholders and are incorporated herein by reference. Our audits also
included the information for the period from December 14, 1994 to December 31,
1994 and the period from January 1, 1994 to December 13, 1994 and the year
ended December 31, 1993 (Predecessor Company operations) included in the
consolidated financial statement schedule of Bucyrus-Erie Company and
subsidiaries, listed in Item 14(a)2. This consolidated financial statement
schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the 1994 and 1993 information
included in the schedule based on our audits. In our opinion, such 1994 and
1993 information included in the consolidated financial statement schedule,
when considered in relation to the basic 1994 and 1993 consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
April 10, 1995
<PAGE>
<TABLE>
Bucyrus-Erie Company and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
Year Ended December 31, 1995, Periods Ended December 31, 1994 and
December 13, 1994 and Year Ended December 31, 1993
<CAPTION>
Charges
Balance At (Credits) (Charges) Balance At
Beginning To Costs Credits End
Of Period And Expenses To Reserves* Of Period
<S> <C> <C> <C> <C>
Allowance for possible losses:
Year ended December 31, 1995:
Notes and accounts receivable - current $ 691,000 $ (4,000) $ (20,000) $ 667,000
Period December 14 to December 31, 1994:
Notes and accounts receivable - current $ 703,000 $ - $ (12,000) $ 691,000
Predecessor Company
Period January 1 to December 13, 1994:
Notes and accounts receivable - current $ 803,000 $ 40,000 $ (140,000) $ 703,000
Year ended December 31, 1993:
Notes and accounts receivable - current $ 815,000 $ 8,000 $ (20,000) $ 803,000
<FN>
* Uncollected receivables written off, net of recoveries, and translation adjustments
at the foreign subsidiaries.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BUCYRUS-ERIE COMPANY
(Registrant)
By /s/W. R. Hildebrand March 25, 1996
Willard R. Hildebrand, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints C. Scott Bartlett, Jr. and
F. John Stark, III, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments to this report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature and Title Date
/s/ C. SCOTT BARTLETT, JR. March 28, 1996
C. Scott Bartlett, Jr., Director
/s/ WILLARD R. HILDEBRAND March 25, 1996
Willard R. Hildebrand, President,
Chief Executive Officer and Director
/s/ CHARLES S. MACALUSO March 26, 1996
Charles S. Macaluso, Director
/s/ FRANK W. MILLER March 24, 1996
Frank W. Miller, Director
/s/ GEORGE A. POOLE, JR. March 26, 1996
George A. Poole, Jr., Director
/s/ JOSEPH J. RADECKI, JR. March 28, 1996
Joseph J. Radecki, Jr., Director
/s/ F. JOHN STARK, III March 24, 1996
F. John Stark, III, Director
/s/ RUSSELL W. SWANSEN March 25, 1996
Russell W. Swansen, Director
/s/ SAMUEL M. VICTOR March 25, 1996
Samuel M. Victor, Director
/s/ JAMES D. ANNAND March 25, 1996
James D. Annand, Interim Vice
President, Treasurer & Chief Financial
Officer (Principal Financial Officer)
/s/ CRAIG R. MACKUS March 25, 1996
Craig R. Mackus, Controller
and Assistant Secretary
(Principal Accounting Officer)
<PAGE>
BUCYRUS-ERIE COMPANY
EXHIBIT INDEX
TO
1995 ANNUAL REPORT ON FORM 10-K
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
2.1 Second Amended Joint Plan Exhibit 2.1 to
of Reorganization of B-E Registrant's
Holdings, Inc. and Bucyrus- Current Report
Erie Company under chapter on Form 8-K,
11 of the Bankruptcy Code, dated December 1,
as modified December 1, 1994 ("Registrant's
1994, including Exhibits. December 1, 1994
8-K").
2.2 Order dated December 1, Exhibit 2.2 to
1994 of the U.S. Bankruptcy Registrant's
Court, Eastern District of December 1,
Wisconsin, confirming the 1994 8-K.
Second Amended Joint Plan
of Reorganization of B-E
Holdings, Inc. and Bucyrus-
Erie Company under chapter
11 of the Bankruptcy Code,
as modified December 1, 1994.
2.3 Agreement and Plan of Exhibit 2.3 to
Merger, dated as of Registrant's
December 14, 1994, Current Report
between B-E Holdings, on Form 8-K,
Inc. and Bucyrus-Erie dated December 14,
Company. 1994 ("Registrant's
December 14, 1994
8-K").
3.1 Restated Certificate of Exhibit 3.1 to
Incorporation of Bucyrus- Registrant's
Erie Company. December 14, 1994
8-K.
3.2 Restated Bylaws of Bucyrus- Exhibit 3.2 to
Erie Company, as amended Registrant's
on August 1 and 2, 1995. Quarterly Report
on Form 10-Q for
quarter ended
September 30, 1995
("Registrant's
September 30, 1995
10-Q").
(a) Amendment to Section Exhibit 3.2(a) to
5.3 and 5.4 of Article V Registrant's
of the Restated Bylaws September 30, 1995
of Bucyrus-Erie Company 10-Q.
adopted by Board of
Directors at its meeting
of August 1-2, 1995.
EI-1
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
(b) Amendment to Section 4.2 X
of Article IV of the Restated
Bylaws of Bucyrus-Erie Company
adopted by Board of Directors
at its meeting of March 11,
1996.
4.1 Specimen certificate of Exhibit 4.1 to
Common Stock, par value $.01 Registrant's
per share, of Bucyrus-Erie December 14, 1994
Company. 8-K.
4.2 Registration Rights Exhibit 4.2 to
Agreement, dated as of Registrant's
December 14, 1994, executed December 14, 1994
by Bucyrus-Erie Company. 8-K.
4.3 Indenture, dated as of Exhibit 4.3 to
December 14, 1994, between Registrant's
Bucyrus-Erie Company and December 14, 1994
Harris Trust and Savings 8-K.
Bank, as Trustee relating
to Bucyrus-Erie Company's
Secured Notes due
December 14, 1999.
4.4 Form of Bucyrus-Erie Exhibit 4.4 to
Company's Secured Notes Registrant's
due December 14, 1999. December 14, 1994
8-K.
4.5 Security Agreement, dated Exhibit 4.5 to
as of December 14, 1994, Registrant's
between Bucyrus-Erie December 14, 1994
Company and Harris Trust 8-K.
and Savings Bank, as
Collateral Agent.
10.1 Credit Agreement, dated Exhibit 10.1 to
as of December 14, 1994, Registrant's
between Bank One, Milwaukee, December 14, 1994
National Association and 8-K.
Bucyrus-Erie Company
("Credit Agreement").
10.2 Amendment No. 1 to Exhibit 10.1(a)
Credit Agreement dated to Registrant's
June 22, 1995. September 30, 1995
10-Q.
EI-2
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
10.3 Amendment No. 2 to Exhibit 10.1(b)
Credit Agreement dated to Registrant's
August 31, 1995. September 30, 1995
10-Q.
10.4 Amendment No. 3 to X
Credit Agreement dated
October 27, 1995.
10.5 Amendment No. 4 to X
Credit Agreement dated
December 29, 1995.
10.6 Amendment No. 5 to X
Credit Agreement dated
December 29, 1995.
10.7 Amendment No. 6 to X
Credit Agreement dated
February 1, 1996.
10.8 Amendment No. 7 to X
Credit Agreement dated
February 8, 1996.
10.9 Security Agreement, dated Exhibit 10.2 to
as of December 14, 1994, Registrant's
between Bucyrus-Erie December 14, 1994
Company and Bank One, 8-K.
Milwaukee, National
Association.
10.10 Pledge Agreement, dated Exhibit 10.3 to
as of December 14, 1994, Registrant's
between Bucyrus-Erie December 14, 1994
Company and Bank One, 8-K.
Milwaukee, National
Association.
10.11 Intercreditor Agreement, Exhibit 10.4 to
dated as of December 14, Registrant's
1994, between Bank One, December 14, 1994
Milwaukee, National 8-K.
Association and Harris
Trust and Savings Bank, as
Collateral Agent.
EI-3
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
10.12 Indemnification Agreement, Exhibit 10.5 to
dated as of November 30, Registrant's
1994, among Jackson December 14, 1994
National Life Insurance 8-K.
Company, B-E Holdings, Inc.
and Bucyrus-Erie Company.
10.13 Bucyrus-Erie Company's X
1995 Management
Incentive Plan, adopted
by Bucyrus-Erie Company's
Board of Directors on
May 3, 1995.
*10.14 (a) Becor Western Salaried Exhibit 10.4 (a)
Employees' Savings Plan to Registrant's
("1984 Savings Plan") as Annual Report on
amended and restated Form 10-K dated
effective January 1, April 14, 1994.
1984. ("Registrant's
1993 10-K")
* (b) Amendments to 1984 Exhibit 10.5(b)
Savings Plan, Sections to Registrant's
3.3 and 4.4. Annual Report on
Form 10-K dated
March 29, 1990.
("Registrant's
1989 10-K")
* (c) Amendments to 1984 Exhibit 10.5(c)
Savings Plan per U.S. to Registrant's
Internal Revenue Service 1989 10-K.
Notice 88-131.
* (d) Amendments to 1984 Exhibit 10.5(d)
Savings Plan, Sections to Registrant's
1.23, 5.1, 5.2, 5.6, 1989 10-K.
5.9 and 6.2.
* (e) Amendment to 1984 Exhibit 10.5(e)
Savings Plan, Section 1.5. to Registrant's
Annual Report on
Form 10-K dated
March 27, 1991.
("Registrant's
1990 10-K")
_________________________
*A management contract or compensatory plan or arrangement.
EI-4
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
*10.15 (a) Becor Western Salaried Exhibit 10.11 to
Employees' Retirement Plan B-E Holdings, Inc.
("BSERP"), as restated Annual Report on
through June 4, 1987. Form 10-K dated
March 29, 1988.
* (b) Amendment to BSERP, Exhibit 10.6(b)
Section 13.01(iii). to Registrant's
1989 10-K.
* (c) Amendments to BSERP, Exhibit 10.6(c)
Sections 1.23 and new to Registrant's
Supplements No. 6 and 10. 1989 10-K.
* (d) Amendment to BSERP Exhibit 10.6(d)
per U.S. Internal Revenue to Registrant's
Service Notice 88-131. 1989 10-K.
* (e) Amendment to BSERP, Exhibit 10.6(e)
Section 1.06. to Registrant's
1990 10-K.
*10.16 (a) Bucyrus-Erie Company Exhibit 10.8(a)
1988 Supplementary to Registrant's
Retirement Benefit Plan 1989 10-K.
("1988 Supplementary
Retirement Plan") adopted
by Board of Directors
March 21, 1988.
* (b) Amendments to 1988 Exhibit 10.8(b)
Supplementary Retirement to Registrant's
Plan, adopted by Board of 1989 10-K.
Directors September 13,
1988.
* (c) Amendments to 1988 Exhibit 10.8(c)
Supplementary Retirement to Registrant's
Plan, adopted by Board 1990 10-K.
of Directors October 2,
1990.
10.17 Letter Agreement dated X
June 14, 1995 among
Jefferies & Company,
Chanin and Company
and Bucyrus-Erie Company.
_________________________
*A management contract or compensatory plan or arrangement.
EI-5
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
(a) Amendment to Letter X
Agreement dated
August 9, 1995 with
Jefferies & Company and
Chanin and Company,
dated June 14, 1995.
10.18 Settlement Agreement Exhibit 10 to
between Bucyrus-Erie Registrant's Current
Company and Jackson Report on Form 8-K,
National Life dated May 31, 1995.
Insurance Company,
dated May 23, 1995.
*10.19 Form of Employment and Exhibit 19.4(a)
Consulting Agreement to Registrant's
between Bucyrus-Erie Quarterly Report
Company as Employer on Form 10-Q for
and P. W. Mork quarter ended
and N. J. Verville, June 30, 1992.
respectively, as ("Registrant's
Employees dated as of June 30, 1992
July 1, 1992. 10-Q")
* (a) Amendment No. 1, Exhibit 10.11(a)
dated November 28, 1994, to Registrant's
to Employment and 1994 10-K.
Consulting Agreement
between Bucyrus-Erie
Company as Employer
and P. W. Mork
and N. J. Verville,
respectively, as Employees
dated as of July 1, 1992.
*10.20 Form of Employment and Exhibit 19.4(b)
Consulting Agreement to Registrant's
between Bucyrus-Erie June 30, 1992
Company as Employer 10-Q.
and J. H. Westerman,
E. F. Schweitzer,
D. M. Goelzer,
C. R. Mackus,
G. R. Noel, and
T. W. Sullivan,
respectively, as
Employees dated as
of July 1, 1992.
_________________________
*A management contract or compensatory plan or arrangement.
EI-6
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
* (a) Amendment No. 1, Exhibit 10.12(a)
dated November 28, 1994 to Registrant's
(except for Mr. Westerman's 1994 10-K.
which was dated November 23,
1994), to Employment and
Consulting Agreement between
Bucyrus-Erie Company as
Employer and J. H. Westerman,
E. F. Schweitzer, D. M.
Goelzer, C. R. Mackus,
G. R. Noel, and T. W. Sullivan,
respectively, as Employees
dated as of July 1, 1992.
*10.21 Senior Executive X
Termination Benefits
Agreement, dated as
of December 7, 1995
between Bucyrus-Erie
Company as Employer
and Craig R. Mackus
as Employee.
*10.22 Senior Executive X
Termination Benefits
Agreement, dated as
of December 7, 1995
between Bucyrus-Erie
Company as Employer
and Timothy W. Sullivan
as Employee.
*10.23 Senior Executive X
Termination Benefits
Agreement, dated as
of December 7, 1995
between Bucyrus-Erie
Company as Employer
and Thomas B. Phillips
as Employee.
*10.24 Separation Agreement Exhibit 10.2 to
and Mutual Release Registrant's
between Bucyrus-Erie September 30, 1995
Company and P. W. Mork 10-Q.
dated July 25, 1995.
_________________________
*A management contract or compensatory plan or arrangement.
EI-7
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
*10.25 Separation Agreement Exhibit 10.3 to
and Mutual Release Registrant's
between Bucyrus-Erie September 30, 1995
Company and 10-Q.
N. J. Verville dated
July 25, 1995.
*10.26 Separation Agreement Exhibit 10.4 to
and Mutual Release Registrant's
between Bucyrus-Erie September 30, 1995
Company and D. M. Goelzer 10-Q.
dated July 25, 1995.
*10.27 Employment Agreement X
between Bucyrus-Erie
Company and
W. R. Hildebrand, as
Employee, dated March 11,
1996.
*10.28 Non-Qualified Stock X
Option Agreement between
Bucyrus-Erie Company
and W. R. Hildebrand, as
Employee, dated March 11,
1996.
*10.29 Restricted Stock Agreement X
between Bucyrus-Erie
Company and
W. R. Hildebrand, as
Employee, dated March 11,
1996.
*10.30 Time Accelerated Restricted X
Stock Agreement between
Bucyrus-Erie Company and
W. R. Hildebrand, as Employee,
dated March 11, 1996.
*10.31 Bucyrus-Erie Company X
1996 Employees' Stock
Incentive Plan.
*10.32 Bucyrus-Erie Company X
Non-Employee Directors'
Stock Option Plan.
_________________________
*A management contract or compensatory plan or arrangement.
EI-8
<PAGE>
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
13 1995 Annual Report. X
16 Letter of Deloitte and Exhibit 16 to
Touche LLP to the SEC. Registrant's
Current Report on
Form 8-K, dated
May 31, 1995.
21 List of Subsidiaries. Exhibit 21
to Registrant's
1994 10-K.
27 Financial Data Schedule. X
(EDGAR filing only.)
99.1 Settlement Agreement and Exhibit 99.5 to
Release entered into Registrant's 1993
effective as of 10-K.
December 23, 1993
between Bell Helicopter
Textron, Inc., BWC Gear,
Inc., Bucyrus-Erie
Company and B-E Holdings,
Inc. relating to
settlement of the Bell
Helicopter Claim.
99.2 Management Agreement, Exhibit 99.2 to
dated July 21, 1995, Registrant's
between Bucyrus-Erie Current Report on
Company and Miller Form 8-K, dated
Associates. July 25, 1995.
(a) Amendment dated X
December 21, 1995 to
Management Agreement
with Miller Associates
dated July 21, 1995.
EI-9
EXHIBIT 3.2(b)
1995 FORM 10-K
AMENDMENT TO SECTION 4.2 OF ARTICLE IV
OF THE RESTATED BYLAWS OF BUCYRUS-ERIE COMPANY
ADOPTED BY BOARD OF DIRECTORS
AT ITS MEETING OF MARCH 11, 1996
Section 4.2. Number, Tenure and Qualifications. Subject to the
rights of the holders of any series or class of stock as set forth in the
Certificate of Incorporation to elect directors under specified circumstances,
as provided in Section 5.04(b) of the Plan from the Effective Date (as defined
in the Plan) until the 1997 Annual Meeting, the Board of Directors shall
consist of nine members, and thereafter the number of directors shall be fixed
from time to time by the Board of Directors, but shall consist of not more
than fifteen nor less than three directors. Upon the Effective Date, the
Board of Directors shall consist of those directors selected as provided in
Section 5.04 of the Plan (the "Original Directors"). Each Original Director
shall hold office from and after the Effective Date until the 1996 Annual
Meeting, and from and after the 1996 Annual Meeting until the 1997 Annual
Meeting as provided in Section 5.04 of the Plan, and otherwise pursuant to the
terms of the Certificate of Incorporation, the Plan, these By-Laws and the
GCL, and until their successors have been duly elected, or appointed pursuant
to Section 4.7(B) of these Bylaws and qualified. Directors shall be elected
annually and shall hold office from the time of such director's election and
qualification until their successors shall have been duly elected and
qualified. At each succeeding annual meeting of stockholders of the
Corporation beginning with the 1997 Annual Meeting, if authorized by a
resolution of the Board of Directors, directors may be elected to fill any
vacancy on the Board of Directors, regardless of how such vacancy shall have
been created. Prior to the 1997 Annual Meeting, this Section 4.2 of these
Bylaws shall not be amended, added to, rescinded or repealed except (x) by
resolution of the Board of Directors increasing the number of directors passed
at a meeting thereof by not less than two-thirds of the number of directors
fixed from time to time by these Bylaws, or (y) by resolution of the Board of
Directors increasing the number of directors passed at a meeting thereof in
connection with any transaction involving the Corporaiton that requires
approval of the stockholders of the Corporation under the GCL and that is
approved at such meeting, provided that in either case notice of the proposed
change was given in a notice given no less than twenty-four hours prior to the
meeting.
EXHIBIT 10.4
1995 FORM 10-K
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of October 27,
1995, amends and supplements the Credit Agreement dated as of December 14,
1994, as amended by the First Amendment to Credit Agreement dated as of
June 22, 1995 and the Second Amendment to Credit Agreement dated as of
August 31, 1995 (as so amended, the "Credit Agreement"), between Bucyrus-Erie
Company (the "Company") and Bank One, Milwaukee, National Association (the
"Bank").
RECITAL
The Company and the Bank desire to amend and supplement the Credit
Agreement as provided below.
AGREEMENTS
In consideration of the promises and agreements set forth in the
Credit Agreement, as amended hereby, the Company and the Bank agree as
follows:
1. Definitions and References. Capitalized terms not defined herein
have the meanings assigned in the Credit Agreement. Upon the fulfillment of
the conditions set forth in section 3 below, all references to the Credit
Agreement contained in the Loan Documents shall mean the Credit Agreement as
amended by this Third Amendment to Credit Agreement.
2. Amendments to Credit Agreement.
(a) The formula in the definition of "Adjusted Libor Rate" in
section 1 of the Credit Agreement is amended by deleting "2.75%" and inserting
"Applicable Libor Margin" in its place.
(b) The definition of "Final Issuance Date" in section 1 of the
Credit Agreement is amended by deleting "December 31, 1996" and inserting
"April 30, 1997" in its place.
(c) Subsection (a)(ii) of the definition of "Interest Period" in
section 1 of the Credit Agreement is amended to read as follows:
(ii) no Interest Period for a Libor Rate Loan evidenced by the
Revolving Note may end later than the Revolving Note Maturity Date and no
Interest Period for a Libor Rate Loan evidenced by a Project Financing Note
may end later than the scheduled maturity date of such Project Financing Note.
(d) The following definitions contained in section 1 of the Credit
Agreement are amended in their entirety to read as follows:
"Libor Rate Loan" means any portion of the Revolving Note or of a
Project Financing Note bearing interest at or by reference to the
Adjusted Libor Rate.
"Note" means the Revolving Note, a PECFA Note or a Project Financing
Note and "Notes" means the Revolving Note, all PECFA Notes and all
Project Financing Notes.
"Reference Rate Loan" means any portion of a Note bearing interest at
or by reference to the Reference Rate.
(e) The following definitions are inserted, in appropriate
alphabetical order, into section 1 of the Credit Agreement:
"Applicable Libor Margin" means (a) in the case of a Libor Rate Loan
evidenced by the Revolving Note, 2.75% and (b) in the case of a Libor
Rate Loan evidenced by a Project Financing Note, the percentage indicated
in the applicable subsection of section 2.16(b).
"Project Financing Loan" means a loan by the Bank to the Company
pursuant to section 2.16 for Project Financing.
"Project Financing Note" means a promissory note issued by the
Company and payable to the order of the Bank evidencing Project Financing
Loans made by the Bank to the Company in the form of Exhibit G attached
hereto.
"Project Financing Reserve" means, on each date of determination, the
aggregate amount of the Project Financing Reserve amounts described in
section 2.16 (excluding such amounts for Project Financing Loans which
have been repaid in full).
(f) Section 2.7 of the Credit Agreement is amended by adding the
following subsection:
(e) The provisions of section 2.7(a) shall apply to loans
evidenced by the Revolving Note and to Project Financing Loans unless any
such provision is inconsistent with a term in section 2.16, in which
event section 2.16 shall control.
(g) The second sentence of section 2.8 is amended by deleting
"December 31, 1997" and inserting "April 30, 1998" in its place.
(h) The third sentence of section 2.8 is amended by inserting
"minus the Project Financing Reserve" after the number "$15,000,000".
(i) Section 2.16 of the Credit Agreement is created to read as
follows:
2.16 Project Financing.
(a) General. The Bank may, in its discretion, make Project
Financing Loans to the Company from time to time. Each Project Financing
Loan shall be in such maximum amount, bear interest at such rate, mature
at such date and be subject to such borrowing base and other limitations,
and other terms and conditions, as are specified in section 2.16(b)
hereof, which shall be amended in connection with each such loan. Except
as specifically provided otherwise in the applicable provisions of
section 2.16(b), each provision of this Agreement which applies to loans
evidenced by the Revolving Note shall also apply to loans evidenced by a
Project Financing Note including without limitation, the provisions of
this Agreement relating to Libor Rate Loans. Each Project Financing Loan
shall be evidenced by a Project Financing Note, appropriately completed,
which shall be expressed to be payable in the full amount set forth in
the applicable subsection of section 2.16(b), but the Company shall be
obligated to pay only the amount actually disbursed to or for the account
of the Company for such Project Financing, together with interest on the
unpaid balance of the sums so disbursed, which remain outstanding from
time to time as shown on the records of the Bank.
(b) Project Financing Loans.
(i) Project Financing Loan No. 1. The Bank agrees to make
advances, subject to the terms and conditions set forth in this Agreement, to
the Company to finance the construction of a Model 59-R Drill and related
equipment and accessories ("Project No. 1") to be sold by the Company to
Dom-Ex, Inc. pursuant to Purchase Order 20913 dated January 18, 1995 (and
which will be resold to USX and installed at the Minntac Mine in Mountain
Iron, Minnesota) as follows:
(a) Maximum Loan Amount: $1,582,000.
(b) Limitations on Advances: Prior to acceptance by USX, the
total amount advanced shall not exceed the lesser of the Maximum Loan
Amount above or 50% of the cost (determined in accordance with GAAP in a
manner consistent with the Company's historical accounting practices) of
the work-in-process and finished goods inventory comprising Project
No. 1. Upon acceptance by USX, the total amount advanced shall not
exceed the lesser of the Maximum Loan Amount or 80% of the amount of the
invoice for Project No. 1.
(c) Maturity Date: The aggregate principal amount of Project
Loan No. 1 and all accrued interest shall be due upon the first to occur
of (a) the receipt by the Company of payment of the amount due for
Project No. 1 or (b) December 31, 1995.
(d) Interest Rate: Reference Rate or the Adjusted Libor Rate
with the Applicable Libor Margin being 2.25%.
(e) Interest Payment Dates: Last Business Day of each month
and the Maturity Date.
(f) Project Financing Reserve: 0% of the Maximum Loan
Amount.
(g) Facility Fee: $0.
(c) Project Financing Notes. Each Project Financing Loan shall be
evidenced by a Project Financing Note, appropriately completed, which
shall be identified by a number identical to the Project Financing Loan
number set forth in the caption to the appropriate subsection of section
2.16(b). The Company may prepay a Project Financing Note in whole or in
part at any time without premium or penalty (except if a Libor Rate Loan
is prepaid, in which event the Company shall make any payment required
under section 2.14(c)).
(j) Section 5.4 of the Credit Agreement is amended by
inserting the clause "and a statement of account receivable agings (in the
form and detail reasonably acceptable to the Bank) as of the last day of such
month" immediately prior to the end of such section.
(k) Exhibit G attached hereto shall be deemed to be an
exhibit to the Credit Agreement.
3. Conditions for Effectiveness. This Third Amendment shall be
effective upon its execution and delivery by the Company and the Bank and the
receipt by the Bank of (a) Project Financing Note No. 1, duly executed by the
Company, and (b) such other documents as the Bank may reasonably request
relating to this Third Amendment.
4. Representations and Warranties. The Company represents and warrants
to the Bank that:
(a) The execution and delivery of this Third Amendment and Project
Financing Note No. 1 are within the Company's corporate power and corporate
authority, have been duly authorized by all necessary corporate action on the
part of the Company, are not in violation of any existing law, rule or
regulation of any governmental agency or authority, any order or decision of
any court, the Certificate of Incorporation or By-Laws of the Company or the
terms of any agreement, restriction or undertaking to which the Company is a
party or which it is bound, and do not require the approval or consent of the
shareholders of the Company, any governmental body, agency or authority or any
other person or entity.
(b) The representations and warranties set forth in section 3 of
the Credit Agreement are true and correct in all material respects as of the
date of this Third Amendment and no Default or Event of Default has occurred
and is continuing.
5. Costs and Expenses. The Company agrees to pay all costs and expenses
(including reasonable attorneys' fees) paid or incurred by the Bank in
connection with the execution and delivery of this Third Amendment and the
consummation of the transactions contemplated hereby.
6. Full Force and Effect. The Company and the Bank confirm that the
Credit Agreement, as amended hereby, remains in full force and effect.
BANK ONE, MILWAUKEE,
NATIONAL ASSOCIATION
BY /s/William E. Shaw
Its Vice President
BUCYRUS-ERIE COMPANY
BY /s/James D. Annand
Its Interim CFO
<PAGE>
EXHIBIT G
PROJECT FINANCING NOTE NO. 1
$_________ Milwaukee, Wisconsin
__________, 19__
FOR VALUE RECEIVED, on or before the Maturity Date set forth in
section 2.16(b)(__) of the Credit Agreement referred to below, the
undersigned, BUCYRUS-ERIE COMPANY, a Delaware corporation, promises to pay to
the order of BANK ONE, MILWAUKEE, NATIONAL ASSOCIATION (the "Bank") the
principal sum of ___________________________________________ Dollars, or such
lesser amount as is shown to be outstanding according to the records of the
Bank, together with interest on the principal balance outstanding from time to
time at such rates and payable at such times as set forth in the Credit
Agreement.
Payments of both principal and interest are to be made in immediately
available funds in lawful currency of the United States of America at the
office of the Bank, 111 East Wisconsin Avenue, Milwaukee, Wisconsin, or such
other place as the holder hereof shall designate to the undersigned in
writing.
This Note is Project Financing Note No. __ issued pursuant to the
Credit Agreement dated as of December 14, 1994, as amended, between the
undersigned and the Bank, to which Agreement reference is made for rights and
obligations as to prepayment and acceleration of maturity.
The undersigned agrees to pay all costs of collection, including
reasonable attorneys' fees.
BUCYRUS-ERIE COMPANY
BY _____________________________
Its____________________________
Exhibit 10.5
1995 FORM 10-K
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of December 29th,
1995, amends and supplements the Credit Agreement dated as of December 14,
1994, as amended by the First Amendment to Credit Agreement dated as of
June 22, 1995, the Second Amendment to Credit Agreement dated as of August 31,
1995, and the Third Amendment to Credit Agreement dated as of October 27,
1995, (as so amended, the "Credit Agreement"), between Bucyrus-Erie Company
(the "Company") and Bank One, Milwaukee, National Association (the "Bank").
RECITAL
The Company and the Bank desire to amend and supplement the Credit
Agreement as provided below.
AGREEMENTS
In consideration of the promises and agreements set forth in the Credit
Agreement, as amended hereby, the Company and the Bank agree as follows:
1. Definitions and References. Capitalized terms not defined herein
shall have the meanings assigned in the Credit Agreement. Upon the
fulfillment of the conditions set forth in Section 3 below, all references to
the Credit Agreement contained in the Loan Documents shall mean the Credit
Agreement as amended by this Fourth Amendment to Credit Agreement.
2. Amendments to Credit Agreement. Section 2.16(b)(ii) is created to
read as follows:
(ii) Project Financing Loan No. 2. The Bank agrees to make
advances, subject to the terms and conditions set forth in this Agreement, to
the Company to finance the construction of a 1570-W base, rack, rails and
roller parts and related equipment and accessories ("Project No. 2") to be
sold by the Company to Dolet Hills Mining Venture pursuant to Purchase Order
51609 dated June 23, 1995, as follows:
(a) Maximum Loan Amount: $1,220,000.
(b) Limitations on Advances: Prior to shipment to Dolet
Hills Mining Venture, the total amount advanced shall not exceed the lesser of
(i) the Maximum Loan Amount above, or (ii) 50% of the cost (determined in
accordance with GAAP in a manner consistent with the Company's historical
accounting practices) of the work-in-process and finished goods inventory
comprising Project No. 2 minus 100% of any progress payment received
(including progress payments attributable to the Minserco, Inc. erection).
Upon invoice to Dolet Hills Mining Venture, the total amount advanced shall
not exceed the lesser of (i) the Maximum Loan Amount; or (ii) 80% of the
amount of the invoice for Project No. 2, plus 50% of any remaining related
work-in-process inventory minus 100% of any progress payments received
(excluding progress payments attributable to the Minserco, Inc. erection).
(c) Maturity Date: The aggregate principal amount of Project
Loan No. 2 and all accrued interest shall be due upon the first to occur of
(a) the receipt by the Company of the amount due for Project No. 2; or (b)
April 30, 1996.
(d) Interest Rate: Reference Rate or the Adjusted Libor Rate
with the Applicable Libor Margin being 2.25%.
(e) Interest Payment Dates: Last Business Day of each month
and the Maturity Date.
(f) Project Financing Reserve: 0% of the Maximum Loan
Amount.
(g) Facility Fee: $10,000.00.
3. Conditions for Effectiveness. This Fourth Amendment shall be
effective upon its execution and delivery by the Company and the Bank and the
receipt by the Bank of (a) Project Financing Note No. 2, duly executed by the
Company, (b) the Facility Fee, and (c) such other documents as the Bank may
reasonably request relating to this Fourth Amendment.
4. Representations and Warranties. The Company represents and warrants
to the Bank that:
(a) The execution and delivery of this Fourth Amendment and
Project Financing Note No. 2 are within the Company's corporate power and
corporate authority, have been duly authorized by all necessary action on the
part of the Company, are not in violation of any existing law, or regulation
of any governmental agency or authority, any order or decision of any court,
the Certificate of Incorporation or By-Laws of the Company, or the terms of
any agreement, restriction or undertaking to which the Company is a party or
by which it is bound, and do not require the approval or consent of the
shareholders of the Company, any governmental body, agency or authority or any
other person or entity.
(b) The representations and warranties set forth in Section 3
of the Credit Agreement are true and correct in all material respects as of
the date of this Fourth Amendment and no Default or Event of Default has
occurred and is continuing.
5. Costs and Expenses. The Company agrees to pay all costs and expenses
(including reasonable attorney's fees) paid or incurred by the Bank in
connection with the execution and delivery of this Fourth Amendment and the
consummation of the transactions contemplated hereby.
6. Full Force and Effect. The Company and the Bank confirm that the
Credit Agreement, as amended hereby, remains in full force and effect in
accordance with its terms.
BANK ONE, MILWAUKEE,
NATIONAL ASSOCIATION
By /s/William E. Shaw
William E. Shaw,
Vice President
BUCYRUS-ERIE COMPANY
By /s/James D. Annand
Title Interim CFO
EXHIBIT 10.6
1995 FORM 10-K
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of December 29th, 1995
(but effective as of September 30, 1995), amends and supplements the Credit
Agreement dated as of December 14, 1994, as amended by the First Amendment to
Credit Agreement dated as of June 22, 1995, the Second Amendment to Credit
Agreement dated as of August 31, 1995, the Third Amendment to Credit Agreement
dated as of October 27, 1995, and the Fourth Amendment to Credit Agreement
dated as of December 29th, 1995, (as so amended, the "Credit Agreement"),
between Bucyrus-Erie Company (the "Company") and Bank One, Milwaukee, National
Association (the "Bank").
RECITAL
The Company and the Bank desire to amend and supplement the Credit
Agreement as provided below.
AGREEMENTS
In consideration of the promises and agreements set forth in the Credit
Agreement, as amended hereby, the Company and the Bank agree as follows:
1. Definitions and References. Capitalized terms not defined herein
shall have the meanings assigned in the Credit Agreement. Upon the
fulfillment of the conditions set forth in Section 3 below, all references to
the Credit Agreement contained in the Loan Documents shall mean the Credit
Agreement as amended by this Fifth Amendment to Credit Agreement.
2. Amendments to Credit Agreement.
a) The following sentence shall be added to the end of the
definition of "EBITDA." "For purposes of the calculations set forth in
Sections 2.1(b) and 2.2 of this Agreement, and only for the period beginning
September 30, 1995, and ending August 31, 1996, "EBITDA" shall be calculated
by adding the sum of $6,849,000 to the calculations set forth in the prior
sentence."
(b) The definition of "Debt Service Coverage Ratio" shall be
amended by adding the following sentence to the end of the definition: "For
the purpose of calculating the Debt Service Coverage Ratio under Section 6.10
during the period September 30, 1995 through June 30, 1996 (but for no other
purpose and during no other period), the sum of $6,849,000 shall be added to
the amount determined under subsection (a) above."
3. Conditions for Effectiveness. This Fifth Amendment shall be
effective as of September 30, 1995 upon its execution and delivery by the
Company and the Bank and the receipt of the Bank of an amendment fee in the
amount of $5,000.00, not withstanding the date of execution.
4. Representations and Warranties. The Company represents and warrants
to the Bank that:
(a) The execution and delivery of this Fifth Amendment are within
the Company's corporate power and corporate authority, have been duly
authorized by all necessary action on the part of the Company, are not in
violation of any existing law, or regulation of any governmental agency or
authority, any order or decision of any court, the Certificate of
Incorporation or By-Laws of the Company, or the terms of any agreement,
restriction or undertaking to which the Company is a party or by which it is
bound, and do not require the approval or consent of the shareholders of the
Company, any governmental body, agency or authority or any other person or
entity.
(b) The representations and warranties set forth in Section 3 of
the Credit Agreement are true and correct in all material respects as of the
date of this Fifth Amendment and no Default or Event of Default has occurred
and is continuing, except for defaults which are cured by the amendment of the
definitions set forth above.
5. Full Force and Effect. The Company and the Bank confirm that the
Credit Agreement, as amended hereby, remains in full force and effect in
accordance with its terms.
BANK ONE, MILWAUKEE,
NATIONAL ASSOCIATION
By /s/William E. Shaw
William E. Shaw,
Vice President
BUCYRUS-ERIE COMPANY
By /s/James D. Annand
Title Interim CFO
EXHIBIT 10.7
1995 FORM 10-K
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT, dated as of February 1, 1996,
amends and supplements the Credit Agreement dated as of December 14, 1994, as
amended by the First Amendment to Credit Agreement dated as of June 22, 1995,
the Second Amendment to Credit Agreement dated as of August 31, 1995, the
Third Amendment to Credit Agreement dated as of October 27, 1995, the Fourth
Amendment to Credit Agreement dated as of December 29, 1995, and the Fifth
Amendment to Credit Agreement dated December 29, 1995, (as so amended, the
"Credit Agreement"), between Bucyrus-Erie Company (the "Company") and Bank
One, Milwaukee, National Association (the "Bank").
RECITAL
The Company and the Bank desire to amend and supplement the Credit
Agreement as provided below.
AGREEMENTS
In consideration of the promises and agreements set forth in the Credit
Agreement, as amended hereby, the Company and the Bank agree as follows:
1. Definitions and References. Capitalized terms not defined herein
shall have the meanings assigned in the Credit Agreement. Upon the
fulfillment of the conditions set forth in Section 3 below, all references to
the Credit Agreement contained in the Loan Documents shall mean the Credit
Agreement as amended by this Sixth Amendment to Credit Agreement.
2. Amendments to Credit Agreement. Section 2.16(b)(iii) is created to
read as follows:
(iii) Project Financing Loan No. 3. The Bank agrees to make
advances, subject to the terms and conditions set forth in this Agreement, to
the Company to finance the construction of a 395-B shovel and related
equipment and accessories to be sold by the Company to Mexicana de Cobre, S.A.
de C.V. pursuant to Purchase Order No. 10-14-24-7488-5 dated November 16,
1995, and a 49-R drill and related equipment and accessories to be sold by the
Company to Mexicana de Cananea, S.A. pursuant to Purchase Order No.
84-15-24-7516-5 dated November 17, 1995 ("Project No. 3") as follows:
(a) Maximum Loan Amount: $5,000,000.00, reducing to
$2,300,000 upon the Company's receipt of 70% of the purchase price for the
395-B shovel.
(b) Limitations on Advances: Prior to shipment to Mexicana
de Cobre, S.A. de C.V. of the 395-B shovel, the total amount advanced shall
not exceed the lesser of (i) the Maximum Loan Amount above, or (ii) 70% of the
cost (determined in accordance with GAAP in a manner consistent with the
Company's historical accounting practices) of the work-in-process and finished
goods inventory comprising Project No. 3 minus 100% of any progress payment
received. Upon shipment of the 395-B shovel to Mexicana de Cobre, S.A. de
C.V., the total amount advanced shall not exceed the lesser of (i) the Maximum
Loan Amount; or (ii) 90% of the amount of the invoice for Project No. 3, plus
70% of any remaining related work-in-process inventory minus 100% of any
progress payments received.
(c) Maturity Date: The aggregate principal amount of Project
Loan No. 3 and all accrued interest shall be due upon the first to occur of
(a) the receipt by the Company of the amount due for Project No. 3; or (b)
June 30, 1996.
(d) Interest Rate: Reference Rate or the Adjusted Libor Rate
with the Applicable Libor Margin being 2.25%.
(e) Interest Payment Dates: Last Business Day of each month
and the Maturity Date.
(f) Project Financing Reserve: 100% of the Maximum Loan
Amount, plus $1,170,000.00, to be reduced to $295,000.00 upon the Company's
payment to the Bank reducing the outstanding principal balance on Project Note
No. 3 to $2,300,000.00.
(g) Facility Fee: $2,500.00.
3. Conditions for Effectiveness. This Sixth Amendment shall be
effective upon its execution and delivery by the Company and the Bank and the
receipt by the Bank of (a) Project Financing Note No. 3, duly executed by the
Company, (b) the Facility Fee, and (c) such other documents as the Bank may
reasonably request relating to this Sixth Amendment.
4. Representations and Warranties. The Company represents and warrants
to the Bank that:
(a) The execution and delivery of this Sixth Amendment and Project
Financing Note No. 3 are within the Company's corporate power and corporate
authority, have been duly authorized by all necessary action on the part of
the Company, are not in violation of any existing law, or regulation of any
governmental agency or authority, any order or decision of any court, the
Certificate of Incorporation or By-Laws of the Company, or the terms of any
agreement, restriction or undertaking to which the Company is a party or by
which it is bound, and do not require the approval or consent of the
shareholders of the Company, any governmental body, agency or authority or any
other person or entity.
(b) The representations and warranties set forth in Section 3 of
the Credit Agreement are true and correct in all material respects as of the
date of this Sixth Amendment and no Default or Event of Default has occurred
and is continuing.
5. Costs and Expenses. The Company agrees to pay all costs and expenses
(including reasonable attorney's fees) paid or incurred by the Bank in
connection with the execution and delivery of this Sixth Amendment and the
consummation of the transactions contemplated hereby.
6. Full Force and Effect. The Company and the Bank confirm that the
Credit Agreement, as amended hereby, remains in full force and effect in
accordance with its terms.
BANK ONE, MILWAUKEE,
NATIONAL ASSOCIATION
By /s/William E. Shaw
William E. Shaw,
Vice President
BUCYRUS-ERIE COMPANY
By /s/James D. Annand
Title V P Finance
EXHIBIT 10.8
1995 FORM 10-K
SEVENTH AMENDMENT TO CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT, dated as of February 8, 1996,
amends and supplements the Credit Agreement dated as of December 14, 1994
between Bucyrus-Erie Company (the "Company") and Bank One, Milwaukee, National
Association (the "Bank"), as amended by the First Amendment to Credit
Agreement dated as of June 22, 1995; the Second Amendment to Credit Agreement
dated as of August 31, 1995; the Third Amendment to Credit Agreement dated as
of October 27, 1995; the Fourth Amendment to Credit Agreement dated as of
December 29, 1995; the Fifth Amendment to Credit Agreement dated as of
December 29, 1995; and the Sixth Amendment to Credit Agreement dated as of
February 1, 1996 (as amended, the "Credit Agreement").
RECITAL
The Company and the Bank desire to amend and supplement the Credit
Agreement as provided below.
AGREEMENTS
In consideration of the promises and agreements set forth in the Credit
Agreement, as amended hereby, the Company and the Bank agree as follows:
1. Definitions and References. Capitalized terms not defined herein
have the meanings assigned in the Credit Agreement. Upon the fulfillment of
the conditions set forth in Section 3 below, all references to the Credit
Agreement contained in the Loan Documents shall mean the Credit Agreement as
amended by the Seventh Amendment to Credit Agreement.
2. Amendments.
(a) The definition of Supplemental Revolving Note contained in
Section 1 of the Credit Agreement is amended to read as follows:
"Supplemental Revolving Note" means the promissory note issued
by the Company and payable to the order of the Bank evidencing loans
under Section 2.1(a)(ii) in the form of Exhibit G attached hereto.
(b) Section 2.1(a) of the Credit Agreement is amended by deleting
Section 2.1(a)(ii) and inserting the following in its place:
(ii) The Bank will lend to the Company, subject to the terms
and conditions hereof, up to the maximum amount of $450,000 at any time
outstanding during the period from February 8, 1996 through the Revolving
Note Maturity Date. Loans may be made, repaid and made again. All loans
under this subsection shall be evidenced by the Supplemental Revolving
Note. Although the Supplemental Revolving Note shall be expressed to be
payable in the amount of $450,000, the Company shall be obligated to pay
only the amount actually disbursed to or for the account of the Company,
together with interest on the unpaid balance of the amounts to be
disbursed, which remain outstanding from time to time as shown on the
records of the Bank.
The amount of loans which the Company is entitled to receive
under Section 2.1(a)(i) shall be reduced by the unpaid principal balance
of loans outstanding under this Section 2.1(a)(ii) and, for the purposes
of the limitations on the maximum amounts of loans made by the Bank to
the Company under Sections 2.1(b) and 2.2, loans under Sections 2.1(a)(i)
and 2.1(a)(ii) shall be combined.
Notwithstanding any provision of this Agreement to the
contrary, the outstanding principal balance of loans under Section
2.1(a)(ii) shall bear interest at the rate which is equal to the
Reference Rate plus 2 percentage points and such rate shall change on
each day on which the Reference Rate changes. The unpaid principal
balance of such loans, and all accrued interest, shall be due and payable
ON DEMAND. In the absence of demand by the Bank, accrued interest shall
be due and payable on the first Business Day of each month.
(c) Exhibit G attached hereto shall be deemed to be an exhibit to
the Credit Agreement.
3. Conditions for Effectiveness. This Seventh Amendment shall be
effective upon its execution and delivery by the Company and the Bank and the
receipt by the Bank of (a) the Supplemental Revolving Note, duly executed by
the Company, (b) a certified copy of borrowing resolutions duly adopted by the
Board of Directors of the Company, and (c) such other documents as the Bank
may reasonably request relating to this Seventh Amendment.
4. Representations and Warranties. The Company represents and warrants
to the Bank that:
(a) The execution and delivery of this Seventh Amendment are within
the Company's corporate power and corporate authority, have been duly
authorized by all necessary corporate action on the part of the Company, are
not in violation of any existing law, rule or regulation of any governmental
agency or authority, any order or decision of any court, the Certificate of
Incorporation or By-Laws of the Company or the terms of any agreement,
restriction or undertaking to which the Company is a party or which it is
bound, and do not require the approval or consent of the shareholders of the
Company, any governmental body, agency or authority or any other person or
entity.
(b) The representation and warranties set forth in Section 3 of the
Credit Agreement are true and correct in all material respects as of the date
of this Seventh Amendment and no Default or Event of Default has occurred and
is continuing.
5. Costs and Expenses. The Company agrees to pay all costs and expenses
(including reasonable attorneys' fees) paid or incurred by the Bank in
connection with the execution and delivery of this Seventh Amendment and the
consummation of the transactions contemplated hereby.
6. Full Force and Effect. The Company and the Bank confirm that the
Credit Agreement, as amended hereby, remains in full force and effect.
BUCYRUS-ERIE COMPANY BANK ONE, MILWAUKEE,
NATIONAL ASSOCIATION
By: /s/James D. Annand By: /s/William E. Shaw
Title: VP Finance Title: Vice President
<PAGE>
EXHIBIT G
SUPPLEMENTAL REVOLVING NOTE
$450,000.00 Milwaukee, Wisconsin
February 8, 1996
FOR VALUE RECEIVED, the undersigned BUCYRUS-ERIE COMPANY, a Delaware
corporation promises to pay to the order of BANK ONE, MILWAUKEE, NATIONAL
ASSOCIATION (the "Bank") the principal sum of $450,000.00, or such lesser
amount as is shown to be outstanding according to the records of the Bank ON
DEMAND. The undersigned further agrees to pay interest on the principal
balance outstanding from time to time at such rates and payable at such times
as set forth in the Credit Agreement referred to below.
Payments of both principal and interest are to be made in immediately
available funds in lawful currency of the United States of America at the
office of the Bank, 111 East Wisconsin Avenue, Milwaukee, Wisconsin, or such
other place as the holder hereof shall designate to the undersigned in
writing.
This Note is the Supplemental Revolving Note issued pursuant to a Credit
Agreement dated as of December 14, 1994, as amended, between the undersigned
and the Bank.
The undersigned agrees to pay all costs of collection, including
reasonable attorneys' fees, before and after judgment.
BUCYRUS-ERIE COMPANY
By: /s/James D. Annand
Its: V P Finance
This note replaces and increases by $150,000.00 that certain note dated
August 31, 1995.
EXHIBIT 10.13
1995 FORM 10-K
1995 BUCYRUS-ERIE COMPANY INCENTIVE PLAN
The Company has approved an incentive plan for 1995 based on Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)*.
Participants will be eligible for 0 to 100% of their maximum incentive
opportunity based on a single Company-wide EBITDA* incentive pool.
All domestic and foreign subsidiaries, North American field sales, service,
service centers and electrical service employees will participate in the
Company incentive plan.
There will be no incentive payments unless EBITDA* is above $12,901,950. The
maximum (100%) payment will be achieved if EBITDA* exceeds $27,949,950.
In addition, there will be no Plan payout unless the Company-wide inventory
level as of December 31, 1995 is $78 million or below. This number is
dependent on the 1996 Operating Plan. If the 1996 Plan is substantially
higher than the current projection, then the inventory target may be adjusted
upwards.
The graph on the reverse side of this summary indicates the relationship
between EBITDA* and the percentage of maximum incentive opportunity to be paid
to eligible employees.
The Board of Directors reserves the right to alter the performance and payment
targets upward or downward in the event of a change resulting from deviation
in the 1995 financial plan.
Human Resources Department
* Excludes restructuring expenses, extraordinary gain and cumulative effect
of accounting changes.
<PAGE>
BUCYRUS-ERIE COMPANY
1995 INCENTIVE PLAN CALCULATIONS
TOTAL NET
PAYOUT % EBITDA (1) PAYOUT EBITDA
0.00% $12,901,950 $0 $12,901,950
5.00% $13,654,350 $188,100 $13,466,250
10.00% $14,406,750 $376,200 $14,030,550
15.00% $15,159,150 $564,300 $14,594,850
20.00% $15,911,550 $752,400 $15,159,150
25.00% $16,663,950 $940,500 $15,723,450
30.00% $17,416,350 $1,128,600 $16,287,750
35.00% $18,168,750 $1,316,700 $16,852,050
40.00% $18,921,150 $1,504,800 $17,416,350
45.00% $19,673,550 $1,692,900 $17,980,650
50.00% $20,425,950 $1,881,000 $18,544,950
55.00% $21,178,350 $2,069,100 $19,109,250
60.00% $21,930,750 $2,257,200 $19,673,550
65.00% $22,683,150 $2,445,300 $20,237,850
70.00% $23,435,550 $2,633,400 $20,802,150
75.00% $24,187,950 $2,821,500 $21,366,450
80.00% $24,940,350 $3,009,600 $21,930,750
85.00% $25,692,750 $3,197,700 $22,495,050
90.00% $26,445,150 $3,385,800 $23,059,350
95.00% $27,197,550 $3,573,900 $23,623,650
100.00% $27,949,950 $3,762,000 $24,187,950
(1) Excludes restructuring expenses, extraordinary gain and cumulative
effect of accounting changes.
EXHIBIT 10.17
1995 FORM 10-K
Jefferies & Company, Inc.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Telephone (310) 575-5200 (800) 933-6656
CORPORATE FINANCE FAX (310) 575-5165
June 14, 1995
Mr. Phillip W. Mork
President
BUCYRUS-ERIE COMPANY
1100 Milwaukee Avenue
South Milwaukee, WI 53172
Dear Phil:
This letter (the "Agreement") confirms that Bucyrus-Erie Company
("Bucyrus-Erie" or the "Company"), has engaged Jefferies & Company, Inc.
("Jefferies") and Chanin and Company ("Chanin," and collectively with
Jefferies, the "Financial Advisors") to act as exclusive financial advisors to
the Company in connection with the Company's proposed merger, combination or
joint venture with the Marion Power Shovel division ("Marion") of Indresco,
Inc. ("Indresco").
1. Retention. The Company hereby retains the Financial Advisors on an
exclusive basis, and Jefferies and Chanin agree to act as financial advisors
to the Company, in connection with any merger, combination or joint venture
transaction (the "Merger") involving Marion and any other matters referred to
herein. During the term of the Agreement, the Company agrees that it will not
negotiate with any person or persons with respect to the Merger, other than
through the Financial Advisors, and will keep at least one of the Financial
Advisors informed regarding contacts with Indresco and Marion.
2. Information on the Company. The Company recognizes and confirms that
in rendering services hereunder, the Financial Advisors have been, prior to
the date hereof, and hereinafter will be, using and relying on and assuming
the accuracy of, without independent verification, data, material and other
information with respect to the Company, furnished to the Financial Advisors
by or on behalf of the Company and their agents, counsel, employees and
representatives (the "Information").
The Financial Advisors will perform due diligence; however, the Company
recognizes and confirms that the Financial Advisors: (a) will use and rely
solely on the Information and information available from generally recognized
public sources in performing the services contemplated by this Agreement
without having independently verified the same; (b) do not assume
responsibility for the accuracy or completeness of the Information, and such
other information; (c) will not make an appraisal of any assets of the
Company; and (d) retain the right to continue to perform due diligence during
the course of the engagement. The Company represents and warrants that any
prospectus, placement memorandum or similar disclosure materials utilized by
the Company in connection with any Merger will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances in which they were
made, not false or misleading. The Financial Advisors agree to keep the
Information confidential so long as it is and remains non-public, unless
disclosure is required by law or requested by any government, regulatory or
self-regulatory agency or body, and the Financial Advisors will not make use
thereof, except in connection with their services hereunder for the Company.
3. Use of Name. The Company agrees that any reference to either of the
Financial Advisors in any release, communication, or material is subject to
such Financial Advisors prior written approval, which approval shall not be
unreasonably withheld. If either of the Financial Advisors resigns prior to
the dissemination of any such release, communication or material, no reference
shall be made therein to that Financial Advisor, except as otherwise required
by law.
4. Use of Advice. No advice rendered by the Financial Advisors in
connection with the services performed by the Financial Advisors pursuant to
this Agreement will be quoted by either party hereto, nor will any such advice
be referred to, in any report, document, release or other communication,
whether written or oral, prepared, issued or transmitted by such party or any
person or corporation controlling, controlled by or under common control with
such party or any director, officer, employee, agent or representative of any
such party, without the prior written authorization of all parties hereto
(which shall not be unreasonably witheld), except to the extent required by
law (in which case the appropriate party shall so advise the other in writing
prior to such use and shall consult with the other with respect to the form
and timing of disclosure), provided that the foregoing shall not prohibit
appropriate internal communication or reference with respect to such advice
internally within such parties, which shall include their legal and other
consultants. Any fairness opinion and related disclosure may be included in a
disclosure statement, subject to the final approval of Jefferies.
5. Compensation. In full payment for services rendered and to be
rendered hereunder by the Financial Advisors, the Company agrees to pay to the
Financial Advisors as follows:
(a) The Company agrees to pay to the Financial Advisors a one-time
retainer of $100,000, payable upon execution of this Agreement, which amount
in aggregate may be credited against the success fee described in Section 5(c)
below. This retainer is to be paid solely to Jefferies.
(b) The Company agrees to pay to Jefferies a fee of $150,000 for delivery
of any fairness opinion issued in conjunction with the Merger contemplated
herein, payable immediately upon execution of such fairness opinion. Such
opinion shall be signed by Jefferies alone.
(c) Upon successful consummation of the Merger, the Company agrees to pay
to the Financial Advisors a success fee (the "Success Fee") in an amount equal
to 0.75% of the aggregate transaction value as defined (the "Transaction
Value"). The Transaction Value will be the total enterprise value of the
combined entity resulting after the Merger, such value to be mutually
determined by the Financial Advisors and the Company. Jefferies and Chanin
are to receive 75% and 25%, respectively, of the proceeds from the Success Fee
described herein, after crediting the retainer described in Section 5(a) to
the Success Fee as a whole.
(d) In addition to the compensation to be paid to the Financial Advisors
as provided in Sections 5(a), 5(b) and 5(c) hereof, the Company shall pay to,
or on behalf of, the Financial Advisors, promptly as billed monthly, all
reasonable out-of-pocket expenses incurred by the Financial Advisors in
connection with their services to be rendered hereunder, and without regard to
whether any such Merger is consummated. Such expenses shall include, among
other things, travel (airfare to be by coach fare) and lodging expenses, word
processing charges, messenger and duplicating services, facsimile expenses and
other customary expenditures, all to be billed at no greater than actual cost.
In addition, the reasonable fees, disbursements and all out-of-pocket expenses
of the Financial Advisors' counsel shall be promptly reimbursed by the
Company.
(e) The Financial Advisors may resign, whether individually or jointly,
with or without cause, at any time and the Company may terminate the Financial
Advisors' services, whether individually or jointly, with or without cause, at
any time, each by giving prior written notice to the other. If the Company
terminates the services of the Financial Advisors, or either of them, for any
reason, the Financial Advisors and their counsel (subject to Section 5(d)
above) shall be entitled to receive all of the amounts due pursuant to
Sections 5(a), 5(b), 5(c) and 5(d) hereof up to and including the effective
date of such termination or resignation, as the case may be. Furthermore, if
either or both of the Financial Advisors services, hereunder are terminated by
the Company without Cause (as defined below) and the Company completes any
Merger contemplated herein within one year of such Financial Advisor being
terminated, then the Company shall pay to such Financial Advisor within five
(5) days of the closing of any such Merger in cash the fees as outlined in
Section 5(c), as applicable. If either of or both of the Financial Advisors
resign for any reason, such Financial Advisor shall be entitled to receive
fees as earned (or expenses as incurred) pursuant to Sections 5(a), 5(b), 5(c)
and 5(d) hereof. For purposes of this Agreement, Cause shall mean (i) gross
negligence, (ii) willful misconduct or (iii) breach of this Agreement.
Furthermore, if either Financial Advisor resigns or is terminated by the
Company, the Company can, at its option, replace such Financial Advisor with
another investment bank with the same economic split as outlined in Section 5
for that (resigned or terminated) Financial Advisor. Regardless of whether or
not the Company chooses a replacement investment bank, if either Financial
Advisor resigns or is terminated the total fees paid by the Company (in this
Section 5) shall remain unchanged.
6. Representations and Warranties. The Company represents and warrants
to the Financial Advisors that this Agreement has been duly authorized,
executed and delivered by the Company; and, assuming due execution by the
Financial Advisors, constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company, in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws or decisions affecting creditor
rights generally and to general equitable principles and to the extent that
the indemnification provided for in Section 7 and Schedule A may be limited by
applicable public policy. The Company represents that, to the best of its
knowledge, the Information will not, when delivered and at the closing of any
Merger, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading. The Company agrees
to advise the Financial Advisors promptly of the occurrence of any event or
any other change prior to the closing known to it which results in the
Information containing any untrue statement of a material fact or omitting to
state any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
7. Indemnity. In partial consideration of the services to be rendered
hereunder, the Company agrees to indemnify the Financial Advisors and certain
other indemnified persons in accordance with Schedule A attached hereto.
8. Survival of Certain Provisions. The indemnity and contribution
agreements contained in Section 7 to this Agreement and Schedule A attached
hereto, the compensation provisions in Section 5 of this Agreement and the
representations and warranties of the Company contained in Section 6 of this
Agreement shall remain operative and in full force and effect regardless of
(a) any investigation made by or on behalf of the Financial Advisors, by or on
behalf of any affiliate of the Financial Advisors' or any person controlling
either, (b) any completion or termination of the Merger, (c) the resignation
of the Financial Advisors or any termination of the Financial Advisors'
services or (d) any termination of this Agreement, and shall be binding upon,
and shall inure to the benefit of, any successors, assigns, heirs and personal
representatives of the Company, the Financial Advisors, the indemnified
parties.
9. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Company, at the address set forth above, and (b) if to the Financial Advisors,
at the offices of Jefferies at 11100 Santa Monica Boulevard, Suite 1000, Los
Angeles, California 90025, Attention: Jerry M. Gluck, Executive Vice
President and General Counsel.
10. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
11. Third Party Beneficiaries. This Agreement has been and is made
solely for the benefit of the Company, the Financial Advisors and the other
indemnified persons referred to in Schedule A hereof and their respective
permitted successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement. This Agreement, and the
rights and duties hereunder, may not be assigned by the Financial Advisors
without the prior written consent of the Company except in the case of a
merger, consolidation or transfer of substantially all the assets and
liabilities of the Financial Advisors.
12. Construction. This Agreement incorporates the entire understanding
of the parties and supersedes all previous agreements relating to the subject
matter hereof should they exist and shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to
principles of conflicts of law.
13. Headings. The section headings in this Agreement have been inserted
as a matter of convenience of reference and are not part of this Agreement.
14. Press Announcements. At any time after the consummation or other
public announcement of the Merger, and with the approval of the Company (which
approval shall not be unreasonably withheld or delayed), the Financial
Advisors may place an announcement in such newspapers and publications as it
may choose, stating that the Financial Advisors have acted as Financial
Advisors (and any other appropriate role) to the Company in connection with
the Merger.
15. Amendment. This Agreement may not be modified or amended except in a
writing duly executed by the parties hereto.
16. Term. Except as provided herein, this Agreement shall run from the
date of this letter to a date of one year thereafter, unless extended by
mutual consent of the parties (the "Term").
Please sign and return an original and one copy of this letter to the
undersigned to indicate your acceptance of the terms set forth herein,
whereupon this letter and your acceptance shall constitute a binding agreement
between the Company, Jefferies and Chanin as of the date first above written.
Sincerely,
JEFFERIES & COMPANY, INC.
By /s/David J. Losito
Joseph J. Radecki, Jr.
Executive Vice President
CHANIN AND COMPANY
By /s/Skip Victor
Skip Victor
Managing Director
Accepted and Agreed:
BUCYRUS-ERIE COMPANY
By /s/P. W. Mork
Mr. Phillip W. Mork
President
<PAGE>
SCHEDULE A
June 14, 1995
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
Suite 1000
Los Angeles, CA 90025
CHANIN AND COMPANY
11111 Santa Monica Bouldvard
Suite 210
Los Angeles, CA 90025
Ladies and Gentlemen:
In consideration of the services to be rendered by Jefferies & Company,
Inc. ("Jefferies") and Chanin and Company ("Chanin", and collectively with
Jefferies, the "Financial Advisors") to Bucyrus-Erie Company ("Bucyrus-Erie"
or the "Company") pursuant to the letter agreement dated June 14, 1995,
between the Company and the Financial Advisors of which this Schedule A is a
part (together with this Schedule A, the "Agreement"), the Company agrees to
indemnify and hold harmless each of Jefferies, Chanin, their affiliates, and
each person, if any, who controls Jefferies, Chanin, or any of their
affiliates within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended (a "controlling person"), and the respective agents, employees,
officers, directors and shareholders of Jefferies, Chanin, their affiliates
and any such controlling persons (collectively, the "Indemnified Parties"),
from and against any and all losses, claims, damages, expenses and
liabilities, joint or several, as they may be incurred, arising out of or in
connection with the execution and delivery of the Agreement or the performance
of the services which are the subject of the Agreement or arising out of or in
connection with any transaction contemplated thereby; provided, however, that
the Company shall not be liable under the foregoing indemnity agreement in
respect of any loss, claim, damage, expense or liability to the extent that
such loss, claim, damage, expense or liability resulted solely from the
willful misconduct or gross negligence of such Indemnified Party. In
addition, the Company agrees to reimburse each Indemnified Party for all
reasonable expenses (including, without limitation, reasonable costs of
investigating, preparing and defending any administrative proceeding or
litigation, and fees and expenses of counsel, as they may be incurred) as
incurred by each such Indemnified Party in connection with investigating,
preparing, defending or settling any such action or claim, whether or not in
connection with pending or threatened litigation in which the Financial
Advisors or any such other Indemnified Party is a party.
If any action or proceeding (including any governmental investigation)
shall be brought or asserted against any Indemnified Party in respect of which
indemnity shall be sought from the Company, such Indemnified Party shall
notify the Company in writing, and the Company shall promptly assume the
defense thereof, including the employment of counsel reasonably satisfactory
to the Indemnified Party and the payment of all reasonable fees and expenses
incurred in connection with the defense thereof. All such fees and expenses
(including any fees and expenses incurred in connection with investigating,
preparing, defending or settling such action or proceeding) shall be paid to
such counsel as incurred, on submission of invoices in a form reasonably
satisfactory to the Company. Each Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but, in such event, the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless (a) the Company has agreed to pay
such fees and expenses, (b) the Company shall have failed to assume the
defense of such action or proceeding and employ counsel reasonably
satisfactory to the Indemnified Party in any such action or proceeding or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both an Indemnified Party and the Company and such
Indemnified Party shall have been advised in writing by counsel that the
representation of such Indemnified Party by counsel selected by the Company
would be inappropriate because of actual or potential conflict of interest, in
which case, if such Indemnified Party notifies the Company in writing that it
elects to employ separate counsel at the expense of the Company, the Company
shall not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Party, it being understood, however, that the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party, which firm shall be designated in writing by
the Indemnified Party and shall be reasonably acceptable to the Company.
Neither the Company nor any Indemnified party shall settle any action or
proceeding without the Company's and the Indemnified Party's written consent
(which shall not be unreasonably withheld), but if any such action or
proceeding is settled with written consent of the other, or if there is a
judgment against an Indemnified Party in any such action or proceeding, the
Company agrees to indemnify and hold harmless such Indemnified Party from and
against any loss, claim, damage, expense or liability (to the extent stated
above) incurred by reason of such settlement or judgment.
If for any reason the foregoing indemnification is unavailable to an
Indemnified Party or insufficient to hold it harmless, the Company shall
contribute to amounts paid or payable by the Indemnified Party in respect of
such loss, claim, damage, expense or liability in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Financial Advisors on the other in connection with any
transaction contemplated by the Agreement. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, or otherwise, then the Company shall contribute to such amount paid or
payable by the Indemnified Party in such proportion as is appropriate to
reflect not only the relative benefits but also the relative fault of the
Company, on the one hand, and such Indemnified Party, on the other hand, in
connection with any actions or omissions or any other matters which result in
any such loss, claim, damage, expense or liability, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the losses, claims, damages, expenses and liabilities referred to
above shall be deemed to include, subject to the limitations set forth herein,
any reasonable legal or other fees or expenses incurred by such party in
connection with investigating or defending any action or claim.
Notwithstanding the provisions hereof, in calculating the amount to be
contributed by the Company, the aggregate amount payable by the Financial
Advisors and the other Indemnified Parties with respect to all matters as to
which contribution is sought hereunder shall not exceed the aggregate amount
of fees actually paid to each Financial Advisor by the Company in connection
with any transaction contemplated by the Agreement, and the Company agrees to
contribute such amount as is necessary to give effect to this limitation. It
is hereby further agreed that the relative benefits to the Company on the one
hand and to the Financial Advisors on the other with respect to any
transaction or proposed transaction contemplated by the Agreement shall be
deemed to be in the same proportion as (i) the total value of the transaction
bears to (ii) the fees actually paid to the Financial Advisors with respect to
such transaction. The relative fault of the Company on the one hand and any
Indemnified Party on the other with respect to the transaction shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Financial Advisors and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Financial Advisors agree that it would not be just and
equitable if contribution were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to herein.
If any of the Financial Advisors' personnel appear as witnesses, are
deposed or are otherwise involved in the defense of any action against the
Financial Advisors, any other Indemnified Party, the Company or the Company's
directors, or are otherwise required to appear as an expert witness or in any
other capacity in connection with a proceeding arising out of any transaction
contemplated by the Agreement, whether or not consummated, or the Financial
Advisors' engagement in connection therewith, the Company will pay to the
Financial Advisors: (i) with respect to each hour that one of the Financial
Advisors' personnel appears as a witness or is deposed and/or (ii) with
respect to each hour thereof that one of the Financial Advisors' personnel is
involved in the preparation therefor, a fee of $350 per hour for each such
person, and the Company will reimburse the Financial Advisors for all
reasonable expenses including reasonable counsel fees and other expenses
incurred, subject to the terms of this Agreement, by the Financial Advisors by
reason of any of its personnel being involved in any such action. The Company
consents to jurisdiction, service and venue in any court in which any claim
which is subject to this Schedule A is brought against Jefferies, Chanin or
any other Indemnified Party.
The reimbursement, indemnity and contribution obligations of the Company
set forth herein, shall (a) apply to any modification of the Agreement, (b) be
in addition to any rights any Indemnified Party may have at common law or
otherwise, (c) be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, Jefferies, Chanin
and any other Indemnified Party and (d) remain in full force and effect (i)
following any completion or termination of the relationship established by the
Agreement and (ii) regardless of any investigation made by or on behalf of any
Indemnified Party.
The provisions of this Schedule A are hereby made a part of the letter
agreement between the Company, Jefferies and Chanin, dated June 14, 1995.
Very truly yours,
BUCYRUS-ERIE COMPANY
By /s/P. W. Mork
Phillip W. Mork
President
Agreed and Accepted:
JEFFERIES & COMPANY, INC.
By /s/David J. Losito
Joseph J. Radecki, Jr.
Executive Vice President
CHANIN AND COMPANY
By /s/Skip Victor
Skip Victor
Managing Director
EXHIBIT 10.17(a)
1995 FORM 10-K
Jefferies & Company, Inc.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Telephone (310) 575-5200 (800) 933-6656
CORPORATE FINANCE FAX (310) 575-5165
August 9, 1995
Mr. Frank Miller
Chief Executive Officer
BUCYRUS-ERIE COMPANY
1100 Milwaukee Avenue
South Milwaukee, WI 53172
Dear Frank:
This amendment to the Agreement dated June 14, 1995 between Bucyrus-Erie,
Jefferies and Chanin (the "Amendment") confirms the Financial Advisors will
act as exclusive financial advisors to the Company with respect to an
exploration of strategic alternatives for the Company, in addition to a
proposed merger, combination or joint venture with Marion. Unless otherwise
noted all capitalized items are defined in the Agreement. The amended
sections of the Agreement will now read as follows:
Page 1, Section 1; "Retention" -
1. Retention. The Company hereby retains the Financial Advisors on an
exclusive basis, and Jefferies and Chanin agree to act as financial advisors
to the Company, in connection with any merger, combination or joint venture
transaction (the "Merger") involving the Marion Power Shovel division of
Indresco and with respect to an exploration of other strategic alternatives or
strategic partners for the Company (the "Search"). During the term of the
Agreement, the Company agrees that it will not, directly or indirectly,
contact, approach or negotiate with any person or persons with respect to the
Merger or Search, other than through the Financial Advisors.
Page 2, Section 5; "Compensation"; subsections (b) and (c) -
(b) The Company agrees to pay to Jefferies a fee of $150,000 for
delivery of each fairness opinion issued in conjunction with the Merger or
Search for the Company, contemplated herein, payable immediately upon
execution of each such fairness opinion.
(c) Upon successful consummation of the Merger or Search, the Company
agrees to pay to the Financial Advisors a success fee (the "Success Fee").
The Success Fee with regard to Merger will be an amount equal to 0.75% of the
aggregate transaction value as defined (the "Transaction Value"). The
Transaction Value will be the total enterprise value of the combined entity
resulting after the Merger, such value to be mutually determined by the
Financial Advisors and the Company. In addition, with respect to consummation
of a transaction related to the Search, the Company will pay a Sucess Fee
consistent with fees payable in the market to the Financial Advisors. Such
Success Fee will be mutually agreed upon when a transaction which results from
the Search is consummated. Jefferies and Chanin are to receive 75% and 25%,
respectively, of the proceeds from each Success Fee described herein, after
crediting the retainer described in Section 5(a) to the aggregate Success Fee.
All other terms contained in the Agreement, and not otherwise modified in
the Amendment, will remain in full force and effect.
Sincerely,
JEFFERIES & COMPANY, INC.
By /s/David J. Losito
Joseph J. Radecki, Jr.
Executive Vice President
CHANIN AND COMPANY
By /s/Skip Victor
Skip Victor
Managing Director
Accepted and Agreed:
BUCYRUS-ERIE COMPANY
By /s/Frank W. Miller
EXHIBIT 10.21
1995 FORM 10-K
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
AGREEMENT, dated as of December 7, 1995, by and between Bucyrus-Erie
Company (the "Company") a Delaware Corporation, and Craig R. Mackus (the
"Executive").
WITNESSETH:
WHEREAS, the Executive of the Company, the employee has made and, if he
continues to be employed by the Company, will continue to make valuable
contributions to the productivity and profitability of the Company, and
whereas the Executive has an existing employment and consulting agreement
(existing agreement) dated July 1, 1992 and amendment to employment and
consulting agreement dated November 28, 1994 (existing amendment).
WHEREAS, the Company considers that providing severance benefits will
operate as an incentive for the Executive to remain employed by the Company;
NOW, THEREFORE, to induce the Executive to remain employed by the Company
and for other good and valuable consideration, the Company and the Executive
agree as follows:
1.) Circumstances Triggering Receipt of Severance Benefits
The Company shall provide the Executive with the benefits set forth in
Section 3 upon any termination of the Executive's employment for any
reason except the following:
(a) Termination by reason of the Executive's "voluntary
termination", except as defined. For the purposes of this
Agreement, "voluntary termination" shall mean the voluntary
resignation by the Executive of his employment with the Company.
(b) Termination by means of "termination with cause". For the
purposes hereof, "termination with cause" shall be defined as
termination of employment of the Executive by the Company
following (1) the continued failure of the Executive to render
services to the Company in accordance with his employment, which
failure amounts to gross neglect of his duties to the Company,
or (2) the commission by the Executive of an act of fraud or
embezzlement against the Company or of an act which he knew to
be in gross violation of his duties to the Company (including
the unauthorized disclosure of confidential information) or (3)
following a felony conviction of the Executive; or
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
(c) Termination upon the Executive's normal retirement.
For the purpose of this agreement, the placement of the Executive on
permanent or long term disability status as defined by the Company's long
term disability policy covering the Executive and the death of the
Executive shall not be deemed a termination and shall not qualify the
Executive for the benefits set forth in this agreement. However, a
termination by the Executive after any reduction of the Executive's
position to a position of lesser responsibility, or a defacto reduction
of the Executive's duties or responsibilities, or the reduction of his
annual base salary or rate of maximum potential bonus, unless such salary
or bonus reduction is part of a reduction of compensation applicable
generally to all Executives of the Company, or a Company imposed
requirement that Executive move his residence or principal place of
business to any location unacceptable to him, is deemed as a termination
event.
2.) No Entitlement to Employment
This agreement shall not be construed as and does not constitute a
promise or guaranty of continued employment.
3.) Termination Benefits
Subject to the conditions set forth in Section 1 and subject to the
mitigation provisions contained in Section 5, the following benefits
(subject to any changes in benefit programs that may occur in the future
and any applicable payroll or other taxes required to be withheld) shall
be accorded to the Executive:
(a) For the willingness to agree to not voluntarily resign prior to
June 30, 1996 and to have this agreement supersede the existing
and amended agreements currently in place, the Company will
provide the following:
o A salary increase to a base annual salary of $123,000,
effective November 1, 1995.
o A cash bonus of $10,000 payable not later than
December 31, 1995.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
o Extension of a severance benefit to December 31, 1996
providing that should the Executive be terminated for
any reason other than those defined, that the Executive
would be entitled to the following:
" Compensation - Commencing on the Termination
Date, the Executive shall be paid
periodically, according to his unit's wage
practices, the amount of his periodic salary
until he has been paid 18 months of annual
base salary (plus a 5% inflation rate) at the
rate in effect on the date of the termination
of his employment with the Company (the
"Termination Date").
" Vacation Pay - Any accrued vacation pay due
but not yet taken at the Termination Date
shall be paid to the Executive on the
Termination Date, but shall in no instance
exceed 5 weeks of pay at the then current base
salary (excluding the inflation adjustment).
" Welfare Benefits, etc. - The Executive's
participation (including dependent coverage)
in any life, disability, health and dental
plans, and any other similar fringe benefits
of the Company (except business accident
insurance and continued contributions to
qualified retirement plans) in effect
immediately prior to the Termination Date
shall be continued, or equivalent benefits
provided by the Company, for a period of
twelve months from the Termination Date to the
extent allowed under the policies or
agreements pursuant to which the Company
obtains and provides such benefits.
" Personal Executive counseling, chosen by the
Executive, in an amount not to exceed $10,000.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
" The Executive shall not be entitled to any
bonus under the Company's Executive bonus plan
for the year in which his termination occurs.
The Agreement shall not affect the Executive's
entitlement to benefits under the Company s
retirement plan accrued as of his termination.
" Voluntary termination at any time between
December 7, 1995 and June 30, 1996 would
provide the Executive with only those benefits
(severance, etc.) in effect at the time for
other employees in the Executives same class
of employee.
" Voluntary resignation between July 1, 1996 and
December 31, 1996 would provide the Executive
with 12 months of compensation severance and
vacation as defined and twelve months of
benefits as defined.
4.) Entirety
The benefits provided by this Agreement are the sole benefits payable by
the Company upon the termination of the Executive's employment and
supersedes any other payment to which the Executive may have been
entitled under any other severance policy or agreement in effect at any
time.
5.) Mitigation
The Executive is not required to mitigate the amount of any termination
or other benefit payments to be made by the Company pursuant to this
Agreement by seeking other employment or otherwise, and no amount due
hereunder shall be offset against or reduced by any amount earned by any
other employment; provided, however, that the benefits provided for in
Welfare Benefits, etc. shall terminate 90 days later the Executive's
obtaining such other employment. The Executive hereby agrees to notify
the Company promptly upon obtaining employment.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
6.) Continuing Obligations
In order to induce the Company to enter into this Agreement, the
Executive hereby agrees that all documents, records, techniques, business
secrets and other information which have come into his possession from
time to time during his employment by the Company or which may come into
his possession during his employment hereunder, shall be deemed to be
confidential and proprietary to the Company and the Executive further
agrees to retain in confidence any confidential information known to him
concerning the Company and its subsidiaries and their respective
businesses so long as such information is not publicly disclosed. The
obligations of the Executive under this Section 6 shall be in addition
to, and shall not limit, any other obligation of the Executive to the
Company with respect to the matters set forth herein or otherwise.
7.) Successors
In the event of any consolidation or merger of the Company into or with
another corporation, or the sale of all or substantially all of the
assets of the Company to another corporation or other entity, such
corporation or other entity shall assume this Agreement and become
obligated to perform all of the terms and conditions hereof, and the
Executive's obligations hereunder shall continue in favor of such
corporation or other entity.
8.) Confidentiality
The Executive agrees that without the consent of the Company he will not
at any time after the termination of his full-time employment (except as
required by law) disclose to any person confidential information
concerning the Company or its subsidiaries or any trade secrets of the
Company or its subsidiaries.
9.) Modification, Termination
This Agreement may not be modified or terminated except by means of a
writing signed by both of the parties hereto.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
10.) Applicable Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, this Termination Benefits Agreement has been duly
executed by the Executive and by the Company as of the date and year first
above written.
BUCYRUS-ERIE COMPANY
By: /s/Frank W. Miller
Interim Chief Executive Officer
/s/Craig R. Mackus
Craig R. Mackus
Corporate Controller
EXHIBIT 10.22
1995 FORM 10-K
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
AGREEMENT, dated as of December 7, 1995, by and between Bucyrus-Erie
Company (the "Company") a Delaware Corporation, and Timothy W. Sullivan (the
"Executive").
WITNESSETH:
WHEREAS, the Executive of the Company, the employee has made and, if he
continues to be employed by the Company, will continue to make valuable
contributions to the productivity and profitability of the Company, and
whereas the Executive has an existing employment and consulting agreement
(existing agreement) dated July 1, 1992 and amendment to employment and
consulting agreement dated November 28, 1994 (existing amendment).
WHEREAS, the Company considers that providing severance benefits will
operate as an incentive for the Executive to remain employed by the Company;
NOW, THEREFORE, to induce the Executive to remain employed by the Company
and for other good and valuable consideration, the Company and the Executive
agree as follows:
1.) Circumstances Triggering Receipt of Severance Benefits
The Company shall provide the Executive with the benefits set forth in
Section 3 upon any termination of the Executive's employment for any
reason except the following:
(a) Termination by reason of the Executive's "voluntary
termination", except as defined. For the purposes of this
Agreement, "voluntary termination" shall mean the voluntary
resignation by the Executive of his employment with the Company.
(b) Termination by means of "termination with cause". For the
purposes hereof, "termination with cause" shall be defined as
termination of employment of the Executive by the Company
following (1) the continued failure of the Executive to render
services to the Company in accordance with his employment, which
failure amounts to gross neglect of his duties to the Company,
or (2) the commission by the Executive of an act of fraud or
embezzlement against the Company or of an act which he knew to
be in gross violation of his duties to the Company (including
the unauthorized disclosure of confidential information) or (3)
following a felony conviction of the Executive; or
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
(c) Termination upon the Executive's normal retirement.
For the purpose of this agreement, the placement of the Executive on
permanent or long term disability status as defined by the Company's long
term disability policy covering the Executive and the death of the
Executive shall not be deemed a termination and shall not qualify the
Executive for the benefits set forth in this agreement. However, a
termination by the Executive after any reduction of the Executive's
position to a position of lesser responsibility, or a defacto reduction
of the Executive's duties or responsibilities, or the reduction of his
annual base salary or rate of maximum potential bonus, unless such salary
or bonus reduction is part of a reduction of compensation applicable
generally to all Executives of the Company, or a Company imposed
requirement that Executive move his residence or principal place of
business to any location unacceptable to him, is deemed as a termination
event.
2.) No Entitlement to Employment
This agreement shall not be construed as and does not constitute a
promise or guaranty of continued employment.
3.) Termination Benefits
Subject to the conditions set forth in Section 1 and subject to the
mitigation provisions contained in Section 5, the following benefits
(subject to any changes in benefit programs that may occur in the future
and any applicable payroll or other taxes required to be withheld) shall
be accorded to the Executive:
(a) For the willingness to agree to not voluntarily resign prior to
June 30, 1996 and to have this agreement supersede the existing
and amended agreements currently in place, the Company will
provide the following:
o A salary increase to a base annual salary of $128,000,
effective November 1, 1995.
o A cash bonus of $10,000 payable not later than
December 31, 1995.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
o Extension of a severance benefit to December 31, 1996
providing that should the Executive be terminated for
any reason other than those defined, that the Executive
would be entitled to the following:
" Compensation - Commencing on the Termination
Date, the Executive shall be paid
periodically, according to his unit's wage
practices, the amount of his periodic salary
until he has been paid 18 months of annual
base salary (plus a 5% inflation rate) at the
rate in effect on the date of the termination
of his employment with the Company (the
"Termination Date").
" Vacation Pay - Any accrued vacation pay due
but not yet taken at the Termination Date
shall be paid to the Executive on the
Termination Date, but shall in no instance
exceed 5 weeks of pay at the then current base
salary (excluding the inflation adjustment).
" Welfare Benefits, etc. - The Executive's
participation (including dependent coverage)
in any life, disability, health and dental
plans, and any other similar fringe benefits
of the Company (except business accident
insurance and continued contributions to
qualified retirement plans) in effect
immediately prior to the Termination Date
shall be continued, or equivalent benefits
provided by the Company, for a period of
twelve months from the Termination Date to the
extent allowed under the policies or
agreements pursuant to which the Company
obtains and provides such benefits.
" Personal Executive counseling, chosen by the
Executive, in an amount not to exceed $10,000.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
" The Executive shall not be entitled to any
bonus under the Company's Executive bonus plan
for the year in which his termination occurs.
The Agreement shall not affect the Executive's
entitlement to benefits under the Company s
retirement plan accrued as of his termination.
" Voluntary termination at any time between
December 7, 1995 and June 30, 1996 would
provide the Executive with only those benefits
(severance, etc.) in effect at the time for
other employees in the Executives same class
of employee.
" Voluntary resignation between July 1, 1996 and
December 31, 1996 would provide the Executive
with 12 months of compensation severance and
vacation as defined and twelve months of
benefits as defined.
4.) Entirety
The benefits provided by this Agreement are the sole benefits payable by
the Company upon the termination of the Executive's employment and
supersedes any other payment to which the Executive may have been
entitled under any other severance policy or agreement in effect at any
time.
5.) Mitigation
The Executive is not required to mitigate the amount of any termination
or other benefit payments to be made by the Company pursuant to this
Agreement by seeking other employment or otherwise, and no amount due
hereunder shall be offset against or reduced by any amount earned by any
other employment; provided, however, that the benefits provided for in
Welfare Benefits, etc. shall terminate 90 days later the Executive's
obtaining such other employment. The Executive hereby agrees to notify
the Company promptly upon obtaining employment.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
6.) Continuing Obligations
In order to induce the Company to enter into this Agreement, the
Executive hereby agrees that all documents, records, techniques, business
secrets and other information which have come into his possession from
time to time during his employment by the Company or which may come into
his possession during his employment hereunder, shall be deemed to be
confidential and proprietary to the Company and the Executive further
agrees to retain in confidence any confidential information known to him
concerning the Company and its subsidiaries and their respective
businesses so long as such information is not publicly disclosed. The
obligations of the Executive under this Section 6 shall be in addition
to, and shall not limit, any other obligation of the Executive to the
Company with respect to the matters set forth herein or otherwise.
7.) Successors
In the event of any consolidation or merger of the Company into or with
another corporation, or the sale of all or substantially all of the
assets of the Company to another corporation or other entity, such
corporation or other entity shall assume this Agreement and become
obligated to perform all of the terms and conditions hereof, and the
Executive's obligations hereunder shall continue in favor of such
corporation or other entity.
8.) Confidentiality
The Executive agrees that without the consent of the Company he will not
at any time after the termination of his full-time employment (except as
required by law) disclose to any person confidential information
concerning the Company or its subsidiaries or any trade secrets of the
Company or its subsidiaries.
9.) Modification, Termination
This Agreement may not be modified or terminated except by means of a
writing signed by both of the parties hereto.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
10.) Applicable Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, this Termination Benefits Agreement has been duly
executed by the Executive and by the Company as of the date and year first
above written.
BUCYRUS-ERIE COMPANY
By: /s/Frank W. Miller
Interim Chief Executive Officer
/s/T. W. Sullivan
Timothy W. Sullivan
Vice President Marketing and Sales
EXHIBIT 10.23
1995 FORM 10-K
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
AGREEMENT, dated as of December 7, 1995, by and between Bucyrus-Erie
Company (the "Company") a Delaware Corporation, and Thomas B. Phillips (the
"Executive").
WITNESSETH:
WHEREAS, the Executive of the Company, the employee has made and, if he
continues to be employed by the Company, will continue to make valuable
contributions to the productivity and profitability of the Company.
WHEREAS, the Company considers that providing severance benefits will
operate as an incentive for the Executive to remain employed by the Company;
NOW, THEREFORE, to induce the Executive to remain employed by the Company
and for other good and valuable consideration, the Company and the Executive
agree as follows:
1.) Circumstances Triggering Receipt of Severance Benefits
The Company shall provide the Executive with the benefits set forth in
Section 3 upon any termination of the Executive's employment for any
reason except the following:
(a) Termination by reason of the Executive's "voluntary
termination", except as defined. For the purposes of this
Agreement, "voluntary termination" shall mean the voluntary
resignation by the Executive of his employment with the Company.
(b) Termination by means of "termination with cause". For the
purposes hereof, "termination with cause" shall be defined as
termination of employment of the Executive by the Company
following (1) the continued failure of the Executive to render
services to the Company in accordance with his employment, which
failure amounts to gross neglect of his duties to the Company,
or (2) the commission by the Executive of an act of fraud or
embezzlement against the Company or of an act which he knew to
be in gross violation of his duties to the Company (including
the unauthorized disclosure of confidential information) or (3)
following a felony conviction of the Executive; or
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
(c) Termination upon the Executive's normal retirement.
For the purpose of this agreement, the placement of the Executive on
permanent or long term disability status as defined by the Company's long
term disability policy covering the Executive and the death of the
Executive shall not be deemed a termination and shall not qualify the
Executive for the benefits set forth in this agreement. However, a
termination by the Executive after any reduction of the Executive's
position to a position of lesser responsibility, or a defacto reduction
of the Executive's duties or responsibilities, or the reduction of his
annual base salary or rate of maximum potential bonus, unless such salary
or bonus reduction is part of a reduction of compensation applicable
generally to all Executives of the Company, or a Company imposed
requirement that Executive move his residence or principal place of
business to any location unacceptable to him, is deemed as a termination
event.
2.) No Entitlement to Employment
This agreement shall not be construed as and does not constitute a
promise or guaranty of continued employment.
3.) Termination Benefits
Subject to the conditions set forth in Section 1 and subject to the
mitigation provisions contained in Section 5, the following benefits
(subject to any changes in benefit programs that may occur in the future
and any applicable payroll or other taxes required to be withheld) shall
be accorded to the Executive:
(a) For the willingness to agree to not voluntarily resign prior to
June 30, 1996 and to have this agreement supersede the existing
and amended agreements currently in place, the Company will
provide the following:
o A salary increase to a base annual salary of $115,000,
effective November 1, 1995.
o A cash bonus of $10,000 payable not later than
December 31, 1995.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
o Extension of a severance benefit to December 31, 1996
providing that should the Executive be terminated for
any reason other than those defined, that the Executive
would be entitled to the following:
" Compensation - Commencing on the Termination
Date, the Executive shall be paid
periodically, according to his unit's wage
practices, the amount of his periodic salary
until he has been paid 12 months of annual
base salary (plus a 5% inflation rate) at the
rate in effect on the date of the termination
of his employment with the Company (the
"Termination Date").
" Vacation Pay - Any accrued vacation pay due
but not yet taken at the Termination Date
shall be paid to the Executive on the
Termination Date, but shall in no instance
exceed 5 weeks of pay at the then current base
salary (excluding the inflation adjustment).
" Welfare Benefits, etc. - The Executive's
participation (including dependent coverage)
in any life, disability, health and dental
plans, and any other similar fringe benefits
of the Company (except business accident
insurance and continued contributions to
qualified retirement plans) in effect
immediately prior to the Termination Date
shall be continued, or equivalent benefits
provided by the Company, for a period of
twelve months from the Termination Date to the
extent allowed under the policies or
agreements pursuant to which the Company
obtains and provides such benefits.
" Personal Executive counseling, chosen by the
Executive, in an amount not to exceed $10,000.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
" The Executive shall not be entitled to any
bonus under the Company's Executive bonus plan
for the year in which his termination occurs.
The Agreement shall not affect the Executive's
entitlement to benefits under the Company s
retirement plan accrued as of his termination.
" Voluntary termination at any time between
December 7, 1995 and June 30, 1996 would
provide the Executive with only those benefits
(severance, etc.) in effect at the time for
other employees in the Executives same class
of employee.
" Voluntary resignation between July 1, 1996 and
December 31, 1996 would provide the Executive
with 6 months of compensation severance and
vacation as defined and six months of benefits
as defined.
4.) Entirety
The benefits provided by this Agreement are the sole benefits payable by
the Company upon the termination of the Executive's employment and
supersedes any other payment to which the Executive may have been
entitled under any other severance policy or agreement in effect at any
time.
5.) Mitigation
The Executive is not required to mitigate the amount of any termination
or other benefit payments to be made by the Company pursuant to this
Agreement by seeking other employment or otherwise, and no amount due
hereunder shall be offset against or reduced by any amount earned by any
other employment; provided, however, that the benefits provided for in
Welfare Benefits, etc. shall terminate 90 days later the Executive's
obtaining such other employment. The Executive hereby agrees to notify
the Company promptly upon obtaining employment.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
6.) Continuing Obligations
In order to induce the Company to enter into this Agreement, the
Executive hereby agrees that all documents, records, techniques, business
secrets and other information which have come into his possession from
time to time during his employment by the Company or which may come into
his possession during his employment hereunder, shall be deemed to be
confidential and proprietary to the Company and the Executive further
agrees to retain in confidence any confidential information known to him
concerning the Company and its subsidiaries and their respective
businesses so long as such information is not publicly disclosed. The
obligations of the Executive under this Section 6 shall be in addition
to, and shall not limit, any other obligation of the Executive to the
Company with respect to the matters set forth herein or otherwise.
7.) Successors
In the event of any consolidation or merger of the Company into or with
another corporation, or the sale of all or substantially all of the
assets of the Company to another corporation or other entity, such
corporation or other entity shall assume this Agreement and become
obligated to perform all of the terms and conditions hereof, and the
Executive's obligations hereunder shall continue in favor of such
corporation or other entity.
8.) Confidentiality
The Executive agrees that without the consent of the Company he will not
at any time after the termination of his full-time employment (except as
required by law) disclose to any person confidential information
concerning the Company or its subsidiaries or any trade secrets of the
Company or its subsidiaries.
9.) Modification, Termination
This Agreement may not be modified or terminated except by means of a
writing signed by both of the parties hereto.
<PAGE>
SENIOR EXECUTIVE
TERMINATION BENEFITS AGREEMENT
(Continued)
10.) Applicable Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, this Termination Benefits Agreement has been duly
executed by the Executive and by the Company as of the date and year first
above written.
BUCYRUS-ERIE COMPANY
By: /s/Frank W. Miller
Interim Chief Executive Officer
/s/Thomas B. Phillips
Thomas B. Phillips
Director of Materials
EXHIBIT 10.27
1995 FORM 10-K
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of this 11
day of March, 1996, by and between Bucyrus-Erie Company, a Delaware
corporation (the "Company"), and Willard R. Hildebrand (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive as President and
Chief Executive Officer and desires to appoint him as a member of the Board of
Directors of the Company; and
WHEREAS, Executive desires to accept the employment offered by the
Company.
NOW, THEREFORE, in consideration of the premises and for the
mutual consideration hereinafter set forth, the parties hereto do covenant and
agree as follows:
1. Employment. The Company hereby offers and Executive hereby
accepts employment as President and Chief Executive Officer of the Company
upon the terms and conditions contained herein. The Company also shall use
its best efforts to cause Executive to be elected to the Board of Directors of
the Company (the "Board") throughout the Term of this Employment Agreement (as
defined in Paragraph 9(a) hereof).
2. Duties.
(a) Executive shall perform all duties consistent with the
position of President and Chief Executive Officer of the Company consistent
with the powers and duties of such offices as set forth in the Company By-
Laws, as well as any other duties on behalf of the Company as the Board may
reasonably direct, which are assigned to him by the Board and are commensurate
with these positions. Executive shall report to and be responsible to the
Board. Executive will devote his entire time during reasonable business hours
(reasonable sick leave and vacations excepted) and best efforts to faithfully,
responsibly and satisfactorily fulfill those duties and to further the
Company's best interests.
(b) During his employment, Executive shall not engage in
any commercial activities which are in any way in competition with the
activities of the Company, or which may in any way interfere in any material
respect with the performance of his duties or responsibilities to the Company;
provided, however, that this paragraph shall not restrict Executive from: (i)
holding up to two (2%) percent of the outstanding capital stock or other
securities of any publicly traded entity; (ii) subject to Board approval
(which shall not be unreasonably withheld), serving on no more than two
corporate boards of entities not affiliated with the Company that do not,
directly or indirectly, compete with the business of the Company; and (iii)
serving on the board of directors, or similar board, of any charitable
institution.
(c) In the performance of his duties, Executive shall be
bound by and comply with any and all obligations imposed by Company policy and
those imposed by law, regulation and ordinance, orders and decrees of any
court, and any other lawful restriction of any kind.
3. Base Salary and Bonuses. In exchange for Executive's
promises contained herein, the Company shall compensate him in the following
manner:
(a) Base Salary. The Company shall compensate Executive
at the base salary rate of Four Hundred Thousand Dollars ($400,000) per annum,
payable in equal monthly installments or on the same basis as other senior
salaried officers of the Company (the "Base Salary"). The Base Salary may be
increased in the future by such amounts and at such times as the Board shall
deem appropriate.
(b) Annual Bonus. Commencing with calendar year 1996,
Executive shall be eligible to participate in the Company's Short-Term
Incentive Compensation Plan for Chief Executive Officer ("Bonus Plan") (to be
adopted at a later date), such incentive compensation plan to provide for an
annual cash incentive bonus equal to (i) 50% of Base Salary in the event of
achievement of targeted performance, as defined in the Bonus Plan, and (ii) a
maximum of 100% of Base Salary in the event of exceptional performance, as
determined in accordance with the Bonus Plan.
(c) The amounts set forth herein are subject to
appropriate deductions required by law.
4. Relocation Allowance; Temporary Housing and Travel Expenses.
(a) In order to compensate Executive for costs associated
with a change in his residence other than those described in subparagraph (b)
of this Paragraph 4, the Company will pay to Executive the sum of $187,021
upon execution of this Agreement.
(b) The Company shall reimburse Executive for reasonable
costs of the following type incurred by him during the period from the date
hereof until such time as Executive shall obtain occupancy of a permanent
residence within reasonable daily commuting distance of the Company's
headquarters ("New Residence"), which period shall not exceed a reasonable
period of approximately four (4) months:
(i) Temporary housing, such as a hotel, residence
hotel or apartment, and board.
(ii) Travel expenses for weekend commuting to and
from Executive's current residence in Savannah, Georgia.
(iii) Travel expenses for a reasonable number of trips
by Executive's spouse in connection with the acquisition of the New
Residence.
(c) The amounts set forth herein are subject to
appropriate deductions required by law.
5. Stock Options.
Pursuant to the terms of the Company's 1996 Employees' Stock
Incentive Plan (the "Stock Incentive Plan"), Executive shall be granted
options to purchase an aggregate of Two Hundred Thousand (200,000) shares of
the Company's common stock at an exercise price equal to fifty-five percent
(55%) of the last sale price for the Company's common stock ("Common Stock")
on the Nasdaq National Market System on the date immediately prior to the date
that Executive commences employment with the Company, or if such date is not a
trading date, then at the last sale price on the next preceding date on which
the Common Stock is traded. Such stock options shall be evidenced by the Non-
Qualified Stock Option Agreement attached hereto as Exhibit A ("Stock Option
Agreement"), and the grant of such stock options shall be subject to approval
of the Plan by the shareholders of the Company. The Company will use its best
efforts to obtain such approval at the first annual meeting of shareholders
after the date of this Agreement. Executive may receive such future grants of
stock options under the Plan or any other similar plan involving Common Stock
as the Company's Board of Directors, or the Committee, if any, administering
any such plan, shall award, in its sole discretion.
6. Restricted Stock. Pursuant to the terms of the Stock
Incentive Plan, Executive will be granted Three Hundred Thousand (300,000)
shares of Restricted Stock (as defined in the Stock Incentive Plan). One
Hundred Thousand (100,000) shares of such Restricted Stock will be granted
pursuant to the terms of the Restricted Stock Agreement attached hereto as
Exhibit B ("Restricted Stock Agreement") and Two Hundred Thousand (200,000)
shares of Restricted Stock will be granted pursuant to the terms of the Time
Accelerated Restricted Stock Agreement attached hereto as Exhibit C ("TARSA").
The grant of such Restricted Stock shall be subject to approval of the Plan by
the shareholders of the Company. The Company will use its best efforts to
obtain such approval at the first annual meeting of shareholders after the
date of this Agreement. Executive may receive such future grants of
Restricted Stock under the Stock Incentive Plan or any similar plan involving
Common Stock as the Company's Board of Directors, or the Committee, if any,
administering any such plan, shall award, in its sole discretion.
7. Benefit Plans. During the Term of this Employment
Agreement, Executive shall be entitled to participate in such employee
benefits plans of the Company as the Company shall provide during the term
hereof for its senior executives.
(a) Medical. Executive and his eligible dependents shall
be entitled to participate in any medical benefit plan of the Company for the
benefit of senior executives. Additionally, the Company shall provide
Executive with short term disability insurance and an option to purchase long-
term disability coverage, in each case in accordance with existing Company
programs.
(b) Retirement.
(i) Executive shall be entitled to participate in
any retirement plan of the Company for the benefit of its senior
executives; provided, however, that the Company's Supplementary
Retirement Benefit Plan will be modified with respect to Executive so
that benefits thereunder shall be computed without regard to any
compensation received by Executive under the terms of the Option
Agreement, the Restricted Stock Agreement or the TARSA, whether or not
such compensation would otherwise be considered in calculating benefits
payable thereunder.
(ii) Upon Executive's termination of employment with
the Company for any reason other than for Cause (as defined in paragraph
9(e) hereof) in the event the Executive is not fully vested in his
accrued benefit under the Bucyrus-Erie Company Salaried Employees'
Savings Plan, Bucyrus-Erie Company Salaried Employees' Retirement Plan
and Bucyrus-Erie Company Supplementary Retirement Benefit Plan, the
Company will pay to Executive the nonvested portion of the benefit. The
Company's payments will be made at the same time and in the same manner
as payment would have been made from such retirement plans, except that
Executive and Company may in the alternative agree upon a cash
settlement of equivalent value.
(iii) The Executive and the Company understand that
the Executive is a participant in two retirement plans sponsored by his
previous employer, a qualified pension plan and a non-qualified
supplemental executive retirement plan (collectively "Prior Plans").
The Prior Plans would have provided him with a vested retirement benefit
commencing at age 65 with a pre-tax value of $30,000 per year, 50% of
which amount would continue to be paid to Executive's spouse for her
life if Executive predeceased her ("Prior Plan Benefit"). The Company
and Executive intend that, if Executive fails to vest in the Prior Plan
Benefit the Company will provide Executive with a fully vested
retirement benefit which will have an after-tax value equivalent to the
after-tax value of the Prior Plan Benefit ("New Benefit"). To that end,
the parties will agree upon a mutually acceptable method of the
Company's providing Executive with such a benefit within ninety (90)
days after the date of this Agreement. The parties further intend that
such benefit will be structured in a manner such that any annuity policy
or assets procured or otherwise set aside for the payment of the New
Benefit will be protected from the claims of creditors of the Company.
If the New Benefit is provided in the form of payment by the Company of
the premium for a single premium annuity contract to be owned by the
Executive providing for a lifetime annuity commencing at Executive's age
65 with 50% of the annuity amount continued to Executive's current
spouse for her life should Executive predecease her, the annual amount
payable under such annuity will be reduced from $30,000 to reflect the
fact that a portion of such annuity, when paid, will be non-taxable.
The Company, with the advice of its independent actuaries, will
determine the annuity amount appropriate to approximate the same after-
tax amount as a fully-taxable $30,000 annuity. If the New Benefit is
provided to Executive in the form of the purchase of such an annuity
contract, the parties recognize that the amount of the premium paid by
the Company ("Annuity Cost") will constitute taxable income to Executive
and, in such event, the Company will pay additional compensation to the
Executive in an amount such that the after-tax value to Executive of
such additional compensation will be equal to the additional income
taxes payable by the Executive for the year in which the annuity is
purchased by reason of inclusion of the Annuity Cost in his taxable
income for such year ("Annuity Taxes"). Such additional compensation
will be paid at such time and in such amounts as necessary to permit
Executive to timely pay the Annuity Taxes. If the parties are unable to
agree upon all of the terms and conditions of a method of providing the
New Benefit for Executive, the Company will provide Executive with a
non-qualified supplemental executive retirement plan ("SERP") which will
provide him with a fully vested pre-tax lifetime annuity in the amount
of $30,000 per year commencing at age 65, with 50% of that amount
continued to Executive's current spouse for her life should Executive
predecease her. Executive understands that the SERP will constitute an
unfunded benefit and that the Executive will be unsecured creditor of
the Company with respect to the Company's obligation under the SERP.
Notwithstanding any other provision of this Agreement, the obligations
of the Company under this Section 7(b)(iii) shall survive any
termination of Executive's employment hereunder and shall continue to
apply thereafter in accordance with their terms.
8. Other Benefits. Executive shall be provided the following
additional benefits:
(a) Club Membership. The Company agrees to reimburse
Executive for the cost of his non-refundable initiation fee in one country
club in the Milwaukee, Wisconsin area or other area in which Executive's new
permanent residence described in Paragraph 4(b) hereof is located (but not in
excess of $30,000) and the annual dues for such club (but not in excess of
$7,500), and shall reimburse Executive for his business-related use thereof.
(b) Business Expenses. The Company shall reimburse
Executive for reasonable expenses and disbursements incurred by him in the
course of the performance of his duties hereunder in accordance with the
Company's expense reimbursement policy.
(c) Vacation. Executive shall be entitled to four (4)
weeks vacation each year of this Employment Agreement, without reduction in
salary.
(d) Car. Executive shall be entitled to the unrestricted
use of a Company car, which may be leased or purchased at the Company's
option, the value of which car shall not exceed $40,000.
9. Duration and Termination.
(a) Duration and Termination By Company. The term
("Initial Term") of this Employment Agreement and the term of employment shall
begin on the date hereof and continue until the third anniversary of the date
hereof unless sooner terminated as herein provided. At the end of the Initial
Term, this Agreement shall automatically renew, for additional one year terms
(each, "Additional Terms") unless the Company gives at least two months'
written notice to Executive that his employment under this Agreement shall
terminate on the last day of the Initial Term or any Additional Term, as the
case may be. The Initial Term and any Additional Terms are sometimes
hereinafter collectively referred to as the "Term" of this Employment
Agreement. In addition to the foregoing, the Company shall have the right to
terminate Executive's employment under this Employment Agreement at any time
without "Cause" (as defined in Paragraph 9(e) hereof) during the Initial Term
or any Additional Term by giving at least two months' written notice to
Executive that his employment under this Agreement shall terminate on the date
specified in such notice, in which event such termination shall be considered
a termination other than for "Cause."
(b) Termination by Executive. Executive may terminate his
employment under this Employment Agreement at any time upon giving at least
ninety (90) days' written notice to the Board of his intent to do so. Upon
giving such notice, Executive shall continue in employment with the Company
for the full ninety (90) days of the notice period, or at the discretion of
the Board may be paid his salary and have his benefits hereunder continued for
such ninety (90) day period, or any part thereof, in lieu of continued
employment. At the end of the ninety (90) day period, all rights of Executive
under this Agreement shall terminate except as otherwise expressly provided
herein. Failure of Executive to provide the full ninety (90) day notice shall
permit the Company to immediately cease the compensation and benefits provided
for herein.
(c) Termination Upon Death or Disability of Executive.
Executive's employment under this Employment Agreement shall immediately
terminate in the event of Executive's death or Disability (as hereinafter
defined). For purposes of this Agreement, Executive shall be deemed to have
suffered a "Disability" in the event that a mutually acceptable physician
determines that Executive is unable to substantially perform his duties
hereunder for a period of an aggregate of six (6) months in any twelve (12)
month period.
(d) Compensation upon Termination. In the event of
termination of Executive's employment under this Agreement by reason of (i)
his death or Disability or (ii) termination by the Company pursuant to
Paragraph 9(a) hereof [including, but not limited to termination at the end of
the Initial Term or any Additional Term pursuant to the second sentence of
Paragraph 9(a)], all of the Company's obligation to pay Executive compensation
and provide benefits under this Agreement shall terminate except as otherwise
expressly provided herein and except as follows:
(i) Executive shall be entitled to continuation of
his Base Salary (including the benefits set forth in paragraph 7 hereof
other than participation in qualified retirement plans in which
Executive is ineligible to participate subsequent to a termination of
his employment) for a period of (A) in the case of termination by reason
of death or Disability, one (1) year from the date of such termination
and (B) in the case of termination by the Company pursuant to Paragraph
9(a), the longer of the remainder of the Initial Term or Additional
Term, as the case may be, or one (1) year from the effective date of
such termination. Such period is hereinafter called the "Severance
Period."
(ii) Executive shall be entitled to receive any bonus
payable to him under the Bonus Plan for the fiscal year of the Company
ending on or next preceding the date of termination of Executive's
employment hereunder ("Final Year") plus a severance bonus payment equal
to (A) the average of the bonus compensation actually paid to Executive
for each of the two (2) fiscal years immediately preceding such
termination or (B) if such bonus compensation has only been paid for a
period of one (1) year or less immediately preceding such termination,
the amount actually paid to Executive during such period, in either case
multiplied by the Applicable Fraction. For purposes of this clause
(ii), the "Applicable Fraction" shall be a fraction, the numerator of
which is the number of whole calendar months from the end of the Final
Year until the end of the Severance Period and the denominator of which
is twelve (12).
The amounts payable pursuant to clauses (i) and (ii) of this Paragraph 9(d)
shall be payable in the manner and at such times as such Base Salary and bonus
would have been paid during the Severance Period but for the termination of
Executive's employment; provided, however, that the severance bonus payment
described in clause (d)(ii) shall be paid at the same time the Company would
have paid Executive a bonus under the Bonus Plan (assuming that he would have
otherwise qualified for such a bonus) with respect to the Company's fiscal
year immediately succeeding the Final Year but for Executive's termination of
employment hereunder. Notwithstanding the foregoing, in the event that
Executive desires to take any action restricted pursuant to Paragraph 11(c)
hereof at any time during the remainder of the Term, Executive may give
written notice to the Company at any time during such period that Executive
waives all rights to all payments due after the date of such notice, in which
event the Company's obligations to make all such payments to Executive shall
terminate.
(e) Termination by the Company for Cause. (i) The
Company, by notice from the Board to Executive, shall have the right to
terminate Executive's employment under this Employment Agreement in the event
of any of the following (which shall constitute "Cause"): (A) Executive's
willful and material breach in respect of his duties under this Agreement, if
such breach continues unremedied to the reasonable satisfaction of the Board
for thirty (30) days after written notice thereof has been sent from the Board
to Executive specifying the acts constituting the breach and requesting that
they be remedied; or (B) if Executive is convicted by a court of law having
jurisdiction over Executive of a felony, fraud, embezzlement or criminal
misconduct against the Company or others, excluding, however, non-felony
traffic offenses.
(ii) Upon a termination for Cause: (A) the Company shall
pay Executive the Base Salary and any additional incentive compensation
payable to him up to the date of termination; (B) Executive shall forfeit all
unexercised stock options, whether or not vested, granted to him by the
Company, with respect to the Company's Common Stock; (C) Executive shall
forfeit all unvested shares of Restricted Stock granted to him under the Stock
Incentive Plan; and (D) except as otherwise expressly provided herein, all
rights of Executive of any kind to any other compensation, benefits or other
payments for periods subsequent to such termination shall cease.
(f) No provision of this Agreement governing the effects
of any termination of Executive's employment hereunder shall limit or
eliminate any benefit under any employee benefit plan of the Company in which
Executive participates, if such benefit, by the terms of the applicable plan,
continues after a termination of Executive's employment.
10. Change of Control.
(a) Definitions. For purposes of this Paragraph 10:
(i) "Act" shall mean the Securities Act of 1934.
(ii) A "Change of Control of the Company" shall be
deemed to have occurred when:
(A) Securities of the Company representing 20%
or more of the combined voting power of the Company's then
outstanding voting securities are acquired, directly or
indirectly, by any Person who did not on the date of this
Agreement own, directly or indirectly, 5% or more of the combined
voting power of the Company's voting securities outstanding on the
date of this Agreement.
(B) The shareholders of the Company approve a
merger or consolidation of the Company with any other corporation
as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity are owned by the
former shareholders of the Company (other than a shareholder who
is an "affiliate," as defined in the Act, of any party to such
consolidation or merger).
(C) The shareholders of the Company approve
the sale of substantially all of the Company's assets to a
corporation which is not a wholly-owned subsidiary of the Company.
(D) During any period of two consecutive
years, individuals who, at the beginning of such period,
constituted the Board of Directors of the Company cease, for any
reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was
approved by the vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
(E) Jackson National Life Insurance Company
("JNL") or any "affiliate" of JNL as defined in the Act, shall
sell, exchange, transfer or otherwise dispose of more than sixty-
six percent (66%) of the shares of Common Stock of the Company
owned by JNL on the date of this Agreement other than to JNL or
any such affiliate of JNL.
(F) The Company shall become eligible,
pursuant to Section 12(g)(4) of the Act, to terminate the
registration under the Act of any class of its securities then
registered under the Act.
(iii) "Person" shall have the meaning used in Section
3(a)(9) of the Act.
(iv) "Effective Date" shall mean the date a Change of
Control becomes effective.
(v) "Good Reason" shall mean the occurrence of any
one or more of the following events without the Executive's express
written consent:
(A) The assignment of the Executive to duties
materially inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, titles, and
reporting requirements) as the President and Chief Executive
Officer of the Company, or a material reduction or material
alteration in the nature or status of the Executive' authorities,
duties, or responsibilities from those in effect during the
immediately preceding fiscal year.
(B) The Company's requiring the Executive to
be based at a location which is at least fifty (50) miles further
from the Executive's residence at the Effective Date (which is
within reasonable daily commuting distance of the Company's
headquarters) than is such residence from the Company's
headquarters, except for required travel on the Company's business
to an extent substantially consistent with the Executive's
business obligations as of the Effective Date. As used in this
Paragraph (B), the term "Company's headquarters" shall mean the
Company's headquarters at the Effective Date.
(C) A reduction by the Company in the
Executive's Base Salary as in effect on the Effective Date.
(D) A material reduction in the Executive's
level of participation in any of the Company's short- and/or long-
term incentive compensation plans, or employee benefit or
retirement plans, policies, practices, or arrangements in which
the Executive participates as of the Effective Date; provided,
however, that reductions in the levels of participation in any
such plans shall not be deemed to be "Good Reason" if the
Executive's reduced level of participation in each such program
remains substantially consistent with the average level of
participation of other senior executives of the Company.
(vi) "Qualifying Termination" shall mean any
termination of the Executive's employment other than: (1) by the
Company for Cause (as defined in Paragraph 9(e) hereof); (2) by reason
of death, Disability (as defined in Paragraph 9(c) hereof), or
Retirement (as such term is then defined in the Company's tax qualified
defined retirement plan or under the terms of the Restricted Stock
Agreement attached hereto as Exhibit B or the Time Accelerated
Restricted Stock Agreement attached hereto as Exhibit C; or (3) by the
Executive without Good Reason, including without limitation,
termination by Executive upon expiration of the Initial Term or any Additional
Term pursuant to Paragraph 9(a) hereof. In the event the Executive shall
terminate this Agreement for Good Reason, his notice of termination required
pursuant to Paragraph 9(b) shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for such termination.
(b) Employment Termination in Connection with a Change of
Control. In the event of a Qualifying Termination on, or within six (6) months
prior to, the Effective Date, or within twenty-four (24) months after the
Effective Date, then in lieu of all other benefits provided to Executive under
the provisions of this Agreement, the Company shall pay to the Executive and
provide him with the following severance benefits ("Severance Benefits"):
(i) Continuation of Executive's Base Salary
(including the benefits set forth in Paragraph 8 hereof) for a period
equal to the greater of (A) the remainder of the Initial Term or the
Additional Term, as applicable, or (B) one (1) year. The last day of
such period shall be hereinafter referred to as the "Severance Benefit
Termination Date."
(ii) Executive shall be entitled to receive any bonus
payable to him under the Bonus Plan for the fiscal year of the Company
("Final Year") ending on or next preceding the effective date of such
Qualifying Termination plus an amount equal to (A) the average of the
bonus compensation actually paid to Executive for each of the two (2)
fiscal years immediately preceding such Qualifying Termination or (B) if
bonus compensation has been paid for a period of one year or less
preceding such termination, the amount actually paid to Executive, in
either case multiplied by the "Applicable Fraction". For purposes of
this clause (ii), the "Applicable Fraction" shall be a fraction, the
numerator of which is the number of whole calendar months from the end
of the Final Year until the Severance Benefit Termination Date and the
denominator of which is twelve (12).
(iii) A continuation of all welfare and retirement
benefits provided to Executive pursuant to Paragraph 7 hereof until the
Severance Benefit Termination Date other than qualified retirement plans
in which Executive is ineligible to participate subsequent to a
termination of his employment. These benefits shall be provided to the
Executive at the same premium cost, and at the same coverage level, as
in effect as of the Executive's effective date of termination. However,
in the event the premium cost and/or level of coverage shall change for
all employees of the Company, the cost and/or coverage level, likewise,
shall change for the Executive in a corresponding manner.
Notwithstanding the foregoing, the continuation of these welfare
benefits shall be discontinued prior to the Severance Benefit
Termination Date in the event the Executive has available substantially
similar benefits from a subsequent employer, as determined by the
Company's Board of Directors or the Board's designee.
(c) Limitation on Termination Payment.
(i) Notwithstanding any other provision of this
Paragraph 10, if any portion of the Severance Benefits or any other
payment or transfer of property under this Agreement, or under any other
agreement with or plan of the Company, including but not limited to the
vesting of the restricted stock granted to Executive under the Stock
Incentive Plan ("Restricted Stock"), which payment or transfer of
property is contingent upon a Change of Control of the Company, (in the
aggregate "Total Payments") would constitute an "excess parachute
payment," then the payments to be made to the Executive under this
Paragraph 10 shall be reduced and, if necessary, transferred property
forfeited (including, without limitation, forfeiture of Restricted
Stock) such that the value of the aggregate Total Payments that the
Executive is entitled to receive shall be one dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject
to the tax imposed by Section 4999 of the Internal Revenue Code of 1986
("Code") or any successor provision, or which the Company may pay
without loss of deduction under Section 280G(a) of the Code or any
successor provision; provided, however, that the payments to be made to
the Executive under this Agreement shall be reduced and, if necessary,
other transferred property forfeited, if and only if so reducing the
payments and forfeiting transferred property results in the Executive
receiving a greater net benefit than he would have received had a
reduction not occurred and an excise tax been paid pursuant to Code
Section 4999 or any successor provision. For purposes of this Paragraph
10, the terms "excess parachute payment" and "parachute payments" shall
have the meanings assigned to them in Section 280G of the Code and any
successor provision, and such "parachute payments" shall be valued as
provided therein.
(ii) Within sixty (60) days following delivery of the
notice of termination (as described in Paragraph 9 hereof) or notice by
the Company to the Executive of its belief that there is a payment or
benefit due the Executive which will result in an "excess parachute
payment" as defined in Section 280G of the Code or any successor
provision, the Executive and the Company, at the Company's expense,
shall obtain the opinion of such legal counsel, which need not be
unqualified, as the Executive may choose, which sets forth: (A) the
amount of the Executive's "annualized includible compensation for the
base period" (as defined in Code Section 280G(d)(1) or any successor
provision; (ii) the present value of the Total Payments; and (iii) the
amount and present value of any "excess parachute payment." The opinion
of such legal counsel shall be supported by the opinion of a certified
public accounting firm and, if necessary in the opinion of the Company,
a firm of recognized executive compensation consultants. Such opinion
shall be binding upon the Company and the Executive. Subject to the
proviso in second last sentence of subparagraph 10(c)(i) hereof, in the
event that such opinion determines that there would be an "excess
parachute payment," the Severance Benefits hereunder, and any other
payment or transferred property determined by such counsel to be
includible in Total Payments, shall be reduced, eliminated or forfeited
as specified by the Executive in writing delivered to the Company within
thirty (30) days of his receipt of such opinion, or, if the Executive
fails to so notify the Company, then as the Company shall reasonably
determine, so that under the basis of calculations set forth in such
opinion, there will be no "excess parachute payment." The provisions of
this Paragraph 10(c), including the calculations, notices, and opinion
provided for herein shall be based upon the conclusive presumption that:
(i) the compensation and benefits provided for in Paragraphs 3-8 herein;
and (ii) any other compensation earned prior to the effective date of
termination of the Executive's employment hereunder pursuant to the
Company's compensation programs (if such payments would have been made
in the future in any event, even though the timing of such payment is
triggered by the Change in Control), are reasonable.
11. Executive Covenants; Covenant Not to Compete. In order to
induce the Company to enter into this Employment Agreement, Executive hereby
agrees as follows:
(a) Except when it is in the interest of the Company, or
with the consent of or as directed by the Board, Executive will keep
confidential and shall not divulge to any other person or entity, during the
term of employment or thereafter, any Confidential Information. For purposes
hereof "Confidential Information" shall mean any of the business secrets,
policies, methods, or other confidential information regarding the Company
except for (i) information which was in the public domain on the date of this
Agreement or (ii) information which came into the public domain through no
direct or indirect act or omission of the Executive after the date of this
Agreement.
(b) All papers, books and records and other property of
every kind and description relating to the business and affairs of the
Company, whether or not prepared by Executive, shall be the sole and exclusive
property of the Company, and Executive shall surrender them to the Company, as
applicable, at any time upon request by the Board.
(c) During the Term of this Employment Agreement and for a
period of two (2) years thereafter (exclusive of any period of breach),
Executive will not, without the prior written consent of the Board; (i)
participate as an officer, director, stockholder or partner, or have any
direct or indirect material financial interest as a creditor, in any
corporation, partnership or other entity that engages in a business
competitive with the business of manufacturing, marketing, distributing or
selling any surface mining equipment, or any other product or service, whether
in operations or in the planning or development stage, that the Company or any
of its subsidiaries or affiliates manufactures, markets, distributes or sells
at the time Executive ceases to be employed by the Company (such business
being the "Bucyrus-Erie Business"); provided, however, that this paragraph
shall not restrict Executive from holding up to two (2%) percent of the
outstanding capital stock or other securities of any publicly traded entity;
(ii) directly or indirectly solicit or cause to be solicited, for or on behalf
of himself or any third party in competition with the Company, any business
relating to the Bucyrus-Erie Business from or with any third party who was at
any time within one year prior to the cessation of Executive's employment
hereunder, a customer of the Company; (iii) directly or indirectly accept or
cause to be accepted, for or on behalf of himself or any third party in
competition with the Company, any business relating to the Bucyrus-Erie
Business from any such customers; or (iv) directly or indirectly solicit or
cause to be solicited for employment or consultation, for or on behalf of
himself or third parties, any person who was at the time of the cessation of
Executive's employment hereunder, an executive of the Company; and provided,
further that in the event of a termination of Executive's employment under
this Employment Agreement pursuant to the last sentence of Paragraph 9(a)
hereof, the provisions of this Paragraph 11(c) shall not apply upon written
notice from Executive to the Company that the Executive waives all rights to
the payments provided by Paragraph 9(d) hereof, in which event the Company's
obligations thereunder to Executive shall terminate.
(d) Executive acknowledges and agrees that the geographic
scope of the Bucyrus-Erie Business for purposes of the foregoing covenants
includes each State and every other country where the Company does any
material amount of Bucyrus-Erie Business.
(e) By his execution of this Agreement, Executive
expressly acknowledges and agrees that (i) the consideration for the covenants
contained in this Paragraph 11 is fair and adequate, (ii) such covenants are
fair, just and reasonable, both as to geographic scope and period of duration;
and (iii) such covenants are reasonably necessary in order to protect the
legitimate business interests of the Company.
(f) The parties agree that the Company shall, in addition
to other remedies provided by law, have the right and remedy to have the
provisions of this Paragraph 11 specifically enforced by any court having
equity jurisdiction by means of injunctive relief, it being acknowledged and
agreed that any breach or threatened breach of the provisions of this
paragraph will cause irreparable injury to the Company and that money damages
will not provide an adequate remedy. Nothing contained herein shall be
construed as prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach including any recovery of
damages from Executive. The parties hereto also consent to and direct any
court finding any provision of this Paragraph 11 unenforceable to narrow the
scope of such provision in order to enforce its intent to the broadest extent
permissible. The parties hereto understand and intend that each restriction
agreed to by Executive hereinabove shall be construed as separable and
divisible from every other restriction, and the unenforceability, in whole or
in part, of any such restriction, will not affect the enforceability of the
remaining restrictions and that one or more or all of such restrictions may be
enforced in whole or in part as the circumstances warrant. Notwithstanding
any other provisions contained in this Agreement, the provisions of this
Paragraph 11 shall survive any termination of Executive's employment
hereunder.
12. Conflicting Agreements. Executive hereby represents and
warrants to the Company that his entering into this Employment Agreement, and
the obligations and duties undertaken by him hereunder, will not conflict
with, constitute a breach of, or otherwise violate the terms of, any other
employment or other agreement to which he is a party.
13. Arbitration. Any dispute, controversy or claim arising out
of or relating to this Agreement, or breach thereof, shall be settled by
arbitration in the City of Milwaukee, Wisconsin or such other location agreed
to by the parties and in accordance with the Rules of the American Arbitration
Association. The controversy or claim shall be submitted to three neutral
arbitrators: (i) one to be chosen by the Company; (ii) a second to be chosen
by Executive; and (iii) a third to be selected by the two arbitrators chosen
by the Company and by Executive. To the extent permitted by the Rules of the
American Arbitration Association, the selected arbitrators may grant equitable
relief. Judgment upon any proper award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. Each party shall pay the
fees of the arbitrator selected by him and of each party's own attorneys, and
the expenses of each party's witnesses and all other expenses connected with
the presentation of each party's case. The remaining costs of the
arbitration, including the cost of the record or transcripts thereof, if any,
administrative fees, and all other fees and expenses shall be borne by the
Company; provided, however, that if the arbitration panel finds in favor of
the Company, such arbitration costs, fees and expenses shall be shared equally
by the Company and Executive. Notwithstanding anything to the contrary in the
preceding sentence, the arbitrators shall be permitted to order the
unsuccessful party to pay the reasonable legal fees of the successful party,
if the arbitrators find that the unsuccessful party asserted a claim or
defense under this Agreement in bad faith. Nothing contained in this
paragraph, however, shall affect the right of the Company to apply to any
court of competent jurisdiction to enjoin any breach or threatened breach of
Paragraph 11 hereof.
14. Successors and Assigns. The rights of the Company hereunder
shall run in favor of the Company, its successors, assigns, nominees or other
legal representatives. Termination of Executive's employment shall not
operate to relieve him of any remaining obligations hereunder, and all such
obligations are binding upon his heirs, executors, administrators and other
legal representatives. This Agreement shall be binding upon any successor in
accordance with the operation of law and such successor shall be deemed the
"Company" for purposes of this Agreement.
15. Notices. All notices, requests, demands and other
communications hereunder must be in writing and shall be delivered by hand,
mailed within the continental United States by first class certified mail,
return receipt requested, postage prepaid, or telecopied, to the other party,
addressed as follows:
(i) if to the Company:
Bucyrus-Erie Company
1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
Attention: Corporate Secretary
Telecopy No. (414) 768-5060
(ii) if to Executive:
Willard R. Hildebrand
23 Little Comfort Road
Savannah, Georgia 31311
Telephone No. (912) 232-4471
All such notices, demands or other communications shall be effective (x) if
delivered, upon delivery; (y) if mailed, when received or three (3) business
days after being deposited in the mail, whichever occurs first or (z) if
telecopied, when transmitted and confirmed by telephone. Addresses may be
changed by written notice sent to the other party at the last recorded address
of that party.
16. Severability. If any provision of this Employment Agreement
shall be adjudged by any court of competent jurisdiction to be invalid or
unenforceable for any reason, such judgment shall not affect, impair or
invalidate the remainder of this Agreement.
17. Prior Understandings. This Employment Agreement between the
Company and Executive embodies the entire understanding of the parties hereto,
and supersedes all other oral or written agreements or understandings between
them regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in writing, signed by the requisite
representatives of both parties hereto.
18. Headings. The headings in this Employment Agreement are for
convenience and reference only and shall not be construed as part of this
Agreement or to limit or otherwise affect the meaning hereof.
19. Execution in Counterparts. This Employment 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.
20. Choice of Law. Except as provided in Paragraph 10 hereof,
jurisdiction over disputes with regard to this Employment Agreement shall be
exclusively in the courts of the State of Wisconsin. This Employment
Agreement shall be construed in accordance with and governed by the laws of
the State of Wisconsin without giving effect to the principles of conflicts of
laws.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Employment Agreement in Wisconsin as of the day and year first above
written.
BUCYRUS-ERIE COMPANY
By: /s/F. John Stark, III
Title: CHAIRMAN OF THE BOARD
/s/W. R. Hildebrand
WILLARD R. HILDEBRAND, Executive
<PAGE>
EXHIBIT A
BUCYRUS-ERIE COMPANY
1996 EMPLOYEES' STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of this 11 day of March,
1996, by and between BUCYRUS-ERIE COMPANY, a Delaware corporation (the
"Company"), and WILLARD R. HILDEBRAND (the "Optionee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Bucyrus-Erie Company 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 options to purchase 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 Optionee is now employed by the Company or an
affiliate of the Company in a key capacity, and the Company desires the
Optionee to remain in such employ, and to secure or increase his stock
ownership in 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 Option. Subject to the terms and conditions of the
Plan and this Agreement, the Company grants to the Optionee an option (the
"Option") to purchase from the Company all or any part of the aggregate amount
of Two Hundred Thousand (200,000) shares of Common Stock (the "Optioned
Shares"). The Option is intended to constitute a non-qualified stock option
and shall not be treated as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.
2. Option Price. The price to be paid for the Optioned Shares
shall be $5.0875 per share, which has been determined by the Compensation
Committee of the Board of Directors of the Company (the "Committee") to be not
less than 55% of the fair market value of such stock on the date of grant of
the Option.
3. Exercisability and Termination of Option. Except as
otherwise provided herein, the Option may be exercised only while the Optionee
is an employee of either the Company or an affiliate of the Company and only
if the Optionee has been continuously so employed since the date of grant of
the Option. Subject to Paragraph 6, the Option may be exercised by the
Optionee in whole, or in part from time to time, during the 10-year period
beginning on the date hereof, and ending on MARCH 10, 2006.
4. Manner of Exercise and Payment. Subject to the provisions
of Paragraph 3 hereof, the Option 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
Option is being exercised. Subject to the provisions of this Agreement, the
notice of exercise must be accompanied by full payment of the option price of
the shares being purchased (i) in cash or by certified check or bank draft;
(ii) by tendering previously acquired shares of Common Stock (valued at their
"fair market value" as determined in the manner provided below); or (iii) by
any combination of the means of payment set forth in subparagraphs (i) and
(ii). For purposes of this Paragraph 4, the "fair market value" of a share of
Common Stock shall be equal to the last per share sale price of such Common
Stock as reflected on the Nasdaq National Market on the trading day next
preceding the date of exercise; provided, however, that if the principal
market for the shares of Common Stock is then a national securities exchange,
the "fair market value" shall be the closing price per share for the Common
Stock on the principal securities exchange on which the Common Stock is traded
on the trading date next preceding the date of exercise, or, in either case
above, if no trading occurred on the trading date next preceding the exercise
date, then the "fair market value" per share of Common Stock shall be
determined with reference to the next preceding date on which the Common Stock
was traded. For purposes of subparagraphs (ii) and (iii) above, the term
"previously acquired shares of Common Stock" shall only include Common Stock
owned by the Optionee prior to the exercise of the Option and shall not
include shares of Common Stock which are being acquired pursuant to the
exercise of the Option. No shares shall be issued until full payment therefor
has been made.
5. Nontransferability of the Option. The Option shall not be
assignable, alienable, saleable or transferable by the Optionee other than by
will or the laws of descent and distribution; provided, however, that the
Optionee shall be entitled, in the manner provided in Paragraph 9 hereof, to
designate a beneficiary to exercise his rights, and to receive any shares of
Common Stock issuable, with respect to the Option upon the death of the
Optionee. The Option may be exercised during the lifetime of the Optionee
only by the Optionee or, if permitted by applicable law, the Optionee's
guardian or legal representative.
6. Exercisability After Termination of Employment.
(a) Death or Disability; Retirement. In the event the Optionee
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 Option, to the
extent not theretofore exercised, may be exercised in full as follows: (i) by
the legal representative of the Optionee (who for purposes of this Agreement
may be the Optionee's beneficiary as designated pursuant to Paragraph 9) at
any time within twelve (12) months after the date of the Optionee's death
while in the employ of the Company or any affiliate; or (ii) by the Optionee
or his legal representative or guardian at any time within twelve months after
the termination of the Optionee'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 Option. For purposes of this Agreement, Optionee'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) Termination for Cause. In the event the Optionee's
employment is terminated for Cause (as hereinafter defined), the Option, 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.
(c) Other. In the event that the Optionee is discharged or
leaves the employ of the Company and its affiliates for any reason (other than
the death or Disability of the Optionee, the Retirement of the Optionee as
defined in Paragraph 6(a) hereof, or the termination of the Optionee for
Cause), the Option, to the extent not theretofore exercised, may be exercised
by the Optionee or by his legal representative or guardian at any time within
three (3) months after the date of termination of employment upon the tender
to the Company, in cash or its equivalent, of the full purchase price, but in
no event later than ten years after the date of grant of the Option.
7. Tax Withholding. The Company may deduct and withhold from
any cash otherwise payable to the Optionee (whether payable as 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 Optionee 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 Optioned 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 Optionee in accordance herewith (the person who is
the Optionee's beneficiary at the time of his death is herein referred to as
the "Beneficiary") shall be entitled to exercise the Option, to the extent it
is exercisable, after the death of the Optionee. The Optionee 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 Optionee'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 Optionee's death, or if no designated Beneficiary survives, the
Optionee or if such designation conflicts with law, the Optionee's estate
acting through his legal representative, shall be entitled to exercise the
Option, to the extent it is exercisable after the death of the Optionee. If
the Committee is in doubt as to the right of any person to exercise the
Option, the Company may refuse to recognize such exercise, without liability
for any interest or dividends on the Optioned Shares, until the Committee
determines the person entitled to exercise the Option, 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. Transfer Restriction; Registration. The shares to be
acquired upon exercise of the Option may not be sold or offered for sale
except pursuant to an effective registration statement under the Securities
Act of 1933, as amended, or in a transaction which, in the opinion of counsel
for the Company, is exempt from the registration provisions of said Act. The
Company will use its best efforts to file a registration statement on Form S-8
at the Company's expense for the Optioned Shares within 120 days after the
date on which the shareholders of the Company approve the Plan.
11. Status of Optionee. The Optionee shall not be deemed for
any purposes to be a shareholder of the Company with respect to any of the
Optioned Shares except to the extent that the Option shall have been exercised
with respect thereto, the shares shall have been fully paid, and a stock
certificate issued therefor. Neither the Plan nor the Option shall confer
upon the Optionee 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 Optionee at any time.
12. Powers of the Company Not Affected. The existence of the
Option 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 Option, the Optionee 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. Subject to Shareholder Approval. Notwithstanding anything
to the contrary contained herein, the Option may not be exercised prior to the
approval and ratification of the Plan by the shareholders of the Company in
accordance with applicable law.
15. 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-ERIE COMPANY
By: ________________________________________
Title:______________________________________
____________________________________________
WILLARD R. HILDEBRAND, Optionee
Beneficiary: ______________________________
Address of Beneficiary: ____________________
____________________________________________
Beneficiary's Tax Identification
No.: _______________________________________
<PAGE>
EXHBIT B
BUCYRUS-ERIE COMPANY
1996 EMPLOYEES' STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made and entered into as of this 11 day of March,
1996, by and between BUCYRUS-ERIE COMPANY, a Delaware corporation (the
"Company"), and WILLARD R. HILDEBRAND (the "Grantee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Bucyrus-Erie Company 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 shares of the Company's Common Stock, $.01 par value (the "Common Stock"),
to certain key employees of the Company and its affiliates, subject to certain
restrictions imposed pursuant to the terms of the Plan; 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 secure or increase his stock
ownership in 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 Restricted Stock. The Company grants to the
Grantee one hundred thousand (100,000) shares of Common Stock (hereinafter
called "Restricted Stock") subject to the terms of the Plan and upon the terms
and conditions set forth herein.
2. Restrictions and Disposition. The shares of Restricted
Stock may not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated. Notwithstanding the foregoing, such restrictions shall lapse
as to thirty-three and one-third percent (33 1/3%) of the total number of
shares of Restricted Stock granted commencing on the first anniversary of the
date of this Agreement and continuing on the same date each year thereafter,
such that all shares of Restricted Stock will be fully vested on the third
anniversary of the date of this Agreement, except as otherwise provided in
Section 4 below. Without limiting the foregoing, if Grantee's employment ends
at the end of the Initial Term pursuant to the second sentence of Section 9(a)
of the Employment Agreement, all shares of Restricted Stock will be fully
vested. Such three-year period is hereinafter referred to as the "Period of
Restriction" and each such year during such period is referred to as an
"Employment Year."
3. Securities Law Restrictions and Registration. The shares of
Restricted Stock granted hereunder may not be sold or offered for sale except
pursuant to an effective registration statement under the Securities Act of
1933, as amended, or in a transaction which, in the opinion of counsel for the
Company, is exempt from the registration provisions of said Act. A legend
will be placed on the certificates for the Restricted Stock to such effect.
The Company will use its best efforts to file a registration statement on Form
S-8 at the Company's expense for the Restricted Stock within 120 days after
the date on which the shareholders of the Company approve the Plan. In
addition to the limitations described above, the Grantee hereby further agrees
that, to the extent required in order to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, the shares of Restricted Stock
subject to this Agreement may not be sold or otherwise transferred prior to
the date six months after the date on which the shareholders of the Company
approve the Plan.
4. Termination of Employment.
(a) Death or Disability. In the event that the Grantee's
employment with the Company is terminated by reason of Death or Disability,
the Period of Restriction shall automatically terminate and the shares of
Restricted Stock shall be free of restrictions and freely transferrable.
"Disability" shall have the meaning set forth 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 Change of
Control (as defined in Paragraph 10(a) of the Employment Agreement), the
Period of Restriction shall automatically terminate and the shares of
Restricted Stock shall be free of restrictions and freely transferrable;
provided that such shares shall be subject to forfeiture to the extent
provided in Paragraph 10(c) of the Employment Agreement. Any such release of
Restricted Stock from restrictions hereunder shall be deemed to be
retroactively effective as of the latest date as shall be necessary to entitle
Grantee to receive the same consideration, if any, for his Restricted Stock as
a direct result of such Change of Control as other shareholders of the Company
who held shares of the Company's stock on any record or effective date for the
receipt of consideration as a direct result of such Change of Control.
(c) Termination without Cause. In the event that
Grantee's employment with the Company is terminated by the Company without
"Cause" (as defined in Paragraph 9(e) of the Employment Agreement) prior to
attaining age 65, then the Period of Restriction shall terminate with respect
to the following number of shares of Restricted Stock which were subject to
the restrictions of Paragraph 2 hereof immediately prior to the effective date
of such termination ("Termination Date") and such shares shall become free of
such restrictions and freely transferable: a number of shares equal to the
product of the number of such unreleased shares which would have been released
from such restrictions as of the anniversary date of this Agreement next
following the Termination Date and a fraction, the numerator of which is the
whole number of months of Grantee's employment with the Company during the
Employment Year in which the Termination Date occurs and the denominator of
which is 12. All remaining unreleased shares after the release of the shares
described in the immediately preceding sentence shall automatically be
forfeited and returned to the Company on the Termination Date; provided,
however, that the Compensation Committee of the Board of Directors of the
Company ("Committee") may, in its sole discretion, waive the automatic
forfeiture of any or all such shares and/or may add such new restrictions to
such shares of Restricted Stock as it deems appropriate.
(d) Other. In the event that the Grantee's employment
with the Company terminates for any reason other than those set forth in
subparagraphs (a), (b) and (c) above during the Period of Restriction, then
any shares of Restricted Stock which are subject to restrictions hereunder at
the date of such termination shall automatically be forfeited and returned to
the Company.
5. 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 the Grantee's death is hereinafter referred to as the
"Beneficiary") shall be entitled to receive the shares of Restricted Stock
subject to this Agreement upon the death of the Grantee. The Grantee may from
time to time revoke or change the 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 shall
be entitled to receive the shares of Restricted Stock subject to this
Agreement upon the death of the Grantee. If the Committee is in doubt as to
the right of any person to receive such shares of Restricted Stock, the
Company may prohibit the transfer of such shares, without liability for any
interest thereon, until the Committee determines the person is entitled
thereto or the Company may apply to any court of appropriate jurisdiction and
such application shall be a complete discharge of any liability of the Company
therefor.
6. Certificate Legend. In addition to any legends placed on
certificates for shares of Restricted Stock under Section 3 hereof, each
certificate for shares of Restricted Stock subject to this Agreement shall
bear the following legend:
"The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary, involuntary or
by operation of law, is subject to certain restrictions set forth
in the Bucyrus-Erie Company 1996 Stock Incentive Plan, rules of
administration adopted pursuant to such Plan, if any, and a
Restricted Stock Agreement dated March 11, 1996. A copy of such
Plan, such rules and such Restricted Stock Agreement may be
obtained from the Secretary of Bucyrus-Erie Company."
When the restrictions imposed by Section 2 hereof terminate, the Grantee shall
be entitled to have the foregoing legend removed from the certificates
representing such shares of Restricted Stock.
7. Voting Rights; Dividends and Other Distributions.
(a) While the shares of Restricted Stock are subject to
restrictions under Section 2 hereof, the Grantee may exercise full voting
rights with respect to such shares of Restricted Stock.
(b) While the shares of Restricted Stock are subject to
the restrictions under Section 2 hereof, the Grantee shall be entitled to
receive all dividends and other distributions paid with respect to such shares
of Restricted Stock. If any such dividends or distributions are paid in
shares of the Company's Common Stock, such shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they were
paid.
8. Adjustments in Event of Change in Stock. The number of
shares of Restricted Stock subject to this Agreement shall be subject to
adjustment in the manner provided in Section 4 of the Plan.
9. Interpretation by Committee. As condition of the grant of
Restricted Stock, 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.
10. Withholding Tax. The Company may deduct and withhold from
any cash otherwise payable to the Grantee (whether payable as 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.
11. Miscellaneous.
(a) This Agreement shall be governed and construed in
accordance with the internal laws of the State of Wisconsin.
(b) This Agreement may not be amended or modified except
by the written consent of the parties hereto.
(c) This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and shall be binding
upon and inure to the benefit of the Grantee and the personal
representative(s) and heirs of the Grantee, except that the Grantee may not
transfer any interest in any shares of Restricted Stock subject to this
Agreement prior to the lapse of the restrictions imposed by the Plan and this
Agreement.
(d) The Company shall retain the shares of Restricted
Stock during the Period of Restriction, as applicable, unless otherwise
determined by the Committee. When shares of Restricted Stock are no longer
subject to the Period of Restriction, the Committee shall deliver to the
Grantee a certificate or certificates for such shares without the restrictive
legend set forth in Section 6 hereof.
(e) 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.
12. No Right to Continued Employment. This grant shall not
confer upon the Grantee any right with respect to continuance of employment by
the Company or any subsidiary, nor shall it interfere in any way with the
right of his employer to terminate his employment at any time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
BUCYRUS-ERIE COMPANY
By: _________________________________________
Title:_______________________________________
_____________________________________________
WILLARD R. HILDEBRAND, Grantee
Beneficiary: _______________________________
Address of Beneficiary: _____________________
_____________________________________________
Beneficiary's Tax Identification
No.:
<PAGE>
EXHIBIT C
BUCYRUS-ERIE COMPANY
1996 EMPLOYEES' STOCK INCENTIVE PLAN
TIME ACCELERATED RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made and entered into as of this 11 day of March,
1996, by and between BUCYRUS-ERIE COMPANY, a Delaware corporation (the
"Company"), and WILLARD R. HILDEBRAND (the "Grantee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Bucyrus-Erie Company 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 shares of the Company's Common Stock, $.01 par value (the "Common Stock"),
to certain key employees of the Company and its affiliates, subject to certain
restrictions imposed pursuant to the terms of the Plan; 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 secure or increase his stock
ownership in 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 Restricted Stock. The Company grants to the
Grantee two hundred thousand (200,000) shares of Common Stock (hereinafter
called "Restricted Stock") subject to the terms of the Plan and upon the terms
and conditions set forth herein.
2. Restrictions and Disposition. The shares of Restricted
Stock may not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated. Notwithstanding the foregoing, such restrictions shall lapse
with respect to thirty-three and one-third percent (33 1/3%) of the total
number of shares of Restricted Stock on each of the third, fourth and fifth
anniversaries of the date of this Agreement if the Company shall have achieved
the EBITDA (as hereinafter defined) goal for the fiscal year of the Company
ending immediately prior to such anniversary date, as set forth in the
Bucyrus-Erie Company Fiscal 1996 Preliminary Business Plan, receipt of a copy
of which is acknowledged by Grantee. Such lapse 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 Restricted Stock which would otherwise
have been released shall continue to be subject to the restrictions of this
Paragraph 2 until the release date hereinafter specified. 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 foregoing restrictions shall lapse with respect to the number of shares of
Restricted Stock with respect to which such restrictions would have lapsed if
such EBITDA goal had been achieved; 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 the
restrictions imposed by this Paragraph 2 on any shares of Restricted Stock
have not been previously released pursuant to the provisions of this Paragraph
2, such restrictions shall lapse upon the eighth annual anniversary of the
date of this Agreement. Such eight-year period is hereinafter referred to as
the "Period of Restriction."
3. Securities Law Restrictions and Registration. The shares of
Restricted Stock granted hereunder may not be sold or offered for sale except
pursuant to an effective registration statement under the Securities Act of
1933, as amended, or in a transaction which, in the opinion of counsel for the
Company, is exempt from the registration provisions of said Act. A legend
will be placed on the certificates for the Restricted Stock to such effect.
The Company will use its best efforts to file a registration statement on Form
S-8 at the Company's expense for the Restricted Stock within 120 days after
the date on which the shareholders of the Company approve the Plan. In
addition to the limitations described above, the Grantee hereby further agrees
that, to the extent required in order to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, the shares of Restricted Stock
subject to this Agreement may not be sold or otherwise transferred prior to
the date six months after the date on which the shareholders of the Company
approve the Plan.
4. Termination of Employment.
(a) Death, Disability or Retirement. In the event that
the Grantee's employment with the Company is terminated by reason of Death,
Disability or Retirement, then, notwithstanding anything to the contrary in
Paragraph 2 hereof, the following portion of all shares of Restricted Stock
which were subject to the restrictions of Paragraph 2 hereof immediately prior
to such termination shall become free of such restrictions and freely
transferable: the total number of shares of Restricted Stock which were
subject to the restrictions of Paragraph 2 hereof immediately prior to such
termination multiplied by a fraction, the numerator of which is the total
whole number of months of Grantee's employment with the Company prior to such
termination and the denominator of which is 96. "Disability" shall have the
meaning set forth in Paragraph 9(c) of the Employment Agreement between
Grantee and the Company dated the date hereof ("Employment Agreement").
Grantee's employment shall be deemed to have terminated by reason of
"Retirement" if his employment is terminated voluntarily or involuntarily for
any reason other than Cause (as defined in Paragraph 9(e) of the Employment
Agreement) on or after his attaining age 65 or if his employment is terminated
voluntarily by him 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.
(b) Change of Control. In the event of a Change of
Control (as defined in Paragraph 10(a) of the Employment Agreement), the
Period of Restriction shall automatically terminate and the shares of
Restricted Stock shall be free of restrictions and freely transferrable;
provided that such shares shall be subject to forfeiture to the extent
provided in Paragraph 10(c) of the Employment Agreement. Any such release of
Restricted Stock from restrictions hereunder shall be deemed to be
retroactively effective as of the latest date as shall be necessary to entitle
Grantee to receive the same consideration, if any, for his Restricted Stock as
a direct result of such Change of Control as other shareholders of the Company
who held shares of the Company's stock on any record or effective date for the
receipt of consideration as a direct result of such Change of Control.
(c) Termination without Cause. In the event that the
Grantee's employment with the Company is terminated by the Company without
"Cause" (as defined in Paragraph 9(e) of the Employment Agreement) prior to
his attaining age 65, including but not limited to termination of the end of
the "Initial Term" or any "Additional Term" (as such terms are defined in
Paragraph 9(a) of the Employment Agreement), the Period of Restriction shall
terminate with respect to the following portion of all shares of Restricted
Stock which were subject to the restrictions of Paragraph 2 hereof immediately
prior to the effective date of such termination ("Unreleased Shares") and such
shares shall become free of such restrictions and freely transferable:
(i) In the event (A) such termination of employment
shall be effective as of a date ("Termination Date") which is six
(6) months or more after the beginning of the fiscal year of the
Company in which the Termination Date occurs and (B) the EBITDA
goal for such fiscal year (as described in Paragraph 2 hereof) is
achieved, the full amount of Restricted Stock which would have
been released pursuant to Paragraph 2 hereof on the anniversary
date of this Agreement next following the Termination Date but for
such termination of employment; plus
(ii) A number of shares equal to the product of all
Unreleased Shares other than the number, if any, described in
clause (i) of this subparagraph (c) and a fraction, the numerator
of which is the whole number of months of the Grantee's employment
with the Company prior to the Termination Date and the denominator
of which is 96.
Any such termination of restrictions shall be effective (1) upon determination
of EBITDA for the fiscal year in which the Termination Date occurs if clause
(i) of this subparagraph (c) is applicable and (2) upon the effective date of
termination of employment in all other cases. All remaining Unreleased Shares
after the release of the shares described in this subparagraph (c) shall
automatically be forfeited and returned to the Company on the effective date
of termination of employment; provided, however, that the Compensation
Committee of the Board of Directors of the Company ("Committee") may, in its
sole discretion, waive the automatic forfeiture of any or all such shares
and/or may add such new restrictions to such shares of Restricted Stock as it
deems appropriate.
(d) Other. In the event that the Grantee's employment
with the Company terminates for any reason other than those set forth in
subparagraphs (a), (b) and (c) above during the Period of Restriction, then
any shares of Restricted Stock which are subject to restrictions hereunder at
the date of such termination shall automatically be forfeited and returned to
the Company.
5. 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 the Grantee's death is hereinafter referred to as the
"Beneficiary") shall be entitled to receive the shares of Restricted Stock
subject to this Agreement upon the death of the Grantee. The Grantee may from
time to time revoke or change the 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 shall
be entitled to receive the shares of Restricted Stock subject to this
Agreement upon the death of the Grantee. If the Committee is in doubt as to
the right of any person to receive such shares of Restricted Stock, the
Company may prohibit the transfer of such shares, without liability for any
interest thereon, until the Committee determines the person is entitled
thereto or the Company may apply to any court of appropriate jurisdiction and
such application shall be a complete discharge of any liability of the Company
therefor.
6. Certificate Legend. In addition to any legends placed on
certificates for shares of Restricted Stock under Section 3 hereof, each
certificate for shares of Restricted Stock subject to this Agreement shall
bear the following legend:
"The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary, involuntary or
by operation of law, is subject to certain restrictions set forth
in the Bucyrus-Erie Company 1996 Stock Incentive Plan, rules of
administration adopted pursuant to such Plan, if any, and a
Restricted Stock Agreement dated MARCH 11, 1996. A copy of such
Plan, such rules and such Restricted Stock Agreement may be
obtained from the Secretary of Bucyrus-Erie Company."
When the restrictions imposed by Section 2 hereof terminate, the Grantee shall
be entitled to have the foregoing legend removed from the certificates
representing such shares of Restricted Stock.
7. Voting Rights; Dividends and Other Distributions.
(a) While the shares of Restricted Stock are subject to
restrictions under Section 2 hereof, the Grantee may exercise full voting
rights with respect to such shares of Restricted Stock.
(b) While the shares of Restricted Stock are subject to
the restrictions under Section 2 hereof, the Grantee shall be entitled to
receive all dividends and other distributions paid with respect to such shares
of Restricted Stock. If any such dividends or distributions are paid in
shares of the Company's Common Stock, such shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they were
paid.
8. Adjustments in Event of Change in Stock. The number of
shares of Restricted Stock subject to this Agreement shall be subject to
adjustment in the manner provided in Section 4 of the Plan.
9. Interpretation by Committee. As condition of the grant of
Restricted Stock, 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.
10. Withholding Tax. The Company may deduct and withhold from
any cash otherwise payable to the Grantee (whether payable as 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.
11. Miscellaneous.
(a) This Agreement shall be governed and construed in
accordance with the internal laws of the State of Wisconsin.
(b) This Agreement may not be amended or modified except
by the written consent of the parties hereto.
(c) This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and shall be binding
upon and inure to the benefit of the Grantee and the personal
representative(s) and heirs of the Grantee, except that the Grantee may not
transfer any interest in any shares of Restricted Stock subject to this
Agreement prior to the lapse of the restrictions imposed by the Plan and this
Agreement.
(d) The Company shall retain the shares of Restricted
Stock during the Period of Restriction, as applicable, unless otherwise
determined by the Committee. When shares of Restricted Stock are no longer
subject to the Period of Restriction, the Committee shall deliver to the
Grantee a certificate or certificates for such shares without the restrictive
legend set forth in Section 6 hereof.
(e) 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.
12. No Right to Continued Employment. This grant shall not
confer upon the Grantee any right with respect to continuance of employment by
the Company or any subsidiary, nor shall it interfere in any way with the
right of his employer to terminate his employment at any time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
BUCYRUS-ERIE COMPANY
By: ________________________________________
Title:______________________________________
____________________________________________
WILLARD R. HILDEBRAND, Grantee
Beneficiary: ______________________________
Address of Beneficiary: ____________________
____________________________________________
Beneficiary's Tax Identification
No.:
EXHIBIT 10.28
1995 FORM 10-K
BUCYRUS-ERIE COMPANY
1996 EMPLOYEES' STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of this 11 day of March,
1996, by and between BUCYRUS-ERIE COMPANY, a Delaware corporation (the
"Company"), and WILLARD R. HILDEBRAND (the "Optionee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Bucyrus-Erie Company 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 options to purchase 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 Optionee is now employed by the Company or an
affiliate of the Company in a key capacity, and the Company desires the
Optionee to remain in such employ, and to secure or increase his stock
ownership in 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 Option. Subject to the terms and conditions of the
Plan and this Agreement, the Company grants to the Optionee an option (the
"Option") to purchase from the Company all or any part of the aggregate amount
of Two Hundred Thousand (200,000) shares of Common Stock (the "Optioned
Shares"). The Option is intended to constitute a non-qualified stock option
and shall not be treated as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.
2. Option Price. The price to be paid for the Optioned Shares
shall be $5.0875 per share, which has been determined by the Compensation
Committee of the Board of Directors of the Company (the "Committee") to be not
less than 55% of the fair market value of such stock on the date of grant of
the Option.
3. Exercisability and Termination of Option. Except as
otherwise provided herein, the Option may be exercised only while the Optionee
is an employee of either the Company or an affiliate of the Company and only
if the Optionee has been continuously so employed since the date of grant of
the Option. Subject to Paragraph 6, the Option may be exercised by the
Optionee in whole, or in part from time to time, during the 10-year period
beginning on the date hereof, and ending on MARCH 10, 2006.
4. Manner of Exercise and Payment. Subject to the provisions
of Paragraph 3 hereof, the Option 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
Option is being exercised. Subject to the provisions of this Agreement, the
notice of exercise must be accompanied by full payment of the option price of
the shares being purchased (i) in cash or by certified check or bank draft;
(ii) by tendering previously acquired shares of Common Stock (valued at their
"fair market value" as determined in the manner provided below); or (iii) by
any combination of the means of payment set forth in subparagraphs (i) and
(ii). For purposes of this Paragraph 4, the "fair market value" of a share of
Common Stock shall be equal to the last per share sale price of such Common
Stock as reflected on the Nasdaq National Market on the trading day next
preceding the date of exercise; provided, however, that if the principal
market for the shares of Common Stock is then a national securities exchange,
the "fair market value" shall be the closing price per share for the Common
Stock on the principal securities exchange on which the Common Stock is traded
on the trading date next preceding the date of exercise, or, in either case
above, if no trading occurred on the trading date next preceding the exercise
date, then the "fair market value" per share of Common Stock shall be
determined with reference to the next preceding date on which the Common Stock
was traded. For purposes of subparagraphs (ii) and (iii) above, the term
"previously acquired shares of Common Stock" shall only include Common Stock
owned by the Optionee prior to the exercise of the Option and shall not
include shares of Common Stock which are being acquired pursuant to the
exercise of the Option. No shares shall be issued until full payment therefor
has been made.
5. Nontransferability of the Option. The Option shall not be
assignable, alienable, saleable or transferable by the Optionee other than by
will or the laws of descent and distribution; provided, however, that the
Optionee shall be entitled, in the manner provided in Paragraph 9 hereof, to
designate a beneficiary to exercise his rights, and to receive any shares of
Common Stock issuable, with respect to the Option upon the death of the
Optionee. The Option may be exercised during the lifetime of the Optionee
only by the Optionee or, if permitted by applicable law, the Optionee's
guardian or legal representative.
6. Exercisability After Termination of Employment.
(a) Death or Disability; Retirement. In the event the Optionee
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 Option, to the
extent not theretofore exercised, may be exercised in full as follows: (i) by
the legal representative of the Optionee (who for purposes of this Agreement
may be the Optionee's beneficiary as designated pursuant to Paragraph 9) at
any time within twelve (12) months after the date of the Optionee's death
while in the employ of the Company or any affiliate; or (ii) by the Optionee
or his legal representative or guardian at any time within twelve months after
the termination of the Optionee'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 Option. For purposes of this Agreement, Optionee'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) Termination for Cause. In the event the Optionee's
employment is terminated for Cause (as hereinafter defined), the Option, 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.
(c) Other. In the event that the Optionee is discharged or
leaves the employ of the Company and its affiliates for any reason (other than
the death or Disability of the Optionee, the Retirement of the Optionee as
defined in Paragraph 6(a) hereof, or the termination of the Optionee for
Cause), the Option, to the extent not theretofore exercised, may be exercised
by the Optionee or by his legal representative or guardian at any time within
three (3) months after the date of termination of employment upon the tender
to the Company, in cash or its equivalent, of the full purchase price, but in
no event later than ten years after the date of grant of the Option.
7. Tax Withholding. The Company may deduct and withhold from
any cash otherwise payable to the Optionee (whether payable as 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 Optionee 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 Optioned 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 Optionee in accordance herewith (the person who is
the Optionee's beneficiary at the time of his death is herein referred to as
the "Beneficiary") shall be entitled to exercise the Option, to the extent it
is exercisable, after the death of the Optionee. The Optionee 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 Optionee'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 Optionee's death, or if no designated Beneficiary survives, the
Optionee or if such designation conflicts with law, the Optionee's estate
acting through his legal representative, shall be entitled to exercise the
Option, to the extent it is exercisable after the death of the Optionee. If
the Committee is in doubt as to the right of any person to exercise the
Option, the Company may refuse to recognize such exercise, without liability
for any interest or dividends on the Optioned Shares, until the Committee
determines the person entitled to exercise the Option, 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. Transfer Restriction; Registration. The shares to be
acquired upon exercise of the Option may not be sold or offered for sale
except pursuant to an effective registration statement under the Securities
Act of 1933, as amended, or in a transaction which, in the opinion of counsel
for the Company, is exempt from the registration provisions of said Act. The
Company will use its best efforts to file a registration statement on Form S-8
at the Company's expense for the Optioned Shares within 120 days after the
date on which the shareholders of the Company approve the Plan.
11. Status of Optionee. The Optionee shall not be deemed for
any purposes to be a shareholder of the Company with respect to any of the
Optioned Shares except to the extent that the Option shall have been exercised
with respect thereto, the shares shall have been fully paid, and a stock
certificate issued therefor. Neither the Plan nor the Option shall confer
upon the Optionee 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 Optionee at any time.
12. Powers of the Company Not Affected. The existence of the
Option 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 Option, the Optionee 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. Subject to Shareholder Approval. Notwithstanding anything
to the contrary contained herein, the Option may not be exercised prior to the
approval and ratification of the Plan by the shareholders of the Company in
accordance with applicable law.
15. 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-ERIE COMPANY
By: /s/F. John Stark, III
Title:CHAIRMAN OF THE BOARD
/s/W. R. Hildebrand
WILLARD R. HILDEBRAND, Optionee
Beneficiary: ANNE E. HILDEBRAND
Address of Beneficiary: 23 LITTLE COMFORT RD
SAVANNAH GA 31411
Beneficiary's Tax Identification
No.: _______________________________________
EXHIBIT 10.29
1995 FORM 10-K
BUCYRUS-ERIE COMPANY
1996 EMPLOYEES' STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made and entered into as of this 11 day of March,
1996, by and between BUCYRUS-ERIE COMPANY, a Delaware corporation (the
"Company"), and WILLARD R. HILDEBRAND (the "Grantee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Bucyrus-Erie Company 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 shares of the Company's Common Stock, $.01 par value (the "Common Stock"),
to certain key employees of the Company and its affiliates, subject to certain
restrictions imposed pursuant to the terms of the Plan; 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 secure or increase his stock
ownership in 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 Restricted Stock. The Company grants to the
Grantee one hundred thousand (100,000) shares of Common Stock (hereinafter
called "Restricted Stock") subject to the terms of the Plan and upon the terms
and conditions set forth herein.
2. Restrictions and Disposition. The shares of Restricted
Stock may not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated. Notwithstanding the foregoing, such restrictions shall lapse
as to thirty-three and one-third percent (33 1/3%) of the total number of
shares of Restricted Stock granted commencing on the first anniversary of the
date of this Agreement and continuing on the same date each year thereafter,
such that all shares of Restricted Stock will be fully vested on the third
anniversary of the date of this Agreement, except as otherwise provided in
Section 4 below. Without limiting the foregoing, if Grantee's employment ends
at the end of the Initial Term pursuant to the second sentence of Section 9(a)
of the Employment Agreement, all shares of Restricted Stock will be fully
vested. Such three-year period is hereinafter referred to as the "Period of
Restriction" and each such year during such period is referred to as an
"Employment Year."
3. Securities Law Restrictions and Registration. The shares of
Restricted Stock granted hereunder may not be sold or offered for sale except
pursuant to an effective registration statement under the Securities Act of
1933, as amended, or in a transaction which, in the opinion of counsel for the
Company, is exempt from the registration provisions of said Act. A legend
will be placed on the certificates for the Restricted Stock to such effect.
The Company will use its best efforts to file a registration statement on Form
S-8 at the Company's expense for the Restricted Stock within 120 days after
the date on which the shareholders of the Company approve the Plan. In
addition to the limitations described above, the Grantee hereby further agrees
that, to the extent required in order to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, the shares of Restricted Stock
subject to this Agreement may not be sold or otherwise transferred prior to
the date six months after the date on which the shareholders of the Company
approve the Plan.
4. Termination of Employment.
(a) Death or Disability. In the event that the Grantee's
employment with the Company is terminated by reason of Death or Disability,
the Period of Restriction shall automatically terminate and the shares of
Restricted Stock shall be free of restrictions and freely transferrable.
"Disability" shall have the meaning set forth 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 Change of
Control (as defined in Paragraph 10(a) of the Employment Agreement), the
Period of Restriction shall automatically terminate and the shares of
Restricted Stock shall be free of restrictions and freely transferrable;
provided that such shares shall be subject to forfeiture to the extent
provided in Paragraph 10(c) of the Employment Agreement. Any such release of
Restricted Stock from restrictions hereunder shall be deemed to be
retroactively effective as of the latest date as shall be necessary to entitle
Grantee to receive the same consideration, if any, for his Restricted Stock as
a direct result of such Change of Control as other shareholders of the Company
who held shares of the Company's stock on any record or effective date for the
receipt of consideration as a direct result of such Change of Control.
(c) Termination without Cause. In the event that
Grantee's employment with the Company is terminated by the Company without
"Cause" (as defined in Paragraph 9(e) of the Employment Agreement) prior to
attaining age 65, then the Period of Restriction shall terminate with respect
to the following number of shares of Restricted Stock which were subject to
the restrictions of Paragraph 2 hereof immediately prior to the effective date
of such termination ("Termination Date") and such shares shall become free of
such restrictions and freely transferable: a number of shares equal to the
product of the number of such unreleased shares which would have been released
from such restrictions as of the anniversary date of this Agreement next
following the Termination Date and a fraction, the numerator of which is the
whole number of months of Grantee's employment with the Company during the
Employment Year in which the Termination Date occurs and the denominator of
which is 12. All remaining unreleased shares after the release of the shares
described in the immediately preceding sentence shall automatically be
forfeited and returned to the Company on the Termination Date; provided,
however, that the Compensation Committee of the Board of Directors of the
Company ("Committee") may, in its sole discretion, waive the automatic
forfeiture of any or all such shares and/or may add such new restrictions to
such shares of Restricted Stock as it deems appropriate.
(d) Other. In the event that the Grantee's employment
with the Company terminates for any reason other than those set forth in
subparagraphs (a), (b) and (c) above during the Period of Restriction, then
any shares of Restricted Stock which are subject to restrictions hereunder at
the date of such termination shall automatically be forfeited and returned to
the Company.
5. 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 the Grantee's death is hereinafter referred to as the
"Beneficiary") shall be entitled to receive the shares of Restricted Stock
subject to this Agreement upon the death of the Grantee. The Grantee may from
time to time revoke or change the 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 shall
be entitled to receive the shares of Restricted Stock subject to this
Agreement upon the death of the Grantee. If the Committee is in doubt as to
the right of any person to receive such shares of Restricted Stock, the
Company may prohibit the transfer of such shares, without liability for any
interest thereon, until the Committee determines the person is entitled
thereto or the Company may apply to any court of appropriate jurisdiction and
such application shall be a complete discharge of any liability of the Company
therefor.
6. Certificate Legend. In addition to any legends placed on
certificates for shares of Restricted Stock under Section 3 hereof, each
certificate for shares of Restricted Stock subject to this Agreement shall
bear the following legend:
"The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary, involuntary or
by operation of law, is subject to certain restrictions set forth
in the Bucyrus-Erie Company 1996 Stock Incentive Plan, rules of
administration adopted pursuant to such Plan, if any, and a
Restricted Stock Agreement dated March 11, 1996. A copy of such
Plan, such rules and such Restricted Stock Agreement may be
obtained from the Secretary of Bucyrus-Erie Company."
When the restrictions imposed by Section 2 hereof terminate, the Grantee shall
be entitled to have the foregoing legend removed from the certificates
representing such shares of Restricted Stock.
7. Voting Rights; Dividends and Other Distributions.
(a) While the shares of Restricted Stock are subject to
restrictions under Section 2 hereof, the Grantee may exercise full voting
rights with respect to such shares of Restricted Stock.
(b) While the shares of Restricted Stock are subject to
the restrictions under Section 2 hereof, the Grantee shall be entitled to
receive all dividends and other distributions paid with respect to such shares
of Restricted Stock. If any such dividends or distributions are paid in
shares of the Company's Common Stock, such shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they were
paid.
8. Adjustments in Event of Change in Stock. The number of
shares of Restricted Stock subject to this Agreement shall be subject to
adjustment in the manner provided in Section 4 of the Plan.
9. Interpretation by Committee. As condition of the grant of
Restricted Stock, 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.
10. Withholding Tax. The Company may deduct and withhold from
any cash otherwise payable to the Grantee (whether payable as 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.
11. Miscellaneous.
(a) This Agreement shall be governed and construed in
accordance with the internal laws of the State of Wisconsin.
(b) This Agreement may not be amended or modified except
by the written consent of the parties hereto.
(c) This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and shall be binding
upon and inure to the benefit of the Grantee and the personal
representative(s) and heirs of the Grantee, except that the Grantee may not
transfer any interest in any shares of Restricted Stock subject to this
Agreement prior to the lapse of the restrictions imposed by the Plan and this
Agreement.
(d) The Company shall retain the shares of Restricted
Stock during the Period of Restriction, as applicable, unless otherwise
determined by the Committee. When shares of Restricted Stock are no longer
subject to the Period of Restriction, the Committee shall deliver to the
Grantee a certificate or certificates for such shares without the restrictive
legend set forth in Section 6 hereof.
(e) 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.
12. No Right to Continued Employment. This grant shall not
confer upon the Grantee any right with respect to continuance of employment by
the Company or any subsidiary, nor shall it interfere in any way with the
right of his employer to terminate his employment at any time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
BUCYRUS-ERIE COMPANY
By: /s/F. John Stark, III
Title:CHAIRMAN OF THE BOARD
/s/W. R. Hildebrand
WILLARD R. HILDEBRAND, Grantee
Beneficiary: ANNE E. HILDEBRAND
Address of Beneficiary: 23 LITTLE COMFORT RD
SAVANNAH GA 31411
Beneficiary's Tax Identification
No.:
EXHIBIT 10.30
1995 FORM 10-K
BUCYRUS-ERIE COMPANY
1996 EMPLOYEES' STOCK INCENTIVE PLAN
TIME ACCELERATED RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made and entered into as of this 11 day of March,
1996, by and between BUCYRUS-ERIE COMPANY, a Delaware corporation (the
"Company"), and WILLARD R. HILDEBRAND (the "Grantee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Bucyrus-Erie Company 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 shares of the Company's Common Stock, $.01 par value (the "Common Stock"),
to certain key employees of the Company and its affiliates, subject to certain
restrictions imposed pursuant to the terms of the Plan; 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 secure or increase his stock
ownership in 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 Restricted Stock. The Company grants to the
Grantee two hundred thousand (200,000) shares of Common Stock (hereinafter
called "Restricted Stock") subject to the terms of the Plan and upon the terms
and conditions set forth herein.
2. Restrictions and Disposition. The shares of Restricted
Stock may not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated. Notwithstanding the foregoing, such restrictions shall lapse
with respect to thirty-three and one-third percent (33 1/3%) of the total
number of shares of Restricted Stock on each of the third, fourth and fifth
anniversaries of the date of this Agreement if the Company shall have achieved
the EBITDA (as hereinafter defined) goal for the fiscal year of the Company
ending immediately prior to such anniversary date, as set forth in the
Bucyrus-Erie Company Fiscal 1996 Preliminary Business Plan, receipt of a copy
of which is acknowledged by Grantee. Such lapse 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 Restricted Stock which would otherwise
have been released shall continue to be subject to the restrictions of this
Paragraph 2 until the release date hereinafter specified. 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 foregoing restrictions shall lapse with respect to the number of shares of
Restricted Stock with respect to which such restrictions would have lapsed if
such EBITDA goal had been achieved; 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 the
restrictions imposed by this Paragraph 2 on any shares of Restricted Stock
have not been previously released pursuant to the provisions of this Paragraph
2, such restrictions shall lapse upon the eighth annual anniversary of the
date of this Agreement. Such eight-year period is hereinafter referred to as
the "Period of Restriction."
3. Securities Law Restrictions and Registration. The shares of
Restricted Stock granted hereunder may not be sold or offered for sale except
pursuant to an effective registration statement under the Securities Act of
1933, as amended, or in a transaction which, in the opinion of counsel for the
Company, is exempt from the registration provisions of said Act. A legend
will be placed on the certificates for the Restricted Stock to such effect.
The Company will use its best efforts to file a registration statement on Form
S-8 at the Company's expense for the Restricted Stock within 120 days after
the date on which the shareholders of the Company approve the Plan. In
addition to the limitations described above, the Grantee hereby further agrees
that, to the extent required in order to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, the shares of Restricted Stock
subject to this Agreement may not be sold or otherwise transferred prior to
the date six months after the date on which the shareholders of the Company
approve the Plan.
4. Termination of Employment.
(a) Death, Disability or Retirement. In the event that
the Grantee's employment with the Company is terminated by reason of Death,
Disability or Retirement, then, notwithstanding anything to the contrary in
Paragraph 2 hereof, the following portion of all shares of Restricted Stock
which were subject to the restrictions of Paragraph 2 hereof immediately prior
to such termination shall become free of such restrictions and freely
transferable: the total number of shares of Restricted Stock which were
subject to the restrictions of Paragraph 2 hereof immediately prior to such
termination multiplied by a fraction, the numerator of which is the total
whole number of months of Grantee's employment with the Company prior to such
termination and the denominator of which is 96. "Disability" shall have the
meaning set forth in Paragraph 9(c) of the Employment Agreement between
Grantee and the Company dated the date hereof ("Employment Agreement").
Grantee's employment shall be deemed to have terminated by reason of
"Retirement" if his employment is terminated voluntarily or involuntarily for
any reason other than Cause (as defined in Paragraph 9(e) of the Employment
Agreement) on or after his attaining age 65 or if his employment is terminated
voluntarily by him 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.
(b) Change of Control. In the event of a Change of
Control (as defined in Paragraph 10(a) of the Employment Agreement), the
Period of Restriction shall automatically terminate and the shares of
Restricted Stock shall be free of restrictions and freely transferrable;
provided that such shares shall be subject to forfeiture to the extent
provided in Paragraph 10(c) of the Employment Agreement. Any such release of
Restricted Stock from restrictions hereunder shall be deemed to be
retroactively effective as of the latest date as shall be necessary to entitle
Grantee to receive the same consideration, if any, for his Restricted Stock as
a direct result of such Change of Control as other shareholders of the Company
who held shares of the Company's stock on any record or effective date for the
receipt of consideration as a direct result of such Change of Control.
(c) Termination without Cause. In the event that the
Grantee's employment with the Company is terminated by the Company without
"Cause" (as defined in Paragraph 9(e) of the Employment Agreement) prior to
his attaining age 65, including but not limited to termination of the end of
the "Initial Term" or any "Additional Term" (as such terms are defined in
Paragraph 9(a) of the Employment Agreement), the Period of Restriction shall
terminate with respect to the following portion of all shares of Restricted
Stock which were subject to the restrictions of Paragraph 2 hereof immediately
prior to the effective date of such termination ("Unreleased Shares") and such
shares shall become free of such restrictions and freely transferable:
(i) In the event (A) such termination of employment
shall be effective as of a date ("Termination Date") which is six
(6) months or more after the beginning of the fiscal year of the
Company in which the Termination Date occurs and (B) the EBITDA
goal for such fiscal year (as described in Paragraph 2 hereof) is
achieved, the full amount of Restricted Stock which would have
been released pursuant to Paragraph 2 hereof on the anniversary
date of this Agreement next following the Termination Date but for
such termination of employment; plus
(ii) A number of shares equal to the product of all
Unreleased Shares other than the number, if any, described in
clause (i) of this subparagraph (c) and a fraction, the numerator
of which is the whole number of months of the Grantee's employment
with the Company prior to the Termination Date and the denominator
of which is 96.
Any such termination of restrictions shall be effective (1) upon determination
of EBITDA for the fiscal year in which the Termination Date occurs if clause
(i) of this subparagraph (c) is applicable and (2) upon the effective date of
termination of employment in all other cases. All remaining Unreleased Shares
after the release of the shares described in this subparagraph (c) shall
automatically be forfeited and returned to the Company on the effective date
of termination of employment; provided, however, that the Compensation
Committee of the Board of Directors of the Company ("Committee") may, in its
sole discretion, waive the automatic forfeiture of any or all such shares
and/or may add such new restrictions to such shares of Restricted Stock as it
deems appropriate.
(d) Other. In the event that the Grantee's employment
with the Company terminates for any reason other than those set forth in
subparagraphs (a), (b) and (c) above during the Period of Restriction, then
any shares of Restricted Stock which are subject to restrictions hereunder at
the date of such termination shall automatically be forfeited and returned to
the Company.
5. 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 the Grantee's death is hereinafter referred to as the
"Beneficiary") shall be entitled to receive the shares of Restricted Stock
subject to this Agreement upon the death of the Grantee. The Grantee may from
time to time revoke or change the 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 shall
be entitled to receive the shares of Restricted Stock subject to this
Agreement upon the death of the Grantee. If the Committee is in doubt as to
the right of any person to receive such shares of Restricted Stock, the
Company may prohibit the transfer of such shares, without liability for any
interest thereon, until the Committee determines the person is entitled
thereto or the Company may apply to any court of appropriate jurisdiction and
such application shall be a complete discharge of any liability of the Company
therefor.
6. Certificate Legend. In addition to any legends placed on
certificates for shares of Restricted Stock under Section 3 hereof, each
certificate for shares of Restricted Stock subject to this Agreement shall
bear the following legend:
"The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary, involuntary or
by operation of law, is subject to certain restrictions set forth
in the Bucyrus-Erie Company 1996 Stock Incentive Plan, rules of
administration adopted pursuant to such Plan, if any, and a
Restricted Stock Agreement dated MARCH 11, 1996. A copy of such
Plan, such rules and such Restricted Stock Agreement may be
obtained from the Secretary of Bucyrus-Erie Company."
When the restrictions imposed by Section 2 hereof terminate, the Grantee shall
be entitled to have the foregoing legend removed from the certificates
representing such shares of Restricted Stock.
7. Voting Rights; Dividends and Other Distributions.
(a) While the shares of Restricted Stock are subject to
restrictions under Section 2 hereof, the Grantee may exercise full voting
rights with respect to such shares of Restricted Stock.
(b) While the shares of Restricted Stock are subject to
the restrictions under Section 2 hereof, the Grantee shall be entitled to
receive all dividends and other distributions paid with respect to such shares
of Restricted Stock. If any such dividends or distributions are paid in
shares of the Company's Common Stock, such shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they were
paid.
8. Adjustments in Event of Change in Stock. The number of
shares of Restricted Stock subject to this Agreement shall be subject to
adjustment in the manner provided in Section 4 of the Plan.
9. Interpretation by Committee. As condition of the grant of
Restricted Stock, 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.
10. Withholding Tax. The Company may deduct and withhold from
any cash otherwise payable to the Grantee (whether payable as 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.
11. Miscellaneous.
(a) This Agreement shall be governed and construed in
accordance with the internal laws of the State of Wisconsin.
(b) This Agreement may not be amended or modified except
by the written consent of the parties hereto.
(c) This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and shall be binding
upon and inure to the benefit of the Grantee and the personal
representative(s) and heirs of the Grantee, except that the Grantee may not
transfer any interest in any shares of Restricted Stock subject to this
Agreement prior to the lapse of the restrictions imposed by the Plan and this
Agreement.
(d) The Company shall retain the shares of Restricted
Stock during the Period of Restriction, as applicable, unless otherwise
determined by the Committee. When shares of Restricted Stock are no longer
subject to the Period of Restriction, the Committee shall deliver to the
Grantee a certificate or certificates for such shares without the restrictive
legend set forth in Section 6 hereof.
(e) 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.
12. No Right to Continued Employment. This grant shall not
confer upon the Grantee any right with respect to continuance of employment by
the Company or any subsidiary, nor shall it interfere in any way with the
right of his employer to terminate his employment at any time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
BUCYRUS-ERIE COMPANY
By: /s/F. John Stark, III
Title: CHAIRMAN OF THE BOARD
/s/W. R. Hildebrand
WILLARD R. HILDEBRAND, Grantee
Beneficiary: ANNE E. HILDEBRAND
Address of Beneficiary: 23 LITTLE COMFORT RD
SAVANNAH GA 31411
Beneficiary's Tax Identification
No.:
EXHIBIT 10.31
1995 FORM 10-K
BUCYRUS-ERIE COMPANY
1996 EMPLOYEES' STOCK INCENTIVE PLAN
Section 1. Purpose
The purpose of the Bucyrus-Erie 1996 Employees' Stock Incentive
Plan (the "Plan") is to promote the best interests of Bucyrus-Erie Company
(together with any successor thereto, the "Company") and its shareholders by
providing key employees of the Company and its Affiliates (as defined below)
with an opportunity to acquire a proprietary interest in the Company. It is
intended that the Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company by those key
employees who are primarily responsible for shaping and carrying out the long-
range plans of the Company and securing the Company's continued growth and
financial success.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through
one or more intermediaries, is controlled by, controls, or is under common
control with, the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock or Performance Share granted under the Plan.
(c) "Award Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Award granted under
the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(f) "Committee" shall mean a committee of the Board of Directors
of the Company designated by such Board to administer the Plan and composed of
not less than two directors, each of whom is a "disinterested person" within
the meaning of Rule 16b-3 and each of whom is an "outside director" within the
meaning of Section 162(m)(4)(C) of the Code (or any successor provision
thereto).
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(h) "Excluded Items" shall mean any items which the Committee
determines shall be excluded in fixing Performance Goals, such as any gains or
losses from discontinued operations, any extraordinary gains or losses and the
effects of accounting changes.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code (or any successor provision thereto).
(k) "Key Employee" shall mean any officer or other key employee
of the Company or of any Affiliate who is responsible for or contributes to
the management, growth or profitability of the business of the Company or any
Affiliate, as determined by the Committee.
(l) "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(m) "Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock Option.
(n) "Participating Key Employee" shall mean a Key Employee
designated to be granted an Award under the Plan.
(o) "Performance Goals" shall mean the following (in all cases
after excluding the impact of applicable Excluded Items):
(i) Return on equity for the Performance Period for the
Company on a consolidated basis.
(ii) Return on investment for the Performance Period
(aa) for the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at the
time of selection.
(iii) Return on net assets for the Performance Period
(aa) for the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at the
time of selection.
(iv) Economic value added (as defined by the Committee
at the time of selection) for the Performance Period (aa) for the
Company on a consolidated basis, (bb) for any one or more Affiliates or
divisions of the Company and/or (cc) for any other business unit or
units of the Company as defined by the Committee at the time of
selection.
(v) Earnings from operations for the Performance Period
(aa) for the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at the
time of selection.
(vi) Earnings before interest, taxes, depreciation and
amortization for the Performance Period for the Company on a
consolidated basis.
(vii) Pre-tax profits for the Performance Period (aa) for
the Company on a consolidated basis, (bb) for any one or more Affiliates
or divisions of the Company and/or (cc) for any other business unit or
units of the Company as defined by the Committee at the time of
selection.
(viii) Net earnings for the Performance Period (aa) for
the Company on a consolidated basis, (bb) for any one or more Affiliates
or divisions of the Company and/or (cc) for any other business unit or
units of the Company as defined by the Committee at the time of
selection.
(ix) Net earnings per Share for the Performance Period
for the Company on a consolidated basis.
(x) Working capital as a percent of net sales for the
Performance Period (aa) for the Company on a consolidated basis, (bb)
for any one or more Affiliates or divisions of the Company and/or (cc)
for any other business unit or units of the Company as defined by the
Committee at the time of selection.
(xi) Net cash provided by operating activities for the
Performance Period (aa) for the Company on a consolidated basis, (bb)
for any one or more Affiliates or divisions of the Company and/or (cc)
for any other business unit or units of the Company as defined by the
Committee at the time of selection.
(xii) Market price per Share for the Performance Period.
(xiii) Total shareholder return for the Performance Period
for the Company on a consolidated basis.
(p) "Performance Period" shall mean, in relation to Performance
Shares, any period for which a Performance Goal or Goals have been
established.
(q) "Performance Share" shall mean any right granted under
Section 6(d) of the Plan that will be paid out as a Share (which, in specified
circumstances, may be a Share of Restricted Stock).
(r) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, or government or political subdivision thereof.
(s) "Released Securities" shall mean Shares of Restricted Stock
with respect to which all applicable restrictions have expired, lapsed, or
been waived.
(t) "Restricted Securities" shall mean Awards of Restricted
Stock or other Awards under which issued and outstanding Shares are held
subject to certain restrictions.
(u) "Restricted Stock" shall mean any Share granted under
Section 6(c) of the Plan or, in specified circumstances, a Share paid in
connection with a Performance Share under Section 6(d) of the Plan.
(v) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation
thereto.
(w) "Shares" shall mean shares of common stock of the Company,
$.01 par value, and such other securities or property as may become subject to
Awards pursuant to an adjustment made under Section 4(b) of the Plan.
(x) "Stock Appreciation Right" shall mean any right granted
under Section 6(b) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in existence, the
functions of the Committee as specified in the Plan shall be exercised by a
committee consisting of those members of the Board of Directors of the Company
who qualify as "disinterested persons" under Rule 16b-3 and as "outside
directors" under Section 162(m)(4)(C) of the Code (or any successor provision
thereto). Subject to the terms of the Plan and without limitation by reason
of enumeration, the Committee shall have full power and authority to: (i)
designate Participating Key Employees; (ii) determine the type or types of
Awards to be granted to each Participating Key Employee under the Plan; (iii)
determine the number of Shares to be covered by (or with respect to which
payments, rights, or other matters are to be calculated in connection with)
Awards granted to Participating Key Employees; (iv) determine the terms and
conditions of any Award granted to a Participating Key Employee; (v) determine
whether, to what extent, and under what circumstances Awards granted to
Participating Key Employees may be settled or exercised in cash, Shares, other
securities, other Awards, or other property, and the method or methods by
which Awards may be settled, exercised, cancelled, forfeited, or suspended;
(vi) determine whether, to what extent, and under what circumstances cash,
Shares, other Awards, and other amounts payable with respect to an Award
granted to Participating Key Employees under the Plan shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan (including, without limitation, any
Award Agreement); (viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under
or with respect to the Plan or any Award shall be within the sole discretion
of the Committee, may be made at any time, and shall be final, conclusive, and
binding upon all Persons, including the Company, any Affiliate, any
Participating Key Employee, any holder or beneficiary of any Award, any
shareholder, and any employee of the Company or of any Affiliate.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Number of Shares Available. The number of Shares
with respect to which Awards may be granted under the Plan shall be
1,000,000. If, after the effective date of the Plan, any Shares covered
by an Award granted under the Plan, or to which any Award relates, are
forfeited or if an Award otherwise terminates, expires or is cancelled
prior to the delivery of all of the Shares or of other consideration
issuable or payable pursuant to such Award, then the number of Shares
counted against the number of Shares available under the Plan in
connection with the grant of such Award, to the extent of any such
forfeiture, termination, expiration or cancellation, shall again be
available for granting of additional Awards under the Plan.
(ii) Limitations on Awards to Individual Participants.
No Participating Key Employee shall be granted Awards under the Plan
that could result in such Participating Key Employee exercising Options
for more than 200,000 Shares, or Stock Appreciation Rights with respect
to more than 50,000 Shares or receiving Awards relating to more than
300,000 Shares of Restricted Stock or more than 50,000 Performance
Shares under the Plan. Such number of Shares as specified in the
preceding sentence shall be subject to adjustment in accordance with the
terms of Section 4(b) hereof.
(iii) Accounting for Awards. The number of Shares
covered by an Award under the Plan, or to which such Award relates,
shall be counted on the date of grant of such Award against the number
of Shares available for granting Awards under the Plan.
(iv) Sources of Shares Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist, in whole or in part,
of authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities
of the Company, issuance of warrants or other rights to purchase Shares or
other securities of the Company, or other similar corporate transaction or
event affects the Shares such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee may, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Shares subject to the Plan and which
thereafter may be made the subject of Awards under the Plan, (ii) the number
and type of Shares subject to outstanding Awards, and (iii) the grant,
purchase, or exercise price with respect to any Award, or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award; provided, however, in each case, that with respect to Awards of
Incentive Stock Options no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422(b) of the Code
(or any successor provision thereto); and provided further that the number of
Shares subject to any Award payable or denominated in Shares shall always be a
whole number.
Section 5. Eligibility
Any Key Employee, including any executive officer or employee-
director of the Company or of any Affiliate, who is not a member of the
Committee, shall be eligible to be designated a Participating Key Employee.
Section 6. Awards
(a) Option Awards to Key Employees. The Committee is hereby
authorized to grant Options to Key Employees with the terms and conditions as
set forth below and with such additional terms and conditions, in either case
not inconsistent with the provisions of the Plan, as the Committee shall
determine.
(i) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 6(a) shall be determined by the
Committee; provided, however, that such exercise price shall not be less
than 100% of the Fair Market Value of a Share on the date of grant of
such Option, in the case of an Incentive Stock Option, and not less than
55% of the Fair Market Value of a Share on the date of grant of such
Option, in the case of a Non-qualified Stock Option.
(ii) Option Term. The term of each Option shall be
fixed by the Committee; provided, however, that in no event shall the
term of any Incentive Stock Option exceed a period of ten years from the
date of its grant.
(iii) Exercisability and Method of Exercise. An Option
shall become exercisable in such manner and within such period or
periods and in such installments or otherwise as shall be determined by
the Committee. The Committee also shall determine the method or methods
by which, and the form or forms, including, without limitation, cash,
Shares, other securities, other Awards, or other property, or any
combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price, in which payment of the exercise
price with respect to any Option may be made or deemed to have been
made.
(iv) Incentive Stock Options. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code (or any
successor provision thereto) and any regulations promulgated thereunder.
Notwithstanding any provision in the Plan to the contrary, no Incentive
Stock Option may be granted hereunder after the tenth anniversary of the
adoption of the Plan by the Board of Directors of the Company.
(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights to Key Employees. Subject to
the terms of the Plan and any applicable Award Agreement, a Stock Appreciation
Right granted under the Plan shall confer on the holder thereof a right to
receive, upon exercise thereof, the excess of (i) the Fair Market Value of one
Share on the date of exercise over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which shall not be less than
100% of the Fair Market Value of one Share on the date of grant of the Stock
Appreciation Right. Subject to the terms of the Plan, the grant price, term,
methods of exercise, methods of settlement (including whether the
Participating Key Employee will be paid in cash, Shares, other securities,
other Awards, or other property, or any combination thereof), and any other
terms and conditions of any Stock Appreciation Right shall be as determined by
the Committee. The Committee may impose such conditions or restrictions on
the exercise of any Stock Appreciation Right as it may deem appropriate,
including, without limitation, restricting the time of exercise of the Stock
Appreciation Right to specified periods as may be necessary to satisfy the
requirements of Rule 16b-3.
(c) Restricted Stock Awards.
(i) Issuance. The Committee is hereby authorized to
grant Awards of Restricted Stock to Key Employees.
(ii) Restrictions. Shares of Restricted Stock granted
to Participating Key Employees shall be subject to such restrictions as
the Committee may impose (including, without limitation, any limitation
on the right to vote a Share of Restricted Stock or the right to receive
any dividend or other right or property), which restrictions may lapse
separately or in combination at such time or times, in such installments
or otherwise, as the Committee may deem appropriate (including without
limitation, upon the achievement of specified Performance Goals).
(iii) Registration. Any Restricted Stock granted under
the Plan to a Participating Key Employee may be evidenced in such manner
as the Committee may deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect
of Shares of Restricted Stock granted under the Plan to a Participating
Key Employee, such certificate shall be registered in the name of the
Participating Key Employee and shall bear an appropriate legend (as
determined by the Committee) referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
(iv) Payment of Restricted Stock. At the end of the
applicable restriction period relating to Restricted Stock granted to a
Participating Key Employee, one or more stock certificates for the
appropriate number of Shares, free of restrictions imposed under the
Plan, shall be delivered to the Participating Key Employee, or, if the
Participating Key Employee received stock certificates representing the
Restricted Stock at the time of grant, the legends placed on such
certificates shall be removed.
(v) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment of a Participating Key
Employee (as determined under criteria established by the Committee) for
any reason during the applicable restriction period, all Shares of
Restricted Stock still subject to restriction shall be forfeited by the
Participating Key Employee; provided, however, that the Committee may,
when it finds that a waiver would be in the best interests of the
Company, waive in whole or in part any or all remaining restrictions
with respect to Shares of Restricted Stock held by a Participating Key
Employee.
(d) Performance Shares.
(i) Issuance. The Committee is hereby authorized to
grant Awards of Performance Shares to Participating Key Employees.
(ii) Performance Goals and Other Terms. The Committee
shall determine the Performance Period, the Performance Goal or Goals
(and the performance level or levels related thereto) to be achieved
during any Performance Period, the proportion of payments, if any, to be
made for performance between the minimum and full performance levels for
any Performance Goal and, if applicable, the relative percentage
weighting given to each of the selected Performance Goals, the
restrictions applicable to Shares of Restricted Stock received upon
payment of Performance Shares if Performance Shares are paid in such
manner, and any other terms, conditions and rights relating to a grant
of Performance Shares. The Committee shall have sole discretion to
alter the selected Performance Goals set forth in Section 2(o), subject
to shareholder approval, to the extent required to comply with Rule 16b-
3 and to qualify the Award for the performance-based exemption provided
by Section 162(m) of the Code (or any successor provision thereto).
Notwithstanding the foregoing, in the event the Committee determines it
is advisable to grant Performance Shares which do not qualify for the
performance-based exemption under Section 162(m) of the Code (or any
successor provision thereto), the Committee may make such grants without
satisfying the requirements thereof.
(iii) Rights and Benefits During the Performance Period.
The Committee may provide that, during a Performance Period, a
Participating Key Employee shall be paid cash amounts, with respect to
each Performance Share held by such Participating Key Employee, in the
same manner, at the same time, and in the same amount paid, as a cash
dividend on a Share. Participating Key Employees shall have no voting
rights with respect to Performance Shares held by them.
(iv) Payment of Performance Shares. As soon as is
reasonably practicable following the end of the applicable Performance
Period, and subject to the Committee certifying in writing as to the
satisfaction of the requisite Performance Goal or Goals if such
certification is required in order to qualify the Award for the
performance-based exemption provided by Section 162(m) of the Code (or
any successor provision thereto), one or more certificates representing
the number of Shares equal to the number of Performance Shares payable
shall be registered in the name of and delivered to the Participating
Key Employee; provided, however, that any Shares of Restricted Stock
payable in connection with Performance Shares shall, pending the
expiration, lapse, or waiver of the applicable restrictions, be
evidenced in the manner as set forth in Section 6(c)(iii) hereof.
(e) General.
(i) No Consideration for Awards. Awards shall be
granted to Participating Key Employees for no cash consideration unless
otherwise determined by the Committee.
(ii) Award Agreements. Each Award granted under the
Plan shall be evidenced by an Award Agreement in such form (consistent
with the terms of the Plan) as shall have been approved by the
Committee.
(iii) Awards May Be Granted Separately or Together.
Awards to Participating Key Employees under the Plan may be granted
either alone or in addition to, in tandem with, or in substitution for
any other Award or any award granted under any other plan of the Company
or any Affiliate. Awards granted in addition to or in tandem with other
Awards, or in addition to or in tandem with awards granted under any
other plan of the Company or any Affiliate, may be granted either at the
same time as or at a different time from the grant of such other Awards
or awards.
(iv) Forms of Payment Under Awards. Subject to the
terms of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant,
exercise, or payment of an Award to a Participating Key Employee may be
made in such form or forms as the Committee shall determine, and may be
made in a single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures established
by the Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of interest on
installment or deferred payments.
(v) Limits on Transfer of Awards. No Award (other than
Released Securities), and no right under any such Award, shall be
assignable, alienable, saleable, or transferable by a Participating Key
Employee otherwise than by will or by the laws of descent and
distribution (or, in the case of an Award of Restricted Securities, to
the Company); provided, however, that a Participating Key Employee at
the discretion of the Committee may be entitled, in the manner
established by the Committee, to designate a beneficiary or
beneficiaries to exercise his or her rights, and to receive any property
distributable, with respect to any Award upon the death of the
Participating Key Employee. Each Award, and each right under any Award,
shall be exercisable, during the lifetime of the Participating Key
Employee only by such individual or, if permissible under applicable
law, by such individual's guardian or legal representative. No Award
(other than Released Securities), and no right under any such Award, may
be pledged, alienated, attached, or otherwise encumbered, and any
purported pledge, alienation, attachment, or encumbrance thereof shall
be void and unenforceable against the Company or any Affiliate.
(vi) Term of Awards. Except as otherwise provided in
the Plan, the term of each Award shall be for such period as may be
determined by the Committee.
(vii) Rule 16b-3 Six-Month Limitations. To the extent
required in order to comply with Rule 16b-3 only, any equity security
offered pursuant to the Plan may not be sold for at least six months
after acquisition, except in the case of death or disability, and any
derivative security issued pursuant to the Plan shall not be exercisable
for at least six months, except in case of death or disability of the
holder thereof. Terms used in the preceding sentence shall, for the
purposes of such sentence only, have the meanings, if any, assigned or
attributed to them under Rule 16b-3.
(viii) Share Certificates; Representation. In addition to
the restrictions imposed pursuant to Section 6(c) and Section 6(d)
hereof, all certificates for Shares delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations, and other requirements of the
Commission, any stock exchange or other market upon which such Shares
are then listed or traded, and any applicable federal or state
securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions. The Committee may require each Participating Key Employee
or other Person who acquires Shares under the Plan by means of an Award
originally made to a Participating Key Employee to represent to the
Company in writing that such Participating Key Employee or other Person
is acquiring the Shares without a view to the distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of Defects and
Omissions
(a) Amendments to and Termination of the Plan. The Board of
Directors of the Company may at any time amend, alter, suspend, discontinue,
or terminate the Plan; provided, that shareholder approval of any amendment of
the Plan shall also be obtained if otherwise required by: (i) the rules and/or
regulations promulgated under Section 16 of the Exchange Act (in order for the
Plan to remain qualified under Rule 16b-3), (ii) the Code or any rules
promulgated thereunder (in order to allow for Incentive Stock Options to be
granted under the Plan), or (iii) the quotation or listing requirements of the
Nasdaq National Market or any principal securities exchange or market on which
the Shares are then traded (in order to maintain the quotation or listing of
the Shares thereon). Termination of the Plan shall not affect the rights of
Participating Key Employees with respect to Awards previously granted to them,
and all unexpired Awards shall continue in force and effect after termination
of the Plan except as they may lapse or be terminated by their own terms and
conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in any Award or Award Agreement in the manner and to the extent
it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Participating Key
Employee or other Person shall have any claim to be granted any Award under
the Plan, and there is no obligation for uniformity of treatment of Key
Employees, Participating Key Employees, or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be the same with
respect to each Participating Key Employee.
(b) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of a Participating Key Employee
for federal income tax purposes with respect to any Award under the Plan, the
Participating Key Employee shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be withheld with respect
to such amount. The Committee, in its sole discretion, may permit withholding
obligations arising with respect to Awards to Participating Key Employees
under the Plan to be settled with Shares (other than Restricted Securities),
including Shares that are part of, or are received upon exercise of, the Award
that gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional on such payment or arrangements,
and the Company and any Affiliate shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment otherwise due to the
Participating Key Employee. The Committee may establish such procedures as it
deems appropriate for the settling of withholding obligations with Shares,
including, without limitation, the establishment of such procedures as may be
necessary to satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and
such arrangements may be either generally applicable or applicable only in
specific cases.
(d) Rights and Status of Recipients of Awards. The grant of an
Award shall not be construed as giving a Participating Key Employee the right
to be retained in the employ of the Company or any Affiliate. Further, the
Company or any Affiliate may at any time dismiss a Participating Key Employee
from employment, free from any liability, or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement. Except
for rights accorded under the Plan and under any applicable Award Agreement,
Participating Key Employees shall have no rights as holders of Shares as a
result of the granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by
the Committee, the Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any Participating
Key Employee or other Person. To the extent any Person holds any right by
virtue of a grant under the Plan, such right (unless otherwise determined by
the Committee) shall be no greater than the right of an unsecured general
creditor of the Company.
(f) Governing Law. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Wisconsin and
applicable federal law.
(g) Severability. If any provision of the Plan or any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, any Award Agreement or the Award, such
provision shall be stricken as to such jurisdiction, Person, or Award, and the
remainder of the Plan, any such Award Agreement and any such Award shall
remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other
securities shall be issued or delivered pursuant to the Plan, any Award
Agreement or any Award, and the Committee shall determine (except as otherwise
provided in the Plan) whether cash, other securities, or other property shall
be paid or transferred in lieu of any fractional Shares or other securities,
or whether such fractional Shares or other securities or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective on the date of adoption of the Plan by
the Board of Directors of the Company provided that the Plan is approved by
the shareholders of the Company within twelve months following the date of
adoption of the Plan by the Board of Directors. All Awards granted prior to
shareholder approval of the Plan shall be subject to such approval and shall
not be exercisable until after such approval.
EXHIBIT 10.32
1995 10-K
BUCYRUS-ERIE COMPANY
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. Purpose. The purpose of the Bucyrus-Erie Company Non-Employee
Directors' Stock Option Plan (the "Plan") is to promote the best interests of
the Bucyrus-Erie Company (the "Company") and its shareholders by providing
non-employee directors of the Company with an opportunity to acquire a
proprietary interest in the Company. By encouraging stock ownership by
non-employee directors, the Company seeks both to attract and retain on its
Board of Directors (the "Board") persons of exceptional competence
and to provide a further incentive to serve as a director of the Company.
2. Administration. The Plan shall be administered by the Board. In
accordance with the provisions of the Plan, the Board shall administer the Plan
and adopt such rules and regulations for carrying out the Plan as it may deem
proper and in the best interests of the Company. The interpretation of any
provision of the Plan by the Board and any determination made by the Board
on the matters referred to in this Section 2 shall be final.
The Board may appoint a committee (the "Committee"), which shall
consist of not less than two non-employee members of the Board, and may
delegate to the Committee full power and authority to take any and all action
required or permitted to be taken by the Board under the Plan whether or not
the power and the authority of the Committee is hereinafter fully
set forth.
3. Shares Subject to the Plan. The shares that are subject to
options under the Plan shall be shares of the Company's Common Stock ("Stock").
The total number of shares of Stock that may be purchased pursuant to options
granted under the Plan shall not exceed an aggregate of 60,000 shares,
subject to adjustment as provided in Section 7 hereof. Shares of Stock
delivered upon exercise of an option under the Plan may consist, in whole or
in part, of authorized but unissued shares or of treasury shares. In the event
that an option granted under the Plan expires, is canceled or terminates
unexercised as to any shares of Stock covered thereby, such shares shall
thereafter be available for the granting of additional options under the Plan.
4. Grants of Options
(a) Eligibility. Each member of the Board who is not an employee
of the Company or any of its subsidiaries or any parent corporation of the
Company (a "Non-Employee Director") shall be eligible to be granted stock
options under the Plan. A Non-Employee Director may hold more than one
option, but only on the terms and subject to any restrictions set forth
in this Section 4.
(b) Option Price. The option exercise price per share of Stock
shall be equal to the last sale price for the Stock on the Nasdaq National
Market System ("NASDAQ") on the date of grant of the option, as reported in
the Wall Street Journal (Midwest Edition); provided, however, that if the
principal market for the Stock is then a national securities exchange, the
option exercise price shall be the closing price for the Stock on the principal
securities exchange on which the Stock is traded on the date of grant of the
option or, in either case above, if no trading occurred on such date of
grant, then the option exercise price shall be determined with
reference to the next preceding date on which the Stock is traded.
(c) Grant of Options.
(i) Any person who is a Non-Employee Director at the
Effective Date of the Plan, as defined in Section 13 hereof, shall
automatically be granted an option to purchase 2000 shares of Stock
on such date.
(ii) Any person who is first elected or appointed as a
Non-Employee Director after the Effective Date of the Plan shall
automatically on the date of such election or appointment be granted
an option to purchase 2,000 shares of Stock (which number shall be
subject to adjustment in the manner as provided in Section 7).
(iii) Thereafter, in consideration for serving on the Board,
each Non-Employee Director (if he or she continues to serve in such
capacity) shall automatically be granted an option on the date of the
first Board meeting in each calendar year, commencing in 1996, for so
long as the Plan remains in effect and a sufficient number of shares
are available thereunder for the granting of such option. Such option
shall entitle the Non-Employee Director to purchase 2000 shares of
Stock (which number shall be subject to adjustment in the manner as
provided in Section 7).
(d) Exercisability and Termination of Options. Options granted to
Non-Employee Directors shall vest and become exercisable immediately on the
date of grant. Options granted to Non-Employee Directors shall terminate on
the earlier of:
(i) ten years after the date of grant;
(ii) six months after the Non-Employee Director ceases to be a
director of the Company by reason of death; or
(iii) three months after the Non-Employee Director ceases to be
a director of the Company for any reason other than death.
(e) Exercise of Options. An option may be exercised, subject to
its terms and conditions and the terms and conditions of the Plan, in full or
in part, from time to time by delivery to the Secretary of the Company at
the Company's principal office in South Milwaukee, Wisconsin, of a written
notice of exercise specifying the number of shares with respect to which
the option is being exercised. Any notice of exercise shall be accompanied
by full payment of the option price of the shares being purchased in cash or
its equivalent. No shares shall be issued until full payment therefor
has been made.
5. Nontransferability of Options. No option shall be transferable
by an optionee other than by will or the laws of descent and distribution.
Options under the Plan may be exercised during the life of the optionee only
by the optionee or the optionee's guardian or legal representative.
6. Powers of the Company Not Affected. The existence of the Plan
or any options granted under the Plan 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, or preferred or prior
preference stock ahead of or affecting the Stock or the rights thereof, or any
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 similar character or otherwise.
7. Capital Adjustments Affecting Stock. In the event of a capital
adjustment resulting from a stock dividend, stock split, reorganization,
spin-off, split up or distribution of assets to shareholders,
recapitalization, merger, consolidation, combination or exchange of shares
or the like following the Effective Date of the Plan, the number of shares of
Stock subject to the Plan, the number of shares subject to options to be
granted pursuant to Section 4(c) hereof, and the number of shares under
option in outstanding option agreements shall be adjusted in a manner
consistent with such capital adjustment; provided, however, that no such
adjustment shall require the Company to sell any fractional shares and the
adjustment shall be limited accordingly. The price of any shares under
option shall be adjusted so that there will be no change in the aggregate
purchase price upon exercise of any such option. The determination of the
Board or the Committee, as the case may be, shall be final.
8. Option Agreements. All options granted under the Plan shall be
evidenced by written agreements (which need not be identical) in such form as
the Board or the Committee, as the case may be, shall determine.
9. Rights as a Shareholder; Rights as a Director. An optionee
shall have no rights as a shareholder with respect to shares covered by an
option until the date of issuance of stock certificates to him or her and
only after such shares are fully paid. Neither the Plan nor any option
granted hereunder shall confer upon any optionee the right to continue as a
director of the Company.
10. Transfer Restrictions. Shares of Stock purchased under the
Plan may not be sold or otherwise disposed of except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or
except in a transaction that, in the option of counsel for the Company, is
exempt from registration under said Act. The Board or the Committee, as the
case may be, may waive the foregoing restrictions in whole or in part in any
particular case or cases or may terminate such restrictions whenever the Board
or the Committee, as the case may be, determines that such restrictions
afford no substantial benefit to the Company.
11. Amendment of Plan. The Board shall have the right to amend
the Plan at any time and for any reason; provided, however, that the Plan
shall not be amended more than once every six months, other than to comport
with changes in the Internal Revenue Code of 1986, as amended, and successor
provisions thereto (the "Code"), the Employee Retirement Income Security Act
of 1974, as amended, or the rules promulgated thereunder; and provided,
further, that shareholder approval of any amendment to the Plan shall also
be obtained:
(a) if otherwise required by (i) the rules and/or regulations
promulgated under Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (in order for the Plan to remain qualified
under Rule 16b-3 or any successor provision under such Act), or (ii) the
quotation or listing requirements of NASDAQ or any principal securities
exchange or market on which the Stock is then traded (in order to maintain the
Stock's quotation or listing thereon);
(b) if such amendment materially modifies the eligibility
requirements as provided in Section 4(a) hereof;
(c) if such amendment increases the total number of shares of
Stock, except as provided in Section 7 hereof, which may be purchased
pursuant to the exercise of options granted under the Plan; or
(d) if such amendment reduces the minimum option price per share
at which options may be granted as provided in Section 4(b) hereof.
Any amendment of the Plan shall not, without the consent of the optionee,
alter or impair any rights of obligations under any option previously granted
to the optionee.
12. Termination of Plan. The Board shall have the right to suspend
or terminate the Plan at any time. Termination of the Plan shall not affect
the rights of optionees under options previously granted to them, and all
unexpired options shall continue in force and operation after termination
of the Plan except as they may lapse or be terminated by their own
terms and conditions.
13. Effective Date. The Effective Date of the Plan shall be
February 16, 1995, subject to approval and ratification by the shareholders
of the Company. All options granted prior to shareholder approval and
ratification of the Plan shall be subject to such approval and ratification
and shall not be exercisable until after such approval and ratification.
14. Override. Plan transactions are intended to comply with all
applicable conditions of Rule 16b-3 or any successor provision under the
Exchange Act. To the extent any provision of the Plan or action by the
Board or the Committee, as the case may be, fails to so comply, the
provision or action shall be deemed null and void to the extent permitted by
law and deemed proper and in the best interests of the Company by the Board
or the Committee, as the case may be.
EXHIBIT 13
1995 10-K
BUCYRUS-ERIE COMPANY
1995 ANNUAL REPORT
[COLORED PHOTOGRAPH OF A BUCYRUS-ERIE
495-B ELECTRIC MINING SHOVEL]
<PAGE>
FINANCIAL HIGHLIGHTS
Years Ended December 31,
__________________________________________________________________________
(Dollars in Thousands,
Except Per Share Amounts) 1995 1994(2)
__________________________________________________________________________
Net Shipments $231,921 $193,984
Loss Before Extraordinary Gain (18,772) (23,385)
Net Earnings (Loss) Attributable
to Common Shareholders (18,772) 78,394
Per Common Share:
Loss Before Extraordinary Gain (1.84) (2.51)
Net Earnings (Loss) (1.84) 8.47
Dividends - -
Book Value 3.39 5.27
Long-Term Debt 58,021 53,170
Working Capital 64,663 77,793
Common Shareholders' Investment 34,680 53,617
__________________________________________________________________________
Shareholders of Record 2,029 2,220
Employees at Year-End 1,166 1,059
__________________________________________________________________________
Current Ratio 2.1 2.6
Backlog $118,024 $ 72,346
Adjusted EBITDA(1) $ 8,422 $ 13,233
__________________________________________________________________________
(1) Earnings before extraordinary gain, interest, income taxes, depreciation,
amortization, restructuring expenses, reorganization items and inventory fair
value adjustment charged to cost of products sold.
(2) Includes the results of the Predecessor Company prior to the
reorganization under chapter 11 of the Bankruptcy Code on December 14, 1994.
CONTENTS COMPANY PROFILE
Financial Highlights 1 Bucyrus-Erie Company is a
Company Profile 1 leading manufacturer of surface
President's Letter 2 mining equipment, principally
Surface Mining Equipment 4 walking draglines, electric
Consolidated Statements mining shovels and blast hole
of Operations 6 drills, and related replacement
Consolidated Balance Sheets 8 parts. Major markets for the
Consolidated Statements of surface mining industry are
Common Shareholders' coal mining, copper and iron ore
Investment (Deficiency mining and phosphate production.
in Assets) 10
Consolidated Statements of
Cash Flows 13
Notes to Consolidated
Financial Statements 16
Reports of Independent
Accountants 38
Management's Discussion 40
Selected Financial Data 47
Stock Information 47
Officers and Directors
and Corporate Information 48
<PAGE>
(Picture - Company Logo:
B
BUCYRUS-ERIE
E)
TO OUR CUSTOMERS, SHAREHOLDERS, VENDORS AND EMPLOYEES
On March 11, 1996, I was elected by your Board of Directors to the
position of President and Chief Executive Officer of the Company. Despite the
very difficult past few years, I am positive about the future of Bucyrus-Erie.
I am privileged to have received this opportunity and confident that along
with a fully capable and fully empowered Bucyrus-Erie management team, we can
expect a positive future. It is in this new capacity that I now write this
annual letter to you.
The year 1995 was an incredible year of change for Bucyrus-Erie.
Following the emergence from bankruptcy proceedings on December 14, 1994, the
Company experienced significant organizational restructuring led by your very
active Board of Directors. Following the resignations of the Company's three
senior executives in July, 1995, Miller Associates was hired to manage the
Company. Mr. Frank Miller became the Interim President and Chief Executive
Officer. He and his staff, including an Interim Chief Financial Officer,
investment and administrative adviser and other advisors, were directed by
your Board to reorganize management structure to become market focused,
develop new strategy, implement an operating planning process, and develop
long-term financial projections. These tasks were very effectively managed
and significant progress was made by Miller Associates while the Board
conducted a search leading to my recent appointment.
The Profit and Loss results of the Company in 1995 are not comparable to
1994 due to accounting issues associated with the emergence from bankruptcy.
On a year-to-year basis some very significant progress was accomplished
including:
o Net Sales were increased 19.6% to $231.9 million.
o Parts and Service sales were increased 7.5% to $155.4 million.
o Machine sales were increased 54.7% to $76.5 million with new machine
bookings increasing by 136.9% over 1994.
o Year-end backlog was increased from $72.3 million at December 31,
1994 to $118.0 million, which is a very significant 63% increase.
Our net loss for 1995 was $18.8 million, which is not comparable to the
previous year. It is important to note that, in addition to certain remaining
expenses associated with the bankruptcy of 1994, the Company absorbed several
nonrecurring expenses during the year with the most significant being:
o $10.1 million related to "fresh-start" reporting of inventory.
o $4.4 million of surplus and obsolete inventory write-offs.
o $2.6 million associated with management restructuring.
o $0.9 million in legal and professional fees related to the
bankruptcy.
Excluding the above expenses, the Company operated at close to break-even
in 1995.
Operationally over the last six months, management has developed a very
effective teamwork approach in the implementation of some significant and
positive changes in Company direction. Old strategies have been abandoned and
new ones adopted in a drive to become a very market focused organization.
Projects have been launched to improve customer service, improve customer
parts performance, improve machine reliability through product design changes,
design a new model 39R rotary blast hole drill, which was nearing completion
by year-end for a 1996 market launch, reduce product cost with $7.4 million in
capital expenditure commitments, including equipment leases, and improve our
competitive position with the formation of important vendor partnerships.
It is my commitment to continue these management processes in order to
earn preferred status with our customers and to improve shareholder value. To
facilitate and communicate our desired image as an international market
oriented company, we are recommending to our shareholders that we adopt the
new Company name ..... Bucyrus International, Inc.
I wish to thank our customers, suppliers, and employees for their
patience and support over the past few difficult years.
Sincerely,
[Picture - electric mining shovel]
/s/W. R. Hildebrand
W. R. Hildebrand
President and
Chief Executive Officer
<PAGE>
SURFACE MINING EQUIPMENT
Scope of Operation
Bucyrus-Erie Company (the "Company") manufactures mining equipment in
South Milwaukee, Wisconsin for surface mining applications. The product line
consists of a full range of rotary blast hole drills, electric mining shovels
and walking draglines.
Rotary blast hole drills bore large holes in mineral deposits or rocky
overburden so that explosive charges can be placed to loosen and fragmentate
materials, facilitating removal by electric mining shovels or walking
draglines.
Electric mining shovels are primarily used to load coal, copper, iron
ore, other mineral-bearing materials, overburden and rock into some form of
haulage system such as a truck or conveyor.
Walking draglines are used primarily to remove overburden above the coal
seams in surface coal operations, assist in land reclamation and mine
phosphate and bauxite.
The Company also manufactures and supplies replacement parts and provides
after sales service for all of its product lines. Minserco, Inc., a wholly-
owned subsidiary of the Company, services the mining industry with
comprehensive structural and mechanical engineering, non-destructive testing,
repairs and rebuilds of machine components, product and component upgrades,
contract maintenance, turnkey erections and machine moves. Boonville Mining
Services, Inc., another wholly-owned subsidiary of the Company, operates as a
separate enterprise that provides replacement parts and repair and rebuild
services for surface mining equipment.
In 1995, the Company established the ROX division to engineer,
manufacture, sell and service rigging products which attach to dragline
buckets and shovel dippers. These products include such items as dragline
teeth and adapters, shrouds, dump blocks and chains as well as dipper teeth
and adapters and heel bands.
To comply with the increasing after sales demands of larger mining
customers, maintenance and repair contracts are provided. Under these
contracts, the Company services the equipment with an on site support team
maintaining a high level of production reliability, thus allowing the customer
to concentrate on mining production.
In late 1994, the Company's continued commitment to quality was formally
recognized by receiving ISO 9001 Certification from the world's foremost
standards organization, Det Norske Veritas. This certification signifies that
the Company meets the most rigid standards for design, development, production
and erection of blast hole drills, electric mining shovels and walking
draglines.
Worldwide Demand
In recent years worldwide demand for blast hole drills and electric
mining shovels has increased in copper and iron ore surface mining
applications. The Company has increased its market share in the blast hole
drill market due to the reliability and productivity of the 49R series drills
and maintains its traditional market share for other products. The demand for
mining machines in worldwide coal mining operations continued at a low level
in 1995; however, the Company has been receiving inquiries for several walking
dragline tenders due in 1996.
New Products
The new 39R "prototype" rotary blast hole drill will be introduced in
mid-1996 and incorporates diesel/hydraulic technology and includes such
features as a combination of mast, pipe positioner and rigid mounted crawler
frames to produce a stable, mobile and productive drill capable of drilling at
30 to -5 angles. The 39R is expected to propel up a 25% grade with the mast
in any position and have the capability of leveling the drill on a 20% slope
for drilling. The machine is designed to drill from 9 inch to 12-1/4 inch
holes and joins the 49R and 59R model blast hole drills. The initial use of
this drill will be for field testing and modifications with a highly
experienced mining drill customer.
The first 395BIII electric mining shovel was commissioned in 1995 which
is designed to handle 25% to 30% larger loads than the 395BII model and
incorporates a new independent propel drive. The shovel is powered by the
Company's proven AC electric drive and control systems.
The Company also introduced the 495BI electric mining shovel in 1995
which features enhanced engineering designs to greatly improve reliability and
ease of maintenance.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Bucyrus-Erie Company and Subsidiaries
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
Predecessor Company
Year Ended December 14 - January 1 - Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
<S> <C> <C> <C> <C>
REVENUES:
Net shipments $231,921 $ 7,810 $186,174 $198,464
Other income 1,295 79 2,976 1,735
________ ________ ________ ________
233,216 7,889 189,150 200,199
________ ________ ________ ________
COSTS AND EXPENSES:
Cost of products sold 205,552 6,933 157,181 166,774
Product development, selling, administrative
and miscellaneous expenses 34,172 1,099 30,158 33,749
Interest expense (Predecessor Company contractual
interest not recognized in 1994 -
$20,250) 6,254 284 13,911 35,065
Restructuring expenses 2,577 - - -
Reorganization items 919 - 9,338 4,387
________ ________ ________ ________
249,474 8,316 210,588 239,975
________ ________ ________ ________
Loss before income taxes, extraordinary
gain and cumulative effects of changes
in accounting principles (16,258) (427) (21,438) (39,776)
Income taxes 2,514 125 1,395 916
________ ________ ________ ________
Loss before extraordinary gain and
cumulative effects of changes in
accounting principles (18,772) (552) (22,833) (40,692)
Extraordinary gain - - 142,480 -
Cumulative effects of changes in
accounting principles for:
Postretirement benefits $ - $ - $ - $ (11,744)
Income taxes - - - 446
________ _________ _________ _________
Net earnings (loss) (18,772) (552) 119,647 (51,990)
Redeemable preferred stock dividends - - (40) 50
Preferred stock accretion - - (106) (689)
Reorganization item - preferred stock - - (40,555) -
________ _________ _________ _________
Net earnings (loss) attributable
to common shareholders $(18,772) $ (552) $ 78,946 $ (52,629)
Net earnings (loss) per share of common
stock:
Loss before extraordinary gain and
cumulative effects of changes
in accounting principles $(1.84) $( .05) $(2.46) $(4.56)
Extraordinary gain - - 15.37 -
Cumulative effects of changes in
accounting principles for:
Postretirement benefits - - - (1.31)
Income taxes - - - .05
______ ______ ______ ______
Net earnings (loss) (1.84) (.05) 12.91 (5.82)
Preferred stock dividends, accretion and
reorganization item - - (4.39) (.07)
______ ______ ______ ______
Net earnings (loss) per share attributable
to common shareholders $(1.84) $( .05) $ 8.52 $(5.89)
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Bucyrus-Erie Company and Subsidiaries
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
December 31, December 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C> <C>
LIABILITIES AND COMMON
ASSETS SHAREHOLDERS' INVESTMENT
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents $ 11,150 $ 16,209 Accounts payable and
Receivables 35,603 26,220 accrued expenses $ 38,154 $ 32,703
Inventories 73,566 82,393 Liabilities to customers on
Prepaid expenses and uncompleted contracts and
other current assets 1,414 1,856 warranties 8,222 6,239
Income taxes 3,463 2,820
Short-term obligations 5,573 -
Current maturities of long-
term debt 1,658 7,123
________ ________ ________ ________
Total Current Assets 121,733 126,678 Total Current Liabilities 57,070 48,885
OTHER ASSETS: LONG-TERM LIABILITIES:
Restricted funds on Deferred income taxes 183 122
deposit 2,877 3,675 Liabilities to customers
Intangible assets 9,021 9,497 on uncompleted contracts
Other assets 2,517 2,414 and warranties 3,127 3,261
________ ________ Postretirement benefits 11,527 11,828
Deferred expenses
14,415 15,586 and other 7,187 7,071
________ ________
PROPERTY, PLANT AND EQUIPMENT:
Land 1,507 1,522 22,024 22,282
Buildings and improvements 5,630 5,262
Machinery and equipment 32,250 29,113 LONG-TERM DEBT, less
Less accumulated current maturities 58,021 53,170
depreciation (3,740) (207)
_______ ________
35,647 35,690
COMMON SHAREHOLDERS'
INVESTMENT:
Common stock - par value
$.01 per share,
authorized 20,000,000
shares, issued and
outstanding 10,234,574
shares in 1995 and
10,170,417 shares
in 1994 $ 102 $ 102
Additional paid-in
capital 54,259 53,898
Accumulated deficit (19,324) (552)
Cumulative translation
adjustment (357) 169
________ ________
34,680 53,617
________ ________ ________ ________
$171,795 $177,954 $171,795 $177,954
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' INVESTMENT (DEFICIENCY IN ASSETS)
Bucyrus-Erie Company and Subsidiaries
(Dollars in Thousands)
<CAPTION>
Additional Cumulative
Common Stock Paid-In Accumulated Translation
Class C Class D Common Stock Warrants Capital Deficit Adjustment
<S> <C> <C> <C> <C> <C> <C> <C>
Predecessor Company
Balance at
January 1, 1993 $ 64 $ - $ - $ 637 $ - $ (86,650) $(3,052)
Exercise of warrants
(2,903,832 shares) 29 - - (441) 441 - -
Expiration of
warrants - - - (195) 195 - -
Conversion of
Class C common
stock to Class D
common stock
(88,154 shares) (1) 1 - - - - -
Exercise of options
(6,025 shares) - - - - 1 - -
Net loss - - - - - (51,990) -
Preferred stock
accretion - - - - (423) (266) -
Preferred stock
dividends - - - - (214) (88) -
Translation
adjustments - - - - - - (1,157)
______ _______ ________ ______ _______ ___________ _______
Balance at
December 31, 1993 92 1 - 1 - (138,994) (4,209)
Exercise of warrants
(6,392 shares) $ - $ - $ - $ (1) $ 1 $ - $ -
Net earnings - - - - - 119,647 -
Preferred stock
accretion - - - - - (106) -
Preferred stock
dividends - - - - - (129) -
Reorganization item -
preferred stock - - - - - (40,555) -
Translation adjustments - - - - - - 991
Cancellation of former
equity and elimination
of accumulated deficit
and cumulative foreign
currency translation
adjustments (92) (1) - - (1) 60,137 3,218
Issuance of new
common stock
(10,170,417
shares) - - 102 - 53,898 - -
_______ _______ ________ ______ _______ ___________ ______
Balance at
December 13, 1994 $ - $ - $ 102 $ - $53,898 $ - $ -
</TABLE>
<TABLE>
<CAPTION>
Additional Cumulative
Common Paid-In Accumulated Translation
Stock Capital Deficit Adjustment
<S> <C> <C> <C> <C>
Balance at December 14, 1994 $ 102 $ 53,898 $ - $ -
Net loss - December 14
to December 31, 1994 - - (552) -
Translation adjustments -
December 14 to
December 31, 1994 - - - 169
________ ________ _________ _______
Balance at December 31, 1994 102 53,898 (552) 169
Issuance of common stock
(64,157 shares) - 361 - -
Net loss (18,772) -
Translation adjustments - - - (526)
________ ________ _________ ________
Balance at December 31, 1995 $ 102 $ 54,259 $ (19,324) $ (357)
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Bucyrus-Erie Company and Subsidiaries
(Dollars in Thousands)
<CAPTION>
Predecessor Company
Year Ended December 14 - January 1 - Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net earnings (loss) $(18,772) $ (552) $119,647 $(51,990)
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in)
operating activities:
Inventory obsolescence provision (see Note E) 4,416 - - -
Depreciation 3,671 145 7,356 7,615
Amortization 1,194 23 3,679 4,445
Deferred rent (interest) on sale and leaseback
financing arrangement - - 7,287 5,749
In kind interest on the Secured Notes
due December 14, 1999 5,691 258 - -
Amortization of debt discount - - 71 474
(Gain) loss on sale of property, plant
and equipment (166) 5 37 (42)
Non-cash reorganization items - - 1,680 -
Extraordinary gain - - (142,480) -
Cumulative effects of changes in
accounting principles - - - 11,298
Changes in assets and liabilities:
(Increase) decrease in receivables (9,651) 4,318 (4,616) 944
Decrease (increase) in inventories 3,769 (61) (7,539) 2,194
Decrease (increase) in other current assets 564 (73) 125 772
(Increase) decrease in other assets (254) 15 505 (622)
Increase (decrease) in current liabilities
other than income taxes, short-term
obligations and current
maturities of long-term debt 8,325 (5,163) 17,548 22,301
Increase (decrease) in income taxes 740 302 543 (1,566)
Decrease in long-term liabilities
other than income taxes (1,611) (154) (2,112) (7,391)
________ ________ ________ ________
Net cash (used in) provided by
operating activities (2,084) (937) 1,731 (5,819)
________ ________ ________ ________
Cash Flows From Investing Activities
Decrease in restricted funds
on deposit $ 798 $ - $ 2,863 $ 3,274
Purchases of property, plant and equipment (3,006) (190) (2,616) (2,990)
Proceeds from sale of property, plant
and equipment 263 - 125 284
________ ________ ________ ________
Net cash (used in) provided by
investing activities (1,945) (190) 372 568
________ ________ ________ ________
Cash Flows From Financing Activities
Proceeds from issuance of project
financing obligations 6,012 1,620 7,891 8,516
Reduction of project financing
obligations (7,117) - (6,933) (4,856)
Net increase (decrease) in other bank
borrowings 361 - (376) 376
Payments of current maturities of long-term debt (57) - (834) (1,138)
Proceeds from exercise of warrants - - - 29
Proceeds from exercise of stock options - - - 1
________ ________ ________ ________
Net cash (used in) provided by
financing activities (801) 1,620 (252) 2,928
________ ________ ________ ________
Effect of exchange rate changes on cash (229) (5) 174 -
________ ________ ________ ________
Net (decrease) increase in cash
and cash equivalents (5,059) 488 2,025 (2,323)
Cash and cash equivalents at beginning
of period 16,209 15,721 13,696 16,019
________ ________ ________ ________
Cash and cash equivalents at end of period $ 11,150 $ 16,209 $ 15,721 $ 13,696
Supplemental Disclosures of Cash Flow Information
Cash paid (received) during the period for:
Interest on long-term debt and
bank borrowings $ 289 $ 20 $ 345 $ 4,209
Income taxes (1) 1,270 12 (259) 380
<FN>
(1) These amounts are net of federal and state income tax refunds of $416 in 1995, $908 (including $907 for the
Predecessor Company) in 1994 and $1,071 in 1993.
</TABLE>
<TABLE>
Supplemental Schedule of Non-Cash Investing and Financing Activities
(A) On June 27, 1995, the Company issued 64,157 shares of common stock as payment in full of $361 of liabilities for
certain legal and professional fees incurred in connection with the Company's reorganization under chapter 11 of the
Bankruptcy Code.
(B) Prior to the Petition Date (see Note B), the Predecessor Company increased the carrying amount of the Series A
redeemable preferred stock by amounts representing the estimated fair value of the pre-petition dividends not
declared or paid, but were payable under mandatory redemption features. The Predecessor Company also recorded
preferred stock discount accretion on these securities prior to the Petition Date. As of the Petition Date, the
Predecessor Company increased the carrying amount of the Series A redeemable preferred stock to the amount of
the allowed claim in the Amended Plan. The amounts as reflected in the consolidated financial statements were
as follows:
<CAPTION>
Predecessor Company
January 1 - Year Ended
December 13, December 31,
1994 1993
<S> <C> <C>
Redeemable preferred stock dividends at net book value $ 129 $ 302
Redeemable preferred stock accretion 106 689
Write-up of redeemable preferred stock issued at a discount to
amount of allowed claim in the Amended Plan 40,555 -
________ ________
$ 40,790 $ 991
(C) Pursuant to the Amended Plan, the Company issued shares of Common Stock in exchange for the unsecured debt securities
of Holdings and the Company and the equity securities of Holdings.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bucyrus-Erie Company and Subsidiaries
NOTE A - SUMMARY OF ACCOUNTING POLICIES
Nature of Operations
Bucyrus-Erie Company (the "Company"), a Delaware corporation, is a
leading manufacturer of surface mining equipment, principally walking
draglines, electric mining shovels and blast hole drills, and related
replacement parts. Major markets for the surface mining industry are
coal mining, copper and iron ore mining and phosphate production.
Basis of Presentation
As discussed in Note B, the Company accounted for the reorganization
under chapter 11 of the Bankruptcy Code effective December 14, 1994
(the "Effective Date") using the principles of fresh start reporting
as required by AICPA Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-
7"). Accordingly, the consolidated financial statements of the
Company are not comparable to the consolidated financial statements
of periods prior to the Effective Date. The Predecessor Company
consolidated financial statements are those of B-E Holdings, Inc.
("Holdings"), the former parent of the Company, which include the
accounts and operating results of the Company.
The acquisition of the Company by Holdings on February 4, 1988 was
accounted for as a purchase and, accordingly, the assets and
liabilities were recorded at their estimated fair values as of the
acquisition date. The excess of the related purchase cost over the
fair value of identifiable net assets was allocated to goodwill. The
Predecessor Company consolidated financial statements included the
related depreciation and amortization charges associated with the
fair value adjustments since the date of the acquisition.
The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets
and liabilities and the reported amounts of revenues and expenses.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of all
subsidiaries. All significant intercompany transactions, profits and
accounts have been eliminated.
Cash Equivalents
All highly liquid investments with maturities of three months or less
when purchased are considered to be cash equivalents. The carrying
amount approximates fair value.
Restricted Funds on Deposit
Restricted funds on deposit represent cash and temporary investments
used to support the issuance of standby letters of credit and other
obligations. The carrying amount approximates fair value.
Inventories
Inventories are stated at lower of cost (first-in, first-out method)
or market (replacement cost or estimated net realizable value).
Advances from customers are netted against inventories to the extent
of related accumulated costs. Advances in excess of related costs
and earnings on uncompleted contracts are classified as a liability
to customers.
Intangibles
As of the Effective Date, intangible assets were recorded at
estimated fair value to the extent of available reorganization value
and accumulated amortization was eliminated in accordance with the
principles of fresh start reporting. Intangible assets consist of
engineering drawings and bill-of-material listings which are being
amortized on a straight-line basis over 20 years (30 years for the
Predecessor Company). At December 31, 1995 and 1994, accumulated
amortization for intangible assets was $499,000 and $23,000,
respectively.
Property, Plant and Equipment
As of the Effective Date, property, plant and equipment was recorded
at estimated fair value to the extent of available reorganization
value and accumulated depreciation was eliminated in accordance with
the principles of fresh start reporting. Additions made subsequent
to the Effective Date are recorded at cost. Depreciation is provided
over the estimated useful lives of respective assets using the
straight-line method for financial reporting and accelerated methods
for income tax purposes. Estimated useful lives used for financial
statement purposes range from ten to forty years for buildings and
improvements and three to twelve years for machinery and equipment.
Foreign Currency Translation
The assets and liabilities of foreign subsidiaries are generally
translated into U.S. dollars using year-end exchange rates. Revenues
and expenses are translated at average rates during the year.
Adjustments resulting from this translation, except for one foreign
subsidiary operating in a highly inflationary economy, are deferred
and reflected as a separate component of Common Shareholders'
Investment. For the one subsidiary operating in a highly
inflationary economy, adjustments resulting from the translation of
financial statements are reflected in the Consolidated Statements of
Operations.
Revenue Recognition
Revenue from long-term sales contracts is recognized using the
percentage-of-completion method. At the time a loss on a contract
becomes known, the amount of the estimated loss is recognized in the
consolidated financial statements. Included in the current portion
of liabilities to customers on uncompleted contracts and warranties
are advances in excess of related costs and earnings on uncompleted
contracts of $790,000 at December 31, 1995 and $1,326,000 at
December 31, 1994.
Accounting Principles to be Adopted
In 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" ("SFAS 121"). The Company will adopt SFAS 121 in 1996.
Management believes that SFAS 121 will not have a material effect on
the Company's financial position or results of operations.
In 1995, the FASB also issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). The Company will adopt SFAS 123 in 1996 which will require
additional disclosures in the notes to the consolidated financial
statements. The adoption of SFAS 123 will not have an effect on the
Company's financial position or results of operations.
Reclassifications
Certain warranty expenses previously included in product development
and selling expense are now included in cost of products sold, and
certain engineering expenses previously included in cost of products
sold are now included in product development expense. Other
reclassifications have also been made to the 1994 and 1993
consolidated financial statements to present them on a basis
consistent with the current year.
NOTE B - FINANCIAL REPORTING RELATING TO REORGANIZATION PROCEEDINGS
On February 18, 1994 (the "Petition Date"), Holdings and the Company,
which at such time was a wholly-owned subsidiary of Holdings,
commenced voluntary petitions under chapter 11 of the Bankruptcy Code
and filed a prepackaged joint plan of reorganization in the United
States Bankruptcy Court, Eastern District of Wisconsin (the
"Bankruptcy Court"). No other subsidiaries of Holdings or the
Company were included in the filing. On December 1, 1994, the
Bankruptcy Court entered an order confirming the Second Amended Joint
Plan of Reorganization of Holdings and the Company as modified on
December 1, 1994 (the "Amended Plan"). The Amended Plan became
effective on the Effective Date.
On the Effective Date, Holdings merged with and into the Company
pursuant to the Amended Plan and the Agreement and Plan of Merger
dated as of December 14, 1994 between Holdings and the Company (the
"Merger Agreement"). Pursuant to the Amended Plan and the Merger
Agreement, the Company issued 10,170,417 shares of its common stock,
par value $.01 per share (the "Common Stock"), which included
10,000,004 shares of Common Stock issued to holders of Holdings' and
the Company's unsecured debt securities and Holdings' equity
securities (including preferred stock) in exchange for such
securities. The Company also issued 170,413 shares of Common Stock
and paid $350,000 in cash to Bell Helicopter Textron, Inc. ("Bell
Helicopter") in settlement of Bell Helicopter's claims against the
Company and an inactive subsidiary of the Company asserted in a civil
action.
Also on the Effective Date pursuant to the Amended Plan, the Company
issued an aggregate principal amount of $52,072,000 of Secured Notes
due December 14, 1999 (the "Secured Notes") in exchange for the
outstanding Series A 10.65% Senior Secured Notes due July 1, 1995 of
the Company, the outstanding Series B 16.5% Senior Secured Notes due
January 1, 1996 of the Company, the obligations of the Company under
its sale and leaseback financing arrangement and accrued interest,
the sum of said items being $54,571,000.
As a result of these transactions pursuant to the Amended Plan, an
extraordinary gain on debt discharge of $142,480,000 was recognized,
which consists of the following:
(Dollars in Thousands)
Carrying value of unsecured debt securities
of Holdings and the Company $158,350
Accrued interest on unsecured debt
securities of Holdings and the Company 31,663
Concession on Series A and B Senior Secured
Notes and obligation under sale and leaseback
financing arrangement 2,499
Settlement of Bell Helicopter claim 3,000
Write-off of previously recorded capitalized
financing costs (309)
________
195,203
Estimated fair value of Common Stock
issued for unsecured debt securities
and Bell Helicopter claim 52,723
________
Total Extraordinary Gain $142,480
For financial statement purposes, there was no income tax expense
recognized.
Reorganization items included in the Consolidated Statements of
Operations consist of the following:
Predecessor Company
Year Ended December 14 to January 1 to Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
(Dollars in Thousands)
Legal and
professional
fees $ 919 $ - $ 8,023 $ 4,387
Net adjustment
of debt to
amount of
allowed claim
in the Amended
Plan - - 567 -
Interest income - - (365) -
Write-off of
previously
recorded
capitalized
financing
costs - - 1,113 -
________ ________ ________ ________
Total $ 919 $ - $ 9,338 $ 4,387
Write-up of
redeemable
preferred stock
issued at a
discount to
amount of
allowed claim
in the Amended
Plan $ - $ - $ 40,555 $ -
The Company accounted for the reorganization by using the principles
of fresh start reporting as required by SOP 90-7. Under the
principles of fresh start reporting, total assets were recorded at
their assumed reorganization value, with the reorganization value
allocated to identifiable tangible and intangible assets on the basis
of their estimated fair value, and liabilities were adjusted to the
present values of amounts to be paid where appropriate. The
consolidated financial statements for periods subsequent to the
Effective Date include the related amortization charges associated
with the fair value adjustments.
Interest income earned from the Petition Date through December 13,
1994 on accumulated cash balances of Holdings and the Company, and
expenses resulting from the reorganization of Holdings and the
Company, were recorded as earned and incurred, respectively, and
reported separately as reorganization items in the Consolidated
Statements of Operations. Interest expense subsequent to the
Petition Date on the unsecured debt securities of Holdings and the
Company, excluding debt of the foreign subsidiaries, was not accrued.
In addition, liabilities and the redeemable preferred stock subject
to compromise under the bankruptcy proceedings were reported at the
amount of the allowed claims in the Amended Plan.
NOTE C - RESTRUCTURING EXPENSES
Restructuring expenses of $2,577,000 for the year ended December 31,
1995 consist of employee severance expenses recorded to reflect the
cost of reduced employment and the severance costs related to the
resignation of three officers of the Company.
NOTE D - RECEIVABLES
Receivables at December 31, 1995 and 1994 include $6,994,000 and
$3,490,000, respectively, of earnings from long-term contracts which
were not billable at that date. Billings on long-term contracts are
made in accordance with the payment terms as defined in the
individual contracts.
Current receivables are reduced by an allowance for losses of
$667,000 at December 31, 1995 and $691,000 at December 31, 1994.
NOTE E - INVENTORIES
Inventories consist of the following:
1995 1994
(Dollars in Thousands)
Raw materials and parts $ 12,138 $ 13,529
Costs relating to
uncompleted contracts 5,861 6,525
Customers' advances offset
against costs incurred on
uncompleted contracts (2,440) (2,619)
Work in process 13,511 13,069
Finished products (primarily
replacement parts) 44,496 51,889
________ ________
$ 73,566 $ 82,393
Inventory was recorded at estimated fair value as of the Effective
Date in accordance with the principles of fresh start reporting. At
December 31, 1994, the remaining estimated fair value adjustment
included in inventory was $10,065,000. All of this adjustment was
charged to cost of products in 1995 as the inventory was sold.
During 1995, the Company completed an evaluation of its inventory and
recorded a charge of $4,416,000 to cost of products sold for the
scrapping and disposal of excess inventory which related to certain
older and discontinued machine models.
NOTE F - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
1995 1994
(Dollars in Thousands)
Trade accounts payable $ 16,703 $ 12,719
Wages and salaries 4,005 3,206
Reorganization items 1,602 3,379
Excess refund from
Internal Revenue Service 2,700 2,700
Other 13,144 10,699
________ ________
$ 38,154 $ 32,703
NOTE G - LONG-TERM DEBT AND FINANCING ARRANGEMENTS
Long-term debt consists of the following:
1995 1994
(Dollars in Thousands)
Secured Notes due
December 14, 1999
(including accrued
payment in kind
interest of $21
and $258, respectively) $ 58,021 $ 52,330
Bridge Loan Accounts of
Bucyrus Europe at
floating interest rate
(8.625% at December 31,
1995 and 8.375% at
December 31, 1994),
due November, 1996 1,600 783
Facility Loan Account of
Bucyrus Europe Holdings
Limited at floating
interest rate (8.8125%
at December 31, 1994) - 829
Project financing
obligations, interest
rate of 6.75% - 6,237
Other 58 114
________ ________
59,679 60,293
Less current maturities of
long-term debt (1,658) (7,123)
________ ________
Long-term debt $ 58,021 $ 53,170
Interest on the Secured Notes accrued at a rate of 10.5% per annum
until December 14, 1995. Thereafter, interest accrues at a rate of
10.5% per annum, if paid in cash, or 13.0% per annum, if paid in
kind. The Credit Agreement (as defined below) requires accrued
interest on the Secured Notes to be paid in kind prior to January 1,
1996, and thereafter restricts the cash payment of principal and
interest on the Secured Notes unless certain ratios and conditions
are met. Otherwise, interest on the Secured Notes is payable in kind
at the discretion of the Company during the term of the Secured
Notes. The Secured Notes are secured by a security interest on
substantially all of the Company's property (other than real estate),
the shares of the Company's U.S. subsidiaries and 65% of the shares
of certain non-U.S. subsidiaries (collectively, the "Pledged
Shares"). The Secured Notes are subordinated to the security
interest in favor of Bank One, Milwaukee, National Association ("Bank
One") up to $16,000,000 in indebtedness and other amounts owing under
the Credit Agreement (as defined below).
Pursuant to the Amended Plan, the Company entered into a Credit
Agreement dated as of December 14, 1994 (the "Credit Agreement"),
with Bank One. The Credit Agreement, as amended, contains a credit
facility for working capital and general corporate purposes (the
"Loan Facility"), a letter of credit facility (the "L/C Facility")
and a project financing loan facility (the "Project Financing
Facility"). Under the Loan Facility, the Company may borrow up to
$2,500,000, provided that it meets certain earnings before interest,
taxes, depreciation and amortization tests, as defined. Borrowings
under the Loan Facility mature on December 31, 1996 and interest is
payable at the Company's option either at a rate equal to Bank One's
reference rate plus 0.75% per annum or an adjusted LIBOR rate plus
2.75% per annum. Under the L/C Facility, Bank One has agreed to
issue letters of credit through April 30, 1997 in an aggregate amount
not in excess of $15,000,000 minus the then outstanding aggregate
borrowings by the Company under the Loan Facility, provided that no
letter of credit may expire after April 30, 1998. The Company,
subject to Board of Director approval, and Bank One have agreed to
extend the Loan Facility to April 30, 1998 and the L/C Facility to
April 30, 1998, provided that no letter of credit may expire after
April 30, 1999. Under the Project Financing Facility, Bank One may
make project financing loans to the Company from time to time.
Borrowings under the Project Financing Facility bear interest at the
Company's option either at a rate equal to Bank One's reference rate
or an adjusted LIBOR rate plus a variable margin. Borrowings under
the Credit Agreement are secured by a security interest on
substantially all of the Company's property (other than real estate),
including the Pledged Shares. At December 31, 1995, the Company had
borrowings outstanding under the Loan Facility of $269,000. At
December 31, 1995 and 1994, $3,419,000 and $6,373,000, respectively,
of the L/C Facility was being used. There were no borrowings under
the Project Financing Facility at December 31, 1995.
The Credit Agreement prohibits the Company from making any dividends
or other distributions upon the Common Stock, other than dividends
payable solely in Common Stock or other equity securities of the
Company. The Indenture relating to the Secured Notes prohibits the
Company from declaring or paying any dividend or making any
distribution in respect of the Common Stock (other than dividends or
distributions payable solely in shares of Common Stock or in options,
warrants or other rights to acquire Common Stock), if at the time
thereof an Event of Default (as defined in such Indenture) or an
event that with the lapse of time or the giving of notice, or both,
would constitute an Event of Default (as defined in such Indenture)
shall have occurred and be continuing.
The agreements relating to the Secured Notes and the Credit Agreement
permit additional project financing to manufacture mining machinery
or other products pursuant to binding purchase contracts. Project
financing borrowings are secured by the inventory being financed and
any accounts receivable relating to such inventory. Project
financing borrowings mature not later than the date of the final
payment by the customer under the applicable purchase contract. At
December 31, 1995 and 1994, the Company had $5,132,000 and
$6,237,000, respectively, of outstanding project financing borrowings
not related to the Project Financing Facility. The outstanding
project financing borrowings at December 31, 1995 bear interest at
7.75% and are included in Short-Term Obligations in the Consolidated
Balance Sheet.
Maturities of long-term debt are the following for each of the next
five years:
1996 $ 1,658,000
1997 -
1998 -
1999 58,021,000
2000 -
As required under various agreements, Equipment Assurance Limited, an
off-shore insurance subsidiary of the Company, has pledged $2,856,000
of its cash to secure its reimbursement obligations for outstanding
letters of credit at December 31, 1995. Bucyrus Chile Ltda. has
pledged $21,000 of its cash for a bank guarantee at December 31,
1995. These collateral amounts are classified as Restricted Funds on
Deposit in the Consolidated Balance Sheet.
The estimated fair value of long-term debt at December 31, 1995 and
1994 approximates recorded amounts. The fair value amounts have been
determined through information obtained from market sources and
management estimates.
NOTE H - COMMON STOCK AND PREFERRED STOCK
Pursuant to the Amended Plan, all holders of Common Stock are deemed
as of the Effective Date to have irrevocably agreed without any
further action:
(i) to cause the shares of Common Stock received pursuant to the
Amended Plan and all other shares of Common Stock beneficially
owned by any such holder following the Effective Date to be
voted for the election of each of the Original Directors as
directors of the Company at the 1996 Annual Meeting for a one-
year term ending on the date of the 1997 Annual Meeting and
until their successors have been duly elected and qualified;
and
(ii) that any sale, transfer or other disposition, whether voluntary
or involuntary, by operation of law or otherwise of any shares
of Common Stock at any time prior to the 1996 Annual Meeting (a
"Transfer"; and any person to whom any shares of Common Stock
are Transferred is referred to as a "Transferee") shall be made
subject to the irrevocable agreement to vote such shares of
Common Stock for the election of each of the Original Directors
at the 1996 Annual Meeting.
The irrevocable voting agreement described in (i) above is binding
upon all Transferees.
In 1995, the Company's Board of Directors adopted, subject to
approval by the shareholders of the Company, the Bucyrus-Erie Company
Non-Employee Directors' Stock Option Plan (the "1995 Stock Option
Plan"). The 1995 Stock Option Plan provides for the issuance of non-
qualified stock options to non-employee members of the Board of
Directors for up to 60,000 shares of Common Stock at an exercise
price based on the defined "last sale price" of the shares as of the
date of grant. Options granted vest and are exercisable immediately
on the date of grant and terminate on the earlier of ten years after
the date of grant, six months after the option holder ceases to be a
director by reason of death or three months after the option holder
ceases to be a director for any reason other than death. In 1995,
options were granted to purchase 8,000 shares at an exercise price of
$6 per share. No options were exercised in 1995 and all of the
options issued were exercisable at December 31, 1995. Subsequent to
December 31, 1995, additional options were granted to purchase 12,000
shares at an exercise price of $9.00-$9.25 per share.
Holdings' stockholders previously adopted the B-E Holdings, Inc. 1988
Stock Option Plan, an employee stock option plan for the issuance of
either qualified incentive stock options or nonqualified stock
options, or any combination thereof, for up to 2,500,000 shares of
Holdings' Class C Common Stock at an exercise price based on the
defined "fair market value" of the shares. Pursuant to the Amended
Plan, all outstanding stock options granted by Holdings under the B-E
Holdings, Inc. 1988 Stock Option Plan that were not exercised on or
prior to the Effective Date were cancelled.
The following summary shows activity and outstanding balances from
time to time of options exercisable for shares of stock of Holdings:
Options
Reserved Outstanding Available
Balances, January 1, 1993
($0.125 - $2.125) 2,500,000 2,496,800 3,200
Exercised ($0.125) (6,025) (6,025)
Lapsed ($0.125 - $2.125) (55,800) 55,800
__________ __________ __________
Balances, December 31, 1993
($0.125 - $2.125) 2,493,975 2,434,975 59,000
Cancellation pursuant to
Amended Plan (2,493,975) (2,434,975) (59,000)
__________ __________ __________
Balances, December 13, 1994 - - -
Dividends on Holdings' Series A 12-1/2% Cumulative Exchangeable
Preferred Stock ("Series A Preferred Stock") were payable in
additional shares of preferred stock, provided, however, that
Holdings could elect to pay dividends in such additional shares for
not more than an aggregate of 12 semi-annual payments. Such payments
were made beginning on September 15, 1988 and semi-annually
thereafter through September 15, 1992. Subsequent to that date,
Holdings did not declare or pay any dividends which resulted in an
event of default under the Restated Certificate of Incorporation of
Holdings. Holdings did, however, increase the carrying amount of the
Series A Preferred Stock by amounts representing the estimated fair
value of the dividends that were not declared or paid through the
Petition Date, but which were payable under mandatory redemption
features.
All Series A Preferred Stock was recorded at fair value. The
difference between the initial fair value of this stock and the
aggregate redemption value was accreted by a charge to retained
earnings (accumulated deficit) and a corresponding credit to the
carrying value of the Series A Preferred Stock during the period the
stock was outstanding.
As of the Petition Date, the carrying amount of the Series A
Preferred Stock was increased to the amount of the allowed claim in
the Amended Plan resulting in a $40,555,000 reduction of net earnings
attributable to common shareholders.
NOTE I - INCOME TAXES
Holdings adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"), effective January 1,
1993. The cumulative effect of adopting SFAS 109 on Holdings'
financial statements was a tax benefit of $446,000 ($.05 per share)
which has been included in the Consolidated Statement of Operations
for the year ended December 31, 1993.
SFAS 109 requires deferred income taxes be provided to reflect
temporary differences between the financial and tax basis of assets
and liabilities using presently enacted tax rates and laws. In
addition, a valuation allowance is to be recognized if it is more
likely than not that some or all of the deferred tax assets will not
be realized.
Loss before income taxes, extraordinary gain and cumulative effects
of changes in accounting principles consists of the following:
Predecessor Company
Year Ended December 14- January 1- Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
(Dollars in Thousands)
United States $ (22,749) $ (199) $ (23,972) $ (41,624)
Foreign 6,491 (228) 2,534 1,848
_________ _________ _________ _________
Total $ (16,258) $ (427) $ (21,438) $ (39,776)
The provision for income taxes consists of the following:
Predecessor Company
Year Ended December 14- January 1- Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
(Dollars in Thousands)
Foreign income taxes:
Current $ 4,080 $ 90 $ 956 $ 777
Deferred (1,717) - 259 (8)
_________ _________ _________ _________
Total 2,363 90 1,215 769
Other (state and
local taxes):
Current 163 35 180 147
Deferred (12) - - -
_________ _________ _________ _________
Total 151 35 180 147
_________ _________ _________ _________
Total income tax
expense $ 2,514 $ 125 $ 1,395 $ 916
Total income tax expense differs from amounts expected by applying
the Federal statutory income tax rate to loss before income taxes,
extraordinary gain and cumulative effects of changes in accounting
principles as set forth in the following table:
<PAGE>
<TABLE>
<CAPTION>
Predecessor Company
Year Ended December 14 - January 1 - Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
Tax Tax Tax Tax
Expense Expense Expense Expense
(Benefit) Percent (Benefit) Percent (Benefit) Percent (Benefit) Percent
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax benefit at
Federal statutory
rate $ (5,690) (35.0)% $ (150) (35.0)% $ (7,503) (35.0)% $(13,922) (35.0)%
Loss for which no
U.S. tax benefit
was recorded 7,189 44.2 92 21.5 5,310 24.8 12,600 31.7
Impact of foreign
subsidiary income,
tax rates and tax
credits 419 2.6 179 41.9 187 .9 142 .4
Nondeductible
reorganization
expenses 322 2.0 - - 3,268 15.2 1,535 3.8
Bell Helicopter
settlement - - - - (439) (2.0) - -
Other items 274 1.7 4 .9 572 2.6 561 1.4
________ ______ ________ ______ ________ ______ ________ ____
Total income
tax expense $ 2,514 15.5% $ 125 29.3% $ 1,395 6.5% $ 916 2.3%
</TABLE>
<PAGE>
Significant components of deferred tax assets and deferred tax
liabilities are as follows:
December 31,
1995 1994
(Dollars in Thousands)
Deferred tax assets:
Postretirement benefits $ 4,905 $ 4,881
Inventory valuation
provisions 4,687 1,811
Accrued and other
liabilities 9,003 7,300
Research and development
expenditures 6,239 -
Tax loss carryforward 27,788 20,849
Tax credit carryforward 479 479
Other items 450 616
__________ __________
Total deferred tax assets 53,551 35,936
Deferred tax liabilities -
Excess of book basis over
tax basis of property,
plant and equipment and
intangible assets (9,966) (10,003)
Valuation allowance (41,249) (25,326)
__________ __________
Net deferred tax asset
recognized in the
Consolidated
Balance Sheets $ 2,336 $ 607
Due to the recent history of net operating losses, a valuation
allowance has been used to reduce the net deferred tax assets (after
giving effect to deferred tax liabilities) for domestic operations to
an amount that is more likely than not to be realized. For the year
ended December 31, 1995, the valuation allowance was increased by
$15,923,000 to offset an increase in net deferred tax assets for
which no tax benefit was recognized.
At December 31, 1995, the Company has available approximately
$69,469,000 of federal net operating loss carryforward ("NOL"),
expiring in years 2003 through 2010, to offset against future taxable
income. Because the consummation of the Amended Plan on the
Effective Date resulted in an "ownership change" within the meaning
of Section 382 of the Internal Revenue Code, the NOL available to the
Company was limited to $53,460,000, the annual use of which is
limited to $3,564,000 plus any unused limitation amount from prior
years. The total NOL available for 1996 is $23,137,000, which
includes all unused NOL limitation amounts as of December 31, 1995,
plus the 1996 NOL limitation amount.
Additionally, the Company has available for federal income tax
purposes approximately $479,000 of alternative minimum tax credit
carryforward which carries forward indefinitely. However, because
the credit arose prior to the Effective Date, it will be subject to
the annual limitations discussed above and will not be usable until
the year 2010.
The Company also has a significant amount of state NOL's (which
expire in the years 1997 through 2010) available to offset future
state taxable income in states where it has significant operations.
Since the majority of states in which the Company files its state
returns follow rules similar to federal rules, it is expected that
the usage of state NOL's will be limited to approximately
$61,400,000.
Cumulative undistributed earnings of foreign subsidiaries that are
considered to be permanently reinvested, and on which U.S. income
taxes have not been provided by the Company, amounted to
approximately $16,000,000 at December 31, 1995. It is not
practicable to estimate the amount of additional tax which would be
payable upon repatriation of such earnings; however, due to foreign
tax credit limitations, higher effective U.S. income tax rates and
foreign withholding taxes, additional taxes could be incurred.
NOTE J - PENSION AND RETIREMENT PLANS
The Company has several pension and retirement plans covering
substantially all employees. The plan covering domestic salaried and
certain non-union hourly employees provides pension benefits that are
based on final average pay formulas. The funding policy for that
plan is to contribute amounts at least equal to the minimum annual
amount required by applicable regulations. Plans covering hourly and
certain union members generally provide benefits of stated amounts
for each year of service. Contributions to these plans are funded
based on normal cost plus amortization of unfunded past service cost
over 30 to 40 years. In addition, the Company has certain unfunded
supplemental retirement plans for which benefits are payable out of
the general funds of the Company.
The following tables set forth the domestic plans' funded status and
amounts recognized in the consolidated financial statements at
December 31, 1995 and 1994:
Status of All Plans
1995 1994
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
(Dollars in Thousands)
Actuarial present
value of benefit
obligations:
Accumulated
benefit
obligation:
Vested $ (47,057) $ (186) $ (45,622) $ (455)
Non-vested (5,052) - (3,163) -
_________ _________ _________ _________
Total accumulated
benefit
obligation $ (52,109) $ (186) $ (48,785) $ (455)
Projected benefit
obligation
for services
rendered to
date $ (58,458) $ (769) $ (53,802) $ (973)
Plan assets at
fair value,
primarily listed
stocks and
corporate and U.S.
government bonds 59,589 - 52,581 -
_________ _________ _________ _________
Projected benefit
obligation less than
(in excess of)
plan assets 1,131 (769) (1,221) (973)
Unrecognized net
(gain) loss (2,635) 84 - -
_________ _________ _________ _________
Pension liability
recognized in
the Consolidated
Balance Sheets $ (1,504) $ (685) $ (1,221) $ (973)
The weighted average discount rate, rate of increase in future
compensation levels, and expected long-term rate of return on assets
used to develop the projected benefit obligation at December 31, 1995
were 7.75%, 5% and 9%, respectively. The corresponding rates used at
December 31, 1994 were 8.5%, 5% and 9%, respectively. The decrease
in the discount rate resulted in a $4,027,000 increase in the
projected benefit obligation.
The foreign subsidiaries do not have a material pension liability at
December 31, 1995 and 1994.
Net domestic periodic pension cost includes the following components:
Predecessor Company
Year Ended December 14- January 1- Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
(Dollars in Thousands)
Service cost $ 1,308 $ 79 $ 1,591 $ 1,313
Interest cost 4,259 186 3,714 4,203
Actual return on
plan assets (10,483) (27) (533) (4,723)
Net amortization
and deferral 6,219 (194) (4,231) (250)
________ ________ _________ _________
Net periodic
pension cost $ 1,303 $ 44 $ 541 $ 543
The Company has 401(k) Savings Plans available to substantially all
U.S. employees. Matching employer contributions are made in
accordance with plan provisions subject to certain limitations.
Matching employer contributions made were $611,000 in 1995, $655,000
(including $622,000 for the Predecessor Company) in 1994 and $679,000
in 1993.
NOTE K - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides certain health care benefits to age 65 and life
insurance benefits for certain eligible retired United States
employees. Substantially all current employees may become eligible
for those benefits if they reach early retirement age while working
for the Company. The majority of the costs of such benefits are
funded as they are incurred.
Effective January 1, 1993, Holdings adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS 106"). SFAS 106
requires the accrual of the estimated cost of postretirement benefits
(such as health care benefits) during the years an employee provides
services. The cumulative effect as of January 1, 1993 of adopting
SFAS 106 was to increase accrued postretirement health care costs by
$11,744,000, which represented the unrecorded accumulated
postretirement benefit obligation existing at January 1, 1993, and to
increase the net loss by $11,744,000 ($1.31 per share). For
financial statement purposes, there was no income tax benefit
recognized.
The following table sets forth the plan's status and amounts
recognized in the consolidated financial statements at December 31,
1995 and 1994:
1995 1994
(Dollars in Thousands)
Accumulated postretirement
benefit obligation:
Retirees $ (7,511) $ (7,336)
Fully eligible active
plan participants (792) (778)
Other active plan
participants (5,506) (5,123)
___________ ___________
(13,809) (13,237)
Unrecognized net loss 873 -
___________ ___________
Accrued postretirement
benefit cost recognized
in the Consolidated
Balance Sheets $ (12,936) $ (13,237)
Net periodic postretirement benefit cost includes the following
components:
Predecessor Company
Year Ended December 14- January 1- Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
(Dollars in Thousands)
Service cost $ 266 $ 15 $ 303 $ 335
Interest cost 1,064 51 1,003 1,294
________ ________ ________ ________
Net periodic post-
retirement benefit
cost $ 1,330 $ 66 $ 1,306 $ 1,629
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation at December 31, 1995
and 1994 was 7.75% and 8.5%, respectively. The decrease in the
discount rate resulted in a $720,000 increase in the accumulated
postretirement benefit obligation. The assumed health care cost
trend rate used in measuring the accumulated postretirement benefit
obligation was 12% at December 31, 1994, declining 1% each year
thereafter (11% at December 31, 1995), to 5% in the year 2002 and
beyond. A 1% increase in the assumed health care cost trend rate for
each year would increase the accumulated postretirement benefit
obligation at December 31, 1995 by $875,000 and would increase the
net periodic postretirement benefit cost for 1995 by $96,000.
NOTE L - RESEARCH AND DEVELOPMENT
Expenditures for design and development of new products and
improvements of existing mining machinery products, including
overhead, aggregated $5,739,000 in 1995, $4,181,000 (including
$3,945,000 for the Predecessor Company) in 1994 and $6,160,000 in
1993. All engineering and product development costs are charged to
product development expense as incurred.
NOTE M - CALCULATION OF NET EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Net earnings (loss) per share of common stock is based on the
weighted average number of common shares outstanding. The weighted
average number of common shares outstanding for the year ended
December 31, 1995, the period December 14, 1994 to December 31, 1994,
the period January 1, 1994 to December 13, 1994 and year ended
December 31, 1993, were 10,203,462, 10,170,417, 9,268,627 and
8,933,393, respectively. Common stock equivalents in 1995 were not
significant. Stock options outstanding in 1994 and 1993 were not
included in the per share calculations because they were anti-
dilutive.
Net earnings (loss) attributable to common shareholders for the
Predecessor Company includes redeemable preferred stock dividends
declared and paid as well as dividends earned but not declared.
NOTE N - FOREIGN OPERATIONS, EXPORT SALES AND SIGNIFICANT CUSTOMERS
The Company has subsidiaries located throughout the world. A summary
of the assets and liabilities of the foreign subsidiaries included in
the Consolidated Balance Sheets is as follows:
December 31,
1995 1994
(Dollars in Thousands)
ASSETS
Current assets $ 51,636 $ 45,760
Long-term assets 9,099 8,934
________ ________
Total $ 60,735 $ 54,694
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current liabilities $ 16,347 $ 12,845
Non-current liabilities 1,503 2,376
Shareholders' investment 42,885 39,473
________ ________
Total $ 60,735 $ 54,694
Included in the Consolidated Statements of Operations are net
shipments and net earnings (before eliminations) of the foreign
subsidiaries of $99,601,000 and $6,984,000, respectively, for 1995,
$71,219,000 and $4,134,000, respectively, for 1994 and $64,608,000
and $2,137,000, respectively, for 1993.
The Company designs, manufactures and sells products in a single
industry segment, Energy and Industrial Products. Operations are
conducted in the United States and through subsidiaries located
throughout the world.
Financial information by geographical area is summarized in the
following table. Each geographic area represents the origin of the
financial information presented. Transfers between geographic areas
represent intercompany export sales of U.S. produced goods and are
accounted for based on established sales prices between the related
companies. In computing operating earnings for non-U.S.
subsidiaries, no allocations of interest or income taxes have been
made. Eliminations for operating earnings (loss) include elimination
of general corporate expenses. Identifiable assets of subsidiaries
are those related to the operations of those subsidiaries. United
States assets consist of all other operating assets.
Western
Hemisphere Eastern
United (Other than Hemis- Elimi- Consoli-
State U.S.) phere nations dated
(Dollars in Thousands)
Year ended
December 31, 1995:
Shipments to
unaffiliated
customers $132,320 $ 43,036 $ 56,565 $ - $231,921
Transfers between
geographic areas 29,847 - 289 (30,136) -
________ ________ ________ ________ ________
Total revenues $162,167 $ 43,036 $ 56,854 $(30,136) $231,921
Operating earnings
(loss) $(17,861) $ 3,680 $ 6,177 $ (2,000) $(10,004)
Identifiable
assets $114,057 $ 32,797 $ 27,938 $ (2,997) $171,795
Combined periods
ended December 13,
1994 and
December 31, 1994:
Shipments to
unaffiliated
customers $122,765 $ 30,400 $ 40,819 $ - $193,984
Transfers between
geographic areas 23,019 7 257 (23,283) -
________ ________ ________ ________ ________
Total revenues $145,784 $ 30,407 $ 41,076 $(23,283) $193,984
Operating earnings
(loss) $(11,909) $ 2,747 $ 3,331 $ (1,839) $ (7,670)
Identifiable
assets $126,010 $ 29,254 $ 25,439 $ (2,749) $177,954
Year ended
December 31, 1993:
Shipments to
unaffiliated
customers $133,856 $ 23,964 $ 40,644 $ - $198,464
Transfers between
geographic areas 13,689 - 168 (13,857) -
________ ________ ________ ________ ________
Total revenues $147,545 $ 23,964 $ 40,812 $(13,857) $198,464
Operating earnings
(loss) $ (6,514) $ 1,206 $ 2,469 $ (1,872) $ (4,711)
Identifiable
assets $137,367 $ 23,789 $ 25,722 $ (1,978) $184,900
Export shipments from United States operations amounted to
$99,323,000 in 1995, $83,646,000 (including $79,565,000 for the
Predecessor Company) in 1994, and $88,489,000 in 1993. Included in
these amounts are shipments to affiliates of $29,847,000, $23,019,000
(including $21,667,000 for the Predecessor Company) and $13,689,000,
respectively. Export shipments by geographic area for 1995, 1994 and
1993 consisted of the following: Eastern Hemisphere - $26,609,000
(including $7,195,000 to affiliates), $28,346,000 (including
$5,538,000 to affiliates) and $44,732,000 (including $3,328,000 to
affiliates), respectively; Western Hemisphere - $72,714,000
(including $22,652,000 to affiliates), $55,300,000 (including
$17,481,000 to affiliates) and $43,757,000 (including $10,361,000 to
affiliates), respectively.
In 1995 and 1994, one customer, BHP Minerals International Inc.,
received approximately 22% and 20%, respectively, of the Company's
consolidated net shipments. In 1993, no customer received shipments
of greater than 10% of the Company's consolidated net shipments. The
Company is not dependent upon any one customer.
NOTE O - COMMITMENTS, CONTINGENCIES AND CREDIT RISKS
On March 7, 1995, Jackson National Life Insurance Company ("JNL"),
currently the holder of approximately 41.31% of the Company's Common
Stock, amended a complaint to name as defendants certain of the
Company's current and/or former officers and directors (the
"Management Defendants") and others. On June 8, 1995, JNL executed
releases in favor of the Management Defendants.
In addition, JNL has filed a claim (the "JNL 503(b) Claim") against
the Company for reimbursement of approximately $3,300,000 for
professional fees and disbursements incurred in connection with the
Company's chapter 11 proceedings pursuant to Section 503(b) of the
Bankruptcy Code. Pursuant to a settlement agreement dated May 23,
1995, JNL agreed that, in the event that the JNL 503(b) Claim is
allowed in whole or in part by the Bankruptcy Court, in lieu of
requiring payment of any award in cash, JNL will accept payment in
Common Stock at a price equal to $5.6375 per share (the average
closing price of such stock on the NASDAQ Stock Market on June 20,
21, 22, 23 and 26, 1995). The Company has filed an objection to the
JNL 503(b) Claim and a trial was scheduled by the Bankruptcy Court
and began on November 29, 1995. Closing arguments are scheduled to
be held on April 18, 1996. The Company has been advised by legal
counsel that in said counsel's opinion the JNL 503(b) Claim is
without merit; however, the ultimate outcome of this matter cannot
presently be determined. Accordingly, no provision for any loss that
may result upon resolution of this matter has been made in the
consolidated financial statements.
The Company's wholly-owned subsidiary, Boonville Mining Services,
Inc. ("BMSI"), is a defendant in an amended complaint filed in the
Marion County Common Pleas Court, Marion County, Ohio on September
24, 1992 by Dresser Industries, Inc. and Global Industrial
Technologies, Inc. (the "Plaintiffs"), alleging that BMSI's purchase
of drawings and other assets of C&M of Indiana, a division of
Construction and Mining Services, Inc., and BMSI's use of these and
other drawings allegedly acquired subsequently, constitute a
misappropriation of the Plaintiffs' trade secrets relating to Marion
Power Shovel Company, a division of Global Industrial Technologies,
Inc. The Plaintiffs seek $40,000,000 in compensatory damages,
$80,000,000 in punitive damages, an injunction against future use of
the Plaintiffs' trade secrets, and costs and reasonable attorneys
fees. The Company has been advised by counsel to BMSI that in said
counsel's opinion the claims against BMSI can be said to be greatly
exaggerated. No claim has been asserted directly against the
Company. BMSI has denied all of the claims asserted in the
Plaintiffs' amended complaint and intends to vigorously defend
against those claims. The Company has been informed by counsel to
BMSI that in said counsel's opinion BMSI will be able to assert
meritorious defenses to this action; however, the outcome of this
matter cannot currently be determined. The Company believes that it
will have no material liability with respect to resolution of this
situation, although no assurance to that effect can be given.
The Company is involved in various other litigation arising in the
normal course of business. It is the view of management that the
Company's recovery or liability, if any, under pending litigation is
not expected to have a material effect on the Company's financial
position or results of operations, although no assurance to that
effect can be given.
Expenditures for ongoing compliance with environmental regulations
that relate to current operations are expensed or capitalized as
appropriate. Expenditures that relate to an existing condition
caused by past operations and which do not contribute to current or
future revenue generation are expensed. Liabilities are recorded
when environmental assessments indicate that remedial efforts are
probable and the costs can be reasonably estimated. Estimates of the
liability are based upon currently available facts, existing
technology and presently enacted laws and regulations. These
liabilities are included in the Consolidated Balance Sheets at their
undiscounted amounts. Recoveries are evaluated separately from the
liability and, if appropriate, are recorded separately from the
associated liability in the Consolidated Balance Sheets.
The Company is normally subject to numerous product liability claims,
many of which relate to products no longer manufactured by the
Company or its subsidiaries, and other claims arising in the ordinary
course of business. The Company has insurance covering most of said
claims, subject to varying deductibles ranging from $300,000 to
$3,000,000, and has various limits of liability depending on the
insurance policy year in question. It is the view of management that
the final resolution of said claims and other similar claims which
are likely to arise in the future will not individually or in the
aggregate have a material effect on the Company's financial position
or results of operations, although no assurance to that effect can be
given.
The Company has obligations under various operating leases and rental
and service agreements. The expense relating to these agreements was
$5,351,000 in 1995, $4,720,000 in 1994 (including $4,525,000 for the
Predecessor Company) and $4,614,000 in 1993. Total commitments
relating to all future periods under noncancellable agreements at
December 31, 1995 was approximately $11,915,000 which includes
minimum annual payments for the respective years ending December 31,
as follows:
1996 $ 4,373,000
1997 3,619,000
1998 1,637,000
1999 916,000
2000 605,000
After 2000 765,000
$ 11,915,000
At December 31, 1995, the Company is also committed to acquire
$1,120,000 of equipment. The Company expects to lease the equipment.
A significant portion of the Company's consolidated net shipments are
to customers whose activities are related to the coal, copper and
iron ore mining industries, including some who are located in foreign
countries. The Company generally extends credit to these customers
and, therefore, collection of receivables may be affected by the
mining industry economy and the economic conditions in the countries
where the customers are located. However, the Company closely
monitors extension of credit and has not experienced significant
credit losses. Also, most foreign sales are made to large, well-
established companies. The Company generally requires collateral or
guarantees on foreign sales to smaller companies.
NOTE P - QUARTERLY RESULTS - UNAUDITED
Quarterly results are as follows:
Quarters Ended at End of
March June September December
(Dollars in Thousands,
Except Per Share Amounts)
Net shipments:
1995 $ 56,873 $ 55,709 $ 61,408 $ 57,931
1994 - - - 7,810
1994 - Predecessor 43,355 50,608 50,648 41,563
Gross profit:
1995 $ 7,179 $ 7,927 $ 2,782 $ 8,481
1994 - - - 877
1994 - Predecessor 6,681 8,047 8,979 5,286
Loss before extraordinary
gain:
1995 $ (2,059) $ (2,985) $(12,051) $ (1,677)
1994 - - - (552)
1994 - Predecessor (9,996) (3,098) (3,158) (6,581)
Net earnings (loss)
attributable to
common shareholders:
1995 $ (2,059) $ (2,985) $(12,051) $ (1,677)
1994 - - - (552)
1994 - Predecessor (50,697) (3,098) (3,158) 135,899
Per share loss before
extraordinary gain:
1995 $ (.20) $ (.29) $ (1.18) $ (.16)
1994 - - - (.05)
1994 - Predecessor (1.08) (.33) (.34) (.71)
Weighted average shares
used in calculation
(in thousands):
1995 10,170 10,173 10,235 10,235
1994 - - - 10,170
1994 - Predecessor 9,265 9,270 9,270 9,270
<PAGE>
ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO. SC
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Bucyrus-Erie Company:
We have audited the accompanying balance sheet of Bucyrus-Erie Company
(Delaware Corporation) as of December 31, 1995 and the related statements of
operations, common shareholders' investment and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bucyrus-Erie Company as of
December 31, 1995, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 29, 1996.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Bucyrus-Erie Company:
We have audited the accompanying consolidated balance sheet of Bucyrus-Erie
Company and subsidiaries (the "Company") as of December 31, 1994, and the
related consolidated statements of operations, common shareholders' investment
(deficiency in assets) and cash flows for the period from December 14, 1994 to
December 31, 1994 and the period from January 1, 1994 to December 13, 1994 and
the year ended December 31, 1993 (Predecessor Company operations). These
financial statements are the responsibility of Company management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As discussed in Note B to the consolidated financial statements, on
December 1, 1994, the Bankruptcy Court entered an order confirming an Amended
Joint Plan of Reorganization which became effective on December 14, 1994.
Accordingly, the accompanying consolidated financial statements have been
prepared in conformity with AICPA Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code," for the
Company as a new entity with assets, liabilities, and a capital structure
having carrying values not comparable with prior periods as discussed in
Note B to the consolidated financial statements. Under the Amended Joint Plan
of Reorganization, the Company's parent, B-E Holdings, Inc., was merged with
and into the Company as of the effective date. The consolidated financial
statements for the periods prior to December 14, 1994 include the operating
results of the merged entities (Predecessor Company).
In our opinion, the Company's consolidated financial statements present
fairly, in all material respects, the financial position of Bucyrus-Erie
Company and subsidiaries as of December 31, 1994, and the results of their
operations and their cash flows for the period December 14, 1994 to
December 31, 1994 in conformity with generally accepted accounting principles.
Further, in our opinion, the Predecessor Company consolidated financial
statements referred to above present fairly, in all material respects, the
results of their operations and their cash flows for the period January 1,
1994 to December 13, 1994 and the year ended December 31, 1993 in conformity
with generally accepted accounting principles.
As discussed in Notes I and K to the consolidated financial statements,
effective January 1, 1993, the Company changed its methods of accounting for
income taxes and postretirement benefits to conform with Statements of
Financial Accounting Standards No. 109 and 106, respectively.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
April 10, 1995
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Bucyrus-Erie Company and Subsidiaries
The reorganization of the Company under chapter 11 of the Bankruptcy Code
was effective December 14, 1994 (the "Effective Date"). The reorganization
was accounted for using the principles of fresh start reporting as required by
AICPA Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code". Under the principles of fresh
start reporting, total assets were recorded at their assumed reorganization
value, with the reorganization value allocated to identifiable tangible and
intangible assets on the basis of their estimated fair value, and liabilities
were adjusted to the present values of amounts to be paid where appropriate.
The consolidated financial statements for periods subsequent to the Effective
Date include the related amortization charges associated with the fair value
adjustments.
As a result of the implementation of fresh start reporting, the
consolidated financial statements of the Company are not comparable to the
consolidated financial statements of periods prior to the Effective Date. The
consolidated financial statements presented for prior periods are not the
Company's, but instead are those of B-E Holdings, Inc. (the "Predecessor
Company"), the former parent of the Company which was merged with and into the
Company on the Effective Date.
The acquisition of the Company by the Predecessor Company on February 4,
1988 was accounted for as a purchase and, accordingly, the assets and
liabilities were recorded at their estimated fair values as of the acquisition
date. The excess of the related purchase cost over the fair value of
identifiable net assets was allocated to goodwill. The Predecessor Company's
consolidated financial statements included the related depreciation and
amortization charges associated with the fair value adjustments since the date
of the acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Working capital and current ratio are two financial measurements which
provide an indication of the Company's ability to meet its short-term
obligations. These measurements at December 31, 1995, 1994 and 1993 were as
follows:
1993
(Predecessor
1995 1994 Company)
(Dollars in Thousands)
Working capital (deficiency) $64,663 $77,793 $(164,003)
Current ratio 2.1 to 1 2.6 to 1 .4 to 1
The decrease in working capital and the current ratio for the year ended
December 31, 1995 was primarily due to the inventory fair value adjustment of
$10,065,000 being charged to cost of products sold as the inventory was sold
and an inventory obsolescence provision of $4,416,000. See RESULTS OF
OPERATIONS - Cost of Products Sold. The increase in working capital and the
current ratio for the year ended December 31, 1994 was primarily due to the
forgiveness of debt, principal and interest, upon consummation of the Second
Amended Joint Plan of Reorganization of the Predecessor Company and the
Company as modified on December 1, 1994 (the "Amended Plan").
The table below summarizes the Company's cash position at December 31,
1995:
Restricted Unrestricted
Location Cash Cash Total
(Dollars in Thousands)
United States $ - $ 5,827 $ 5,827
Foreign Subsidiaries 21 4,690 4,711
Equipment Assurance Limited 2,856 633 3,489
_______ _______ _______
$ 2,877 $11,150 $14,027
Approximately $1,602,000 of cash is required for payment of expenses that
were incurred in connection with the reorganization (primarily legal and
professional fees) and approximately $2,700,000 is required to be refunded to
the Internal Revenue Service for an excess refund received in 1993. The
reorganization expenses are expected to be paid in 1996 and the Company has
reached a tentative agreement with the Internal Revenue Service which would
allow for semi-annual payments over five years at 8% interest commencing
September 15, 1996. A portion of the unrestricted cash at the foreign
subsidiaries is not readily repatriatable because it is required for working
capital purposes at these respective locations. In January, 1996, $1,800,000
of restricted cash at Equipment Assurance Limited became unrestricted and
available for general corporate purposes.
The following table reconciles Loss Before Income Taxes, Extraordinary
Gain and Cumulative Effects of Changes in Accounting Principles to earnings
before extraordinary gain, cumulative effects of changes in accounting
principles, interest, income taxes, depreciation, amortization, restructuring
expenses, reorganization items and inventory fair value adjustment charged to
cost of products sold ("Adjusted EBITDA"):
Predecessor Company
Year Ended December 14 - January 1 - Year Ended
December 31, December 31, December 13, December 31,
1995 1994 1994 1993
(Dollars in Thousands)
Loss before
income taxes,
extraordinary
gain and
cumulative
effects of
changes in
accounting
principles $ (16,258) $ (427) $ (21,438) $ (39,776)
Restructuring
expenses 2,577 - - -
Reorganization
items 919 - 9,338 4,387
Inventory fair
value adjustment
charged to cost
of products
sold 10,065 362 - -
Non cash expenses:
Depreciation 3,671 145 7,356 7,615
Amortization 1,194 23 3,679 4,445
Deferred rent
(interest) on sale
and leaseback
financing
arrangement
(Predecessor
Company) and
payment in kind
interest on the
Secured Notes 5,691 258 7,287 5,749
Amortization of
debt discount - - 71 474
________ ________ ________ ________
Cash available
for use before
non-cash interest
expense, income
taxes and
cumulative
effects of
changes in
accounting
principles 7,859 361 6,293 (17,106)
Cash interest
expense (1) 563 26 6,553 28,842
________ ________ ________ ________
Adjusted
EBITDA (2) $ 8,422 $ 387 $ 12,846 $ 11,736
(1) Cash interest expense for the Predecessor Company includes all
accrued but unpaid interest prior to February 18, 1994 (the "Petition Date"),
the date the Predecessor Company commenced voluntary petitions under Chapter
11 of the Bankruptcy Code. Contractual interest of $20,250,000 on the
unsecured debt of the Predecessor Company did not accrue subsequent to the
Petition Date. Excludes amortization of debt discount, deferred rent
(interest) on the sale and leaseback financing arrangement and interest on the
Secured Notes due December 14, 1999 ("Secured Notes") that will be paid in
kind.
(2) Adjusted EBITDA for the year ended December 31, 1995 is reduced by a
$4,416,000 charge to cost of products sold for the scrapping and disposal of
excess inventory which existed for certain older and discontinued machine
models.
Interest on the Secured Notes accrued at a rate of 10.5% per annum until
December 14, 1995. Thereafter, interest accrues at a rate of 10.5% per annum,
if paid in cash, or 13.0% per annum, if paid in kind. The Credit Agreement
(as defined below) requires accrued interest on the Secured Notes, which
aggregated $21,000 and $258,000 at December 31, 1995 and 1994, respectively,
to be paid in kind prior to January 1, 1996, and thereafter restricts the cash
payment of principal and interest on the Secured Notes unless certain ratios
and conditions are met. Otherwise, interest on the Secured Notes is payable
in kind at the discretion of the Company during the term of the Secured Notes.
The Secured Notes are secured by a security interest on substantially all of
the Company's property (other than real estate), the shares of the Company's
U.S. subsidiaries and 65% of the shares of certain non-U.S. subsidiaries
(collectively, the "Pledged Shares"). The Secured Notes are subordinated to
the security interest in favor of Bank One, Milwaukee, National Association
("Bank One") up to $16,000,000 in indebtedness and other amounts owing under
the Credit Agreement (as defined below).
Pursuant to the Amended Plan, the Company entered into a Credit Agreement
dated as of December 14, 1994 (the "Credit Agreement") with Bank One. The
Credit Agreement, as amended, contains a credit facility for working capital
and general corporate purposes (the "Loan Facility"), a letter of credit
facility (the "L/C Facility") and a project financing loan facility (the
"Project Financing Facility"). Under the Loan Facility, the Company may
borrow up to $2,500,000, provided that it meets certain earnings before
interest, taxes, depreciation and amortization tests, as defined. Borrowings
under the Loan Facility mature on December 31, 1996 and interest is payable at
the Company's option either at a rate equal to Bank One's reference rate plus
0.75% per annum or an adjusted LIBOR rate plus 2.75% per annum. Under the L/C
Facility, Bank One has agreed to issue letters of credit through April 30,
1997 in an aggregate amount not in excess of $15,000,000 minus the then
outstanding aggregate borrowings by the Company under the Loan Facility,
provided that no letter of credit may expire after April 30, 1998. The
Company, subject to Board of Director approval, and Bank One have agreed to
extend the Loan Facility to April 30, 1998 and the L/C Facility to April 30,
1998, provided that no letter of credit may expire after April 30, 1999.
Under the Project Financing Facility, Bank One may make project financing
loans to the Company from time to time. Borrowings under the Project
Financing Facility bear interest at the Company's option either at a rate
equal to Bank One's reference rate or an adjusted LIBOR rate plus a variable
margin. Borrowings under the Credit Agreement are secured by a security
interest on substantially all of the Company's property (other than real
estate), including the Pledged Shares. At December 31, 1995, the Company had
borrowings outstanding under the Loan Facility of $269,000. At December 31,
1995 and 1994, $3,419,000 and $6,373,000, respectively, of the L/C Facility
was being used. There were no borrowings under the Project Financing Facility
at December 31, 1995.
The agreements relating to the Secured Notes and the Credit Agreement
permit additional project financing to manufacture mining machinery or other
products pursuant to binding purchase contracts. Project financing borrowings
are secured by the inventory being financed and any accounts receivable
relating to such inventory. Project financing borrowings mature not later
than the date of the final payment by the customer under the applicable
purchase contract. At December 31, 1995 and 1994, the Company had $5,132,000
and $6,237,000, respectively, of outstanding project financing borrowings not
related to the Project Financing Facility. The outstanding project financing
borrowings at December 31, 1995 bear interest at 7.75% and are included in
Short-Term Obligations in the Consolidated Balance Sheet.
The Company believes that current levels of cash and liquidity, together
with funds generated by operations, funds available from its Credit Agreement
and other project financing arrangements will be sufficient to permit the
Company to satisfy its debt service requirements and fund operating activities
for the foreseeable future. The Company is subject to significant business,
economic and competitive uncertainties that are beyond its control.
Accordingly, there can be no assurance that the Company's financial resources
will be sufficient for the Company to satisfy its debt service obligations and
fund operating activities under all circumstances.
The Company had outstanding letters of credit and guarantees of
$6,740,000 at December 31, 1995. Of this amount, $3,419,000 is related to the
Credit Agreement with the remainder provided by various banks and insurance
companies.
At December 31, 1995, the Company had approximately $1,677,000 of open
approved capital appropriations at the current funding level. The Company
does not anticipate any substantial increase in the level of annual capital
expenditures in 1996. If additional capital becomes available, the Company
would increase its capital spending by $3,000,000 to $4,000,000 over
historical levels.
CAPITALIZATION
The long-term debt to equity ratio at December 31, 1995 and 1994 was 1.7
to 1 and 1.0 to 1, respectively. The increase in the ratio in 1995 was due to
the 1995 net loss and an increase in long-term debt as a result of interest
paid in kind.
RESULTS OF OPERATIONS
Net Shipments and Net Earnings (Loss)
Net shipments for 1995 were $231,921,000 compared with $193,984,000 for
1994. Shipments of repair parts and services for 1995 were $155,434,000,
which is an increase of 7.5% from 1994. The increase in repair parts and
service shipments was primarily due to increased repair parts shipments at
foreign locations as a result of higher demand for replacement parts. Machine
shipments for 1995 were $76,487,000, which is an increase of 54.7% from 1994.
The increase was due to increased blast hole drill and electric mining shovel
shipments, primarily in copper, coal and iron ore markets. The pricing for
machines and repair parts has continued to remain steady with the changes
primarily related to volume.
Net shipments for 1994 were $193,984,000 compared with $198,464,000 for
1993. Shipments of repair parts and services for 1994 were $144,550,000,
which is an increase of 1.6% from 1993. Machine shipments for 1994 were
$49,434,000, which is a decrease of 12.0% from 1993. The decrease in machine
shipments was primarily due to reduced electric mining shovel shipments. The
pricing for machines and repair parts was stable during these periods.
Net loss for 1995 was $18,772,000 compared with net earnings of
$119,095,000 for 1994. Included in the 1995 net loss is an inventory
obsolescence provision of $4,416,000, restructuring expenses of $2,577,000 and
$10,065,000 charged to cost of products sold reflecting the effects of fresh
start reporting for inventories. Non-cash depreciation and amortization
charges included in the 1995 and 1994 net earnings (loss) were $4,865,000 and
$11,203,000, respectively.
Net earnings for 1994 were $119,095,000 compared with a net loss of
$51,990,000 for 1993. The increase in earnings for 1994 was primarily due to
reduced interest expense of $20,870,000, an extraordinary gain on debt
discharge of $142,480,000 and a net charge in 1993 of $11,298,000 for the
cumulative effects of changes in accounting principles as a result of adoption
of Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" and Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"),
partially offset by an increase in reorganization items of $4,951,000 in 1994.
Also included in net earnings (loss) were non-cash depreciation and
amortization charges of $11,203,000 and $12,060,000 for 1994 and 1993,
respectively.
The Company's consolidated backlog on December 31, 1995 was $118,024,000
compared with $72,346,000 on December 31, 1994 and $74,023,000 on December 31,
1993. Machine backlog increased 156.5% from December 31, 1994. Repair parts
and service backlog increased 11.8% from December 31, 1994, primarily at
foreign locations.
New orders for 1995 increased 44.4% from 1994. New machine orders for
1995 increased 136.9% from 1994. The increase was both in electric mining
shovel and blast hole drill volume and represents strong machine sales
activity. New repair parts and service orders for 1995 increased 12.5% from
1994, primarily at foreign locations. Blast hole drill and electric mining
shovel inquiries remain at a relatively high level. The Company believes that
new machine sales activity will continue to improve in the near term as a
result of the high inquiry levels. These inquiries are primarily from South
America and China as a result of the continued strength of mineral prices.
New walking dragline activity is also expected in the near term in coal
applications in Australia. The North American market for electric mining
shovels and blast hole drills remains steady in iron ore, copper and the low
sulphur coal fields in the Western United States.
Other Income
Other income for 1995, 1994 and 1993 was $1,295,000, $3,055,000 and
$1,735,000, respectively. Included in the amount for 1994 was a favorable
insurance settlement of $1,350,000.
Cost of Products Sold
Cost of products sold for 1995 was $205,552,000 or 88.6% of shipments
compared with $164,114,000 or 84.6% of shipments for 1994 and $166,774,000 or
84.0% of shipments for 1993. Included in cost of products sold for 1995 and
1994 was $10,065,000 and $362,000, respectively, as a result of the fair value
adjustment to inventory. This adjustment was made in accordance with the
principles of fresh start reporting and was charged to cost of products sold
as the inventory was sold.
Also, the Company completed an evaluation of its inventory in 1995 and
determined that excess levels existed for certain older and discontinued
machine models. Accordingly, a charge of $4,416,000 was made to cost of
products sold in 1995 for the scrapping and disposal of this excess inventory.
Product Development, Selling, Administrative and Miscellaneous Expenses
Product development, selling, administrative and miscellaneous expenses
for 1995 were $34,172,000 or 14.7% of shipments compared with $31,257,000 or
16.1% of shipments in 1994 and $33,749,000 or 17.0% of shipments in 1993. The
decrease in 1995 as a percentage of net shipments was primarily due to
increased net shipments.
Interest Expense
Interest expense for 1995 was $6,254,000 compared with $14,195,000 for
1994. The decrease was primarily due to the exchange of unsecured debt
securities of Holdings and the Company for shares of the Company's common
stock in connection with the Company's reorganization pursuant to the Amended
Plan.
Interest expense for 1994 was $14,195,000 compared with $35,065,000 for
1993. The decrease was primarily due to not accruing interest subsequent to
the Petition Date on Holdings' and the Company's unsecured debt securities
which included the Company's 10% Senior Notes, the Company's Resettable Senior
Notes, the Company's 9% Sinking Fund Debentures and Holdings' Series A 12-1/2%
Senior Debentures.
Restructuring Expenses
Restructuring expenses of $2,577,000 in 1995 consist of employee
severance expenses recorded to reflect the cost of reduced employment and the
severance costs related to the resignation of three officers of the Company.
Reorganization Items
Reorganization items represent the expenses incurred as a result of the
Company's efforts to reorganize under chapter 11 of the Bankruptcy Code. In
1995 and 1993, reorganization items consist entirely of legal and professional
fees. Reorganization items in 1994 consist of $8,023,000 of legal and
professional fees, $41,122,000 to adjust debt and redeemable preferred stock
to the amount of the allowed claims in the Amended Plan and a $1,113,000
write-off of capitalized financing costs. These expenses were partially
offset by $365,000 of interest income earned from the Petition Date through
December 13, 1994 on accumulated cash balances of Holdings and the Company.
Income Taxes
Income tax expense consists primarily of foreign taxes at applicable
statutory rates. The cumulative effect of adopting SFAS 109 on the
Predecessor Company's financial statements was a tax benefit of $446,000 ($.05
per share) which has been included in the Consolidated Statement of Operations
for the year ended December 31, 1993.
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
Bucyrus-Erie Company and Subsidiaries
(Dollars In Thousands, Except Per Share Amounts)
<CAPTION>
Predecessor Company (b)
Year Ended December 14 - January 1 -
December 31, December 31, December 13, Years Ended December 31,
1995 1994 1994 1993 1992 1991
<S> <C> <C> <C>
Consolidated Statements
of Operations Data:
Net shipments $231,921 $ 7,810 $186,174 $198,464 $242,468 $249,053
Loss before
extraordinary gain
and cumulative
effects of changes
in accounting
principles $(18,772) $ (552) $(22,833) $(40,692) $(16,747) $(15,735)
Net earnings (loss) $(18,772) $ (552) $119,647 $(51,990) $(16,747) $(15,735)
Net earnings (loss)
attributable
to common
shareholders $(18,772) $ (552) $ 78,946 $(52,629) $(19,138) $(19,473)
Loss per share
before extra-
ordinary gain
and cumulative
effects of changes
in accounting
principles $ (1.84) $ (.05) $ (2.46) $ (4.56) $ (2.64) $ (2.47)
Net earnings (loss)
per share $ (1.84) $ (.05) $ 12.91 $ (5.82) $ (2.64) $ (2.47)
Net earnings (loss)
per share
attributable
to common
shareholders $ (1.84) $ (.05) $ 8.52 $ (5.89) $ (3.01) $ (3.06)
Adjusted EBITDA (c) $ 8,422 $ 387 $ 12,846 $ 11,736 $ 25,201 $ 23,644
Cash dividends per
common share $ - $ - $ - $ - $ - $ -
Consolidated Balance
Sheets Data:
Total assets $171,795 $177,954 N/A $184,900 $204,090 $205,436
Long-term debt $ 58,021 $ 53,170 N/A $ 769(a) $ 165(a) $158,219
Redeemable
preferred stock N/A N/A N/A $ 30,302 $ 29,310 $ 26,342
<FN>
(a) Amounts are net of $201,979 at December 31, 1993 and $197,334 at December 31, 1992, of long-term debt
classified as a current liability.
b) As a result of the reorganization and implementation of fresh start reporting as of the Effective Date,
the financial statements of the Company subsequent to the Effective Date are not comparable to the
financial statements of the Predecessor Company.
(c) Earnings before extraordinary gain, cumulative effects of changes in accounting principles, interest,
income taxes, depreciation, amortization, restructuring expenses, reorganization items and inventory
fair value adjustment charged to cost of products sold.
</TABLE>
<PAGE>
STOCK INFORMATION
Stock Ownership Price Range of Common Stock
Effective April 26, 1995, the Closing sales prices of the Company's
Company's Common Stock has been Common Stock based on information
traded on the NASDAQ Stock provided to the Company by the
Market. From December 22, 1994 OTC Bulletin Board for the period
to April 25, 1995, the Company's December 22, 1994 to April 25, 1995
Common Stock was traded on the and by the NASDAQ Stock Market for
OTC Bulletin Board under the periods thereafter were as follows:
trading symbol BCYR. Prior to
this, there was no established Stock Prices
public trading market for
the Company's Common Stock. At High Low Closing
year-end, 10,234,574 shares of 1995 Quarter
common stock were owned by 2,029
registered shareholders of First $ 9 $ 4 $ 5
record compared with 2,220 a Second 6-7/8 4-15/16 5-3/4
year earlier. In addition, Third 10-3/4 5-1/16 8-7/8
there were beneficial owners Fourth 9-1/4 7-1/8 8-1/8
of shares held of record
brokers and fiduciaries. 1994* 7-3/4 6 7
The Company's Common Stock
is owned by residents of *December 22 - December 31, 1994
many states and some foreign
countries. No dividends were paid in 1995 or
from the period December 22, 1994
Transfer Agent and Registrar to December 31, 1994. The Company
is presently unable to pay dividends.
American Stock Transfer and For information regarding restrictions
Trust Company on the Company's ability to pay
40 Wall Street dividends, see Note G to the NOTES
Brooklyn, New York 11219 TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
OFFICERS AND DIRECTORS AND CORPORATE INFORMATION
Officers and Directors
OFFICERS
Willard R. Hildebrand, President and
Chief Executive Officer
James D. Annand, Interim Vice President,
Treasurer and Chief Financial Officer
Elroy F. Schweitzer, Vice President - Engineering
Timothy W. Sullivan, Vice President - Marketing
Thomas B. Phillips, Vice President - Materials
Craig R. Mackus, Controller and Assistant Secretary
BOARD OF DIRECTORS
F. John Stark, III, Chairman of the Board,
Senior Vice President and General Counsel and
portfolio manager of the Special Investments
Portfolio for PPM America, Inc. (asset
management company)
C. Scott Bartlett, Jr., Consultant on banking
matters
Willard R. Hildebrand, President and Chief
Executive Officer
Charles S. Macaluso, Principal with Miller
Associates, Inc.
Frank W. Miller, President of Miller
Associates, Inc. (private management
and consulting firm)
George A. Poole, Jr., Private investor
Joseph J. Radecki, Jr., Executive Vice
President of Jefferies & Company, Inc.
(investment banking and advisory firm)
Russell W. Swansen, President of PPM America,
Inc. (asset management company)
Samuel M. Victor, Executive Vice President and
a Principal of Chanin and Company (investment
banking and financial advisory firm)
AUDIT COMMITTEE
George A. Poole, Jr.
Joseph J. Radecki, Jr.
F. John Stark, III
BENEFIT PLAN COMMITTEE
Russell W. Swansen
Craig R. Mackus
Gary G. Noel
COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
C. Scott Bartlett, Jr.
Russell W. Swansen
FINANCE AND INVESTMENT COMMITTEE
Joseph J. Radecki, Jr.
Samuel M. Victor
OPERATING COMMITTEE
C. Scott Bartlett, Jr.
Willard R. Hildebrand
Frank W. Miller
F. John Stark, III
<PAGE>
Corporate Information
AUDITORS
Arthur Andersen LLP
Milwaukee, Wisconsin
CORPORATE OFFICES
South Milwaukee, Wisconsin
PRINCIPAL SUBSIDIARIES
Bucyrus (Africa) (Proprietary) Limited
Boksburg, Republic of South Africa
Bucyrus (Australia) Proprietary Ltd.
Brisbane, Queensland, Australia
Bucyrus Europe Limited
Lincoln, England
Bucyrus (Brasil) Ltda.
Vespasiano, Brazil
Bucyrus Chile Limitada
Santiago, Chile
Bucyrus-Erie Company of Canada, Limited
Toronto, Canada
Bucyrus India Private Limited
New Delhi, India
Bucyrus (Mauritius) Limited
Port Louis, Republic of Mauritius
Boonville Mining Services, Inc.
Boonville, Indiana
Minserco, Inc.
South Milwaukee, Wisconsin
Equipment Assurance Limited
Grand Cayman, British West Indies
ANNUAL MEETING
The annual meeting of shareholders of
Bucyrus-Erie Company will be held on
May 23, 1996 at a time and place as set
forth in the Company's 1996 Proxy
Statement.
CHANGE OF ADDRESS
Report old and new address to:
American Stock Transfer and
Trust Company
40 Wall Street
Brooklyn, New York 11219
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 11,150
<SECURITIES> 0
<RECEIVABLES> 36,270
<ALLOWANCES> (667)
<INVENTORY> 73,566
<CURRENT-ASSETS> 121,733
<PP&E> 39,387
<DEPRECIATION> (3,740)
<TOTAL-ASSETS> 171,795
<CURRENT-LIABILITIES> 57,070
<BONDS> 58,021
<COMMON> 102
0
0
<OTHER-SE> 34,578
<TOTAL-LIABILITY-AND-EQUITY> 171,795
<SALES> 231,921
<TOTAL-REVENUES> 233,216
<CGS> 205,552
<TOTAL-COSTS> 205,552
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (4)
<INTEREST-EXPENSE> 6,254
<INCOME-PRETAX> (16,258)
<INCOME-TAX> 2,514
<INCOME-CONTINUING> (18,772)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,772)
<EPS-PRIMARY> (1.84)
<EPS-DILUTED> (1.84)
</TABLE>
EXHIBIT 99.2(a)
1995 FORM 10-K
MILLER ASSOCIATES
791 Andover Street
Lowell, MA 01852-2001
December 21, 1995
Mr. C. Scott Bartlett, Jr.
64 Melrose Place
Montclair, New Jersey 07042
Mr. F. John Stark, III
Senior Vice President and Counsel
PPM America
Suite 1200
225 West Wacker Drive
Chicago, Illinois 60606
Gentlemen:
Reference is made to the Management Agreement dated July 21, 1995 (the
"Management Agreement") between Bucyrus-Erie Company (the "Company") and
Miller Associates ("Associates"). Associates proposes the following
modifications to the Management Agreement:
1. The fee payable pursuant to Section 4 of the Management Agreement
for the month of December 1995 and thereafter shall be paid at the rate of
$55,000 per month (prorated for a portion of a month), until such time as the
commencement of employment of a new Chief Executive Officer. If such new
Chief Executive Officer thereafter determines to continue the services of the
personnel provided by Associates as a team, the payments to Associates will
thereafter continue at the rate of $45,000 per month for the following sixty
(60) day period and $35,000 per month thereafter until the termination of the
Agreement.
2. Notwithstanding the termination of the Agreement, Charles S.
Macaluso and Frank W. Miller agree that if within the thirty (30) day period
following the date of termination, the new Chief Executive Officer desires the
services of either or both of them, each of them agrees to use their best
efforts to provide such services on an "as needed" basis at the rate of $1,500
per day for each of them, plus reimbursement of customary and reasonable out-
of-pocket expenses.
3. Notwithstanding the termination of the Management Agreement, James
D. Annand agrees to remain as Interim Chief Financial Officer of the Company
for a period of thirty (30) days subsequent to the Termination Date for a
monthly payment by the Company to Mr. Annand of $15,000. The continuation of
Mr. Annand beyond such initial thirty (30) day period shall be upon such terms
and conditions as Mr. Annand and the new Chief Executive Officer of the
Company shall mutually agree.
<PAGE>
Mr. C. Scott Bartlett, Jr.
Mr. F. John Stark, III
December 21, 1995
Page 2
Except as modified above, the Management Agreement shall continue in
full force and effect until the Termination Date.
Please acknowledge your agreement to the foregoing by signing and
returning the enclosed duplicate copy of this letter.
Sincerely,
MILLER ASSOCIATES
By /s/Frank W. Miller
Frank W. Miller
/s/Frank W. Miller
Frank W. Miller
/s/Charles S. Macalus
Charles S. Macaluso
/s/James D. Annand
James D. Annand
The foregoing is agreed and accepted to
as of the date first above written:
/s/C. Scott Bartlett, Jr.
C. Scott Bartlett, Jr.
/s/F. John Stark, III
F. John Stark, III
