SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Bucyrus-Erie Company
(Name of Registrant as Specified in its Charter)
______________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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P R E L I M I N A R Y C O P Y
BUCYRUS-ERIE COMPANY
P.O. Box 500
1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
Notice of Annual Meeting of Shareholders
To Be Held May 23, 1996
To the Shareholders of Bucyrus-Erie Company:
You are hereby notified that the annual meeting of shareholders of
Bucyrus-Erie Company will be held at Bucyrus-Erie Company, 1100 Milwaukee
Avenue, South Milwaukee, Wisconsin 53172, on Wednesday, May 23, 1996, at
10:00 a.m., Central Time, for the following purposes:
1. To elect nine directors to serve for the ensuing year.
2. To act upon a proposal to approve the Bucyrus-Erie Company 1996
Employees' Stock Incentive Plan.
3. To act upon a proposal to approve the Bucyrus-Erie Company Non-
Employee Directors' Stock Option Plan.
4. To amend the Company's Restated Certificate of Incorporation to change
the Company's name to Bucyrus International, Inc.
5. To ratify the appointment of Arthur Andersen LLP to serve as
independent auditors of the Company.
6. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 12, 1996,
as the record date for the determination of the shareholders entitled to
notice of and to vote at the annual meeting.
We hope that you will be able to attend the meeting in person, but if you
are unable to do so, please complete, sign and promptly mail back the enclosed
proxy form, using the return envelope provided. If, for any reason, you
should subsequently change your plans, you can revoke the proxy at any time
before it is actually voted.
By Order of the Board of Directors
BUCYRUS-ERIE COMPANY
Craig R. Mackus
Assistant Secretary
South Milwaukee, Wisconsin
April __, 1996
<PAGE>
BUCYRUS-ERIE COMPANY
P.O. Box 500
1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To be Held May 23, 1996
This proxy statement is being furnished to shareholders by the Board of
Directors (the "Board") of Bucyrus-Erie Company (the "Company"), a Delaware
corporation, beginning on or about April __, 1996, in connection with a
solicitation of proxies by the Board for use at the annual meeting of
shareholders to be held on May 23, 1996, at 10:00 a.m., Central Time, at
Bucyrus-Erie Company, 1100 Milwaukee Avenue, South Milwaukee, Wisconsin 53172,
and all adjournments or postponements thereof (the "Annual Meeting"), for the
purposes set forth in the attached Notice of Annual Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will not
affect a shareholder's right to attend the Annual Meeting and to vote in
person. Presence at the Annual Meeting of a shareholder who has signed a
proxy does not in itself revoke a proxy. Any shareholder giving a proxy may
revoke it at any time before it is voted by giving notice thereof to the
Company in writing or in open meeting, by attending the Annual Meeting and
voting in person, or by delivering a proxy bearing a later date.
A proxy, in the enclosed form, which is properly executed, duly returned
to the Company and not revoked will be voted in accordance with the
instructions contained therein. The shares represented by executed but
unmarked proxies will be voted FOR approval of the election to the Board of
Directors of Charles S. Macaluso and Frank W. Miller, FOR approval of the
Bucyrus-Erie Company 1996 Employees' Stock Incentive Plan (the "1996 Plan"),
FOR approval of the Bucyrus-Erie Company Non-Employee Directors' Stock Option
Plan (the "Non-Employee Directors' Stock Option Plan"), FOR the proposal to
amend the Company's Restated Certificate of Incorporation to change the name
of the Company to Bucyrus International, Inc. (the "Name Change Amendment"),
FOR ratification of the appointment of Arthur Andersen LLP as the Company's
independent auditors for fiscal 1996, and on such other business or matters
which may properly come before the Annual Meeting in accordance with the best
judgment of the persons named as proxies in the enclosed form of proxy. Other
than the election of directors and the proposals to approve the 1996 Plan, the
Non-Employee Directors' Stock Option Plan, the Name Change Amendment and the
proposal to ratify Arthur Andersen LLP as independent auditors, the Board has
no knowledge of any matters to be presented for action by the shareholders at
the Annual Meeting.
Only holders of record of the Company's common stock, $.01 par value (the
"Common Stock"), at the close of business on April 12, 1996, are entitled to
notice of and to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 10,234,574 shares of Common Stock, each of
which is entitled to one vote per share.
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, nine (9) directors will be elected to hold office
until the 1997 annual meeting of shareholders (the "1997 Annual Meeting") and
until their successors are duly elected and qualified.
As indicated below, seven (7) directors are deemed to be elected at the
Annual Meeting. The only nominees for which proxies are being solicited are
Charles S. Macaluso and Frank W. Miller, who were elected at the Board of
Directors' meeting on March 11, 1996 to fill two vacancies caused by an
amendment to the Company's Bylaws increasing the authorized number of
directors from seven (7) to nine (9). If, as a result of unforeseen
circumstances, either Mr. Macaluso or Mr. Miller, or both, shall be unable to
serve as director, proxies will be voted for the election of such person or
persons as the Board may select.
Pursuant to the terms of the Second Amended Joint Plan of Reorganization
(the "Amended Plan"), under which the Company emerged from bankruptcy on
December 14, 1994 (the "Effective Date"), the size of the Board as of the
Effective Date was fixed at seven directors, and the nominees named below
(except Willard R. Hildebrand) and Phillip W. Mork, former President of the
Company, were selected to serve as directors commencing as of the Effective
Date (the "Original Directors"). Mr. Mork was selected by the Company's Board
immediately prior to the Effective Date to serve as a director upon the
Effective Date (the "Bucyrus Director"). Mr. Mork resigned as the Bucyrus
Director on July 25, 1995 and was replaced as the Bucyrus Director by
Mr. Hildebrand on March 11, 1996. For purposes of the Amended Plan and the
Company's Restated Bylaws ("Restated Bylaws"), Mr. Hildebrand is considered an
Original Director. Mr. Bartlett, Mr. Poole and Mr. Victor were selected prior
to the Effective Date by the statutory creditors committee of unsecured
creditors appointed pursuant to Section 1102 of the Bankruptcy Code to serve
as directors upon the Effective Date (the "Committee Directors"). Mr.
Radecki, Mr. Stark and Mr. Swansen were selected prior to the Effective Date
by Jackson National Life Insurance Company ("JNL") to serve as directors upon
the Effective Date (the "JNL Directors"). The Amended Plan provides that each
Original Director shall serve from the Effective Date until the Annual Meeting
and, pursuant to the provisions of Section 5.04(c) of the Amended Plan
described below, shall serve from and after the 1996 Annual Meeting until the
1997 Annual Meeting and until their successors have been duly elected and
qualified.
Pursuant to Section 5.04(c) of the Amended Plan, all holders of B-E
Holdings, Inc. ("Holdings"), the former parent of the Company, and the
Company's unsecured debt securities and Holdings' equity securities who
accepted the Amended Plan by ballot or master ballot and all holders of
Holdings' and the Company's unsecured debt securities and Holdings' equity
securities who were entitled to receive shares of Common Stock pursuant to the
Amended Plan were deemed as of the Effective Date to have irrevocably agreed
without any further action:
1. 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 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
2. 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 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 Annual Meeting.
Under Section 5.04(c) of the Amended Plan, the irrevocable voting agreement
described in (1) above is binding upon all Transferees. Any amendment or
modification of Section 5.04(c) of the Amended Plan at any time prior to the
1997 Annual Meeting is prohibited. Certain provisions of the Restated
Certificate of Incorporation of the Company and the Restated Bylaws relating
to the election, number, tenure, qualifications and removal of and vacancies
with respect to the Board cannot be amended or modified at any time prior to
the 1997 Annual Meeting.
The Restated Bylaws provide that if prior to the 1997 Annual Meeting, a
vacancy in the Board resulting from the death, resignation, retirement or
removal for cause (an "Original Director Vacancy Event") of an Original
Director occurs, then if such Original Director is (i) the Bucyrus Director,
the Board shall appoint an officer of the Company who served in such capacity
prior to the Effective Date or, in the absence of any such person, an officer
of the Company then serving in such capacity, (ii) a JNL Director, the
remaining JNL Directors (or their successors) shall appoint the successor to
such JNL Director, provided, however, if an Original Director Vacancy Event
occurs in respect of (x) all JNL Directors or (y) the remaining JNL Director
prior to the appointment of a successor to the other JNL Director, then, if at
the time the Original Director Vacancy Event described in (x) or (y) occurs,
JNL owns (1) 30% or more of the then issued and outstanding shares of Common
Stock, the President of JNL shall appoint successors to such JNL Directors or
(2) less than 30% of the then issued and outstanding shares of Common Stock, a
majority of the remaining Original Directors shall appoint successors to such
JNL Directors; or (iii) a Committee Director, the remaining Committee
Directors (or their successors) shall appoint the successor to such Committee
Director, provided, however, if an Original Director Vacancy Event occurs in
respect of (x) all Committee Directors or (y) the remaining Committee Director
prior to the appointment of a successor to the other Committee Director, a
majority of the remaining Original Directors shall appoint successors to such
Committee Directors.
Pursuant to Section 5.04(c) of the Amended Plan, all holders of Common
Stock are deemed to have voted for each of the Original Directors as directors
for terms expiring at the 1997 Annual Meeting. Because such shareholders are
deemed to have voted for each of the Original Directors without any further
action on their part, the Company is not soliciting proxies with respect to
the election of Original Directors. Certain information that follows with
respect to the Original Directors is presented for informational purposes
only.
The following sets forth certain information, as of January 31, 1996,
about each of the nominees for election at the Annual Meeting. Except as
otherwise noted, each nominee has engaged in the principal occupation or
employment and has held the offices shown for more than the past five years.
Nominees for Election at the Annual Meeting
CRAIG SCOTT BARTLETT, JR., 62, Director of the Company since December 14,
1994. Since 1990 he has been a consultant on banking matters, and in
conjunction with such activities was Senior Vice President and Chief Credit
Officer of MTB Bank, a private banking firm from 1992 to 1994. From 1984 to
1990, he was Executive Vice President, Senior Lending Officer and Chairman,
Credit Policy Committee, of National Westminster Bank USA. He presently
serves as a Director of MTB Bank, Darling International, Inc., Harvard
Industries, Inc., NVR, Inc., Triangle Wire & Cable, Inc., and The Western
Transmedia Company, Inc.
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.
CHARLES S. MACALUSO, 52, Director of the Company, effective March 11,
1996. Since 1987 Mr. Macaluso has worked as an investment analyst for
Investment Limited Partnership and it's successor firm The Airlie Group, L.P.
Mr. Macaluso has been a partner of The Airlie Group, L.P. since 1988.
Mr. Macaluso is a principal in Miller Associates, a management consulting and
private investment corporation, since 1995.
FRANK W. MILLER, 51, Director of the Company, effective March 11, 1996.
Mr. Miller was the Interim President and Chief Executive Officer of the
Company from August 1, 1995 through March 11, 1996. Mr. Miller is President
of Miller Associates (a management consulting and private investment
corporation established by Mr. Miller in January, 1995). Prior to
establishing Miller Associates, Mr. Miller was Vice Chairman and Chief
Executive Officer of Darling International, Inc. (November, 1989 - December,
1994). Mr. Miller is a Director of Entex Information Services, Inc., Quality
Institute International, Sound Advice and M. F. Horan Company.
GEORGE A. POOLE, JR., 64, Director of the Company since December 14, 1994,
and has been a private investor since July 1, 1985. Mr. Poole serves as a
Director of Rock Island Foods, Inc., Spreckels Industries, Inc., and U.S. Home
Corporation.
JOSEPH J. RADECKI, JR., 37, Director of the Company since December 14,
1994. Mr. Radecki is currently Executive Vice President (1990) of Jefferies &
Company, Inc., an investment banking and advisory firm. Prior to joining
Jefferies & Company, Mr. Radecki was a First Vice President (from 1983-1990)
in the International Capital Markets Group at Drexel Burnham Lambert, Inc.,
where he specialized in financial restructurings and recapitalizations.
F. JOHN STARK, III, 37, Director of the Company since December 14, 1994.
Since 1990, Mr. Stark has been a Senior Vice President, General Counsel and
portfolio manager of the Special Investments Portfolio for PPM America, Inc.,
an asset management company. Prior to his employment at PPM America, Inc.
Mr. Stark was employed by Washington Square Capital (1989 to 1990), Chief
Operating Officer and General Counsel of Rubber Research Elastomerics, Inc. in
Minneapolis, Minnesota (1986 to 1989), and the law firm of Briggs and Morgan
in Minneapolis, Minnesota (1984 to 1986). Mr. Stark is a director of PPM
America, Inc. and Carolina Steel.
RUSSELL W. SWANSEN, 38, Director of the Company since December 14, 1994.
Mr. Swansen has been President of PPM America, Inc. since 1990. From 1987 to
1990, Mr. Swansen was an Executive Vice President of Washington Square
Capital, a financial services subsidiary of the NWNL Co., where he headed its
investment advisory division and was a director of Washington Square Mortgage
Company, a residential mortgage banking firm. Mr. Swansen is a director of
PPM America, Inc. and Carolina Steel.
SAMUEL M. VICTOR, 40, Director of the Company since December 14, 1994.
Mr. Victor is an Executive Vice President and a Principal of Chanin and
Company, an investment banking and financial advisory firm, which he helped
form in 1990. Prior to joining Chanin and Company, Mr. Victor was a Vice
President (1988-1990) in the Corporate Finance Department of Drexel Burnham
Lambert, Inc., specializing in bankruptcies and restructurings. He is also a
director of BDK Holdings and California Beach Restaurants, Inc.
Unless otherwise indicated, each director listed above is a citizen of the
United States and the address of such person is the Company's principal
executive offices. There are no family relationships among directors and
executive officers of the Company.
Mr. Macaluso and Mr. Miller will be elected by a plurality of the votes
cast at the Annual Meeting (assuming a quorum is present). As indicated
above, all holders of Common Stock are deemed to vote for the seven (7)
Original Directors. An abstention from voting will be tabulated as a vote
withheld on the election and will be included in computing the number of
shares present for purposes of determining the presence of a quorum, but will
not be considered in determining whether Mr. Macaluso or Mr. Miller has
received a plurality of the votes cast at the Annual Meeting.
BOARD OF DIRECTORS
General
The Board held twelve meetings in 1995. Each director attended at least
75% of the aggregate of (a) the total number of meetings of the Board and (b)
the total number of meetings held by all committees of the Board on which the
director served during 1995.
The Board has a standing Audit Committee and Compensation and Management
Development Committee (the "Compensation Committee"). The Audit Committee
consists of Messrs. Poole, Radecki and Stark. The principal functions
performed by the Audit Committee, which met four times in 1995, are to meet
with the Company's independent public accountants before the annual audit to
review procedures and the scope of the audit; to review the results of the
audit; to review the financial control mechanisms used by the Company and the
adequacy of the Company's accounting and financial controls; and to annually
recommend to the Board a firm of independent public accountants to serve as
the Company's auditors. The Compensation Committee in 1995 consisted of
Messrs. Bartlett and Stark, but, as of March 11, 1996, is composed of Messrs.
Bartlett and Swansen. The principal functions of the Compensation Committee,
which met three times in 1995, are to review and make recommendations to the
Board concerning (i) the compensation and related benefits of elected
officers; (ii) incentive and bonus plans that include elected officers and
(iii) long-range planning for executive development and succession. In
addition, it reviews Company policies regarding compensation for senior
management and other employees and establishes and periodically reviews
Company policies on management perquisites.
The Board has no standing nominating committee. Seven (7) of the director
nominees are selected pursuant to Section 5.04(c) of the Amended Plan and only
two are currently elected by shareholders. The Board will consider nominees
recommended by shareholders consistent with Section 5.04(c) of the Amended
Plan, but has no established procedures.
Director Compensation
Directors of the Company, other than full time employees, currently
receive $2,500 each month, regardless of whether meetings are held or the
number of meetings held. Messrs. Stark and Swansen have declined to accept
any fees. Instead, such fees are paid by the Company directly to JNL, the
assets of which are managed by PPM America, Inc., the employer of Messrs.
Stark and Swansen. During 1995 and until March 11, 1996, JNL directed that
Messrs. Swansen's and Stark's $2,000 monthly fees be paid by the Company to
Jefferies & Company, of which Mr. Radecki is Executive Vice President. No
fees are paid for attendance at Committee meetings. In addition, Mr. Bartlett
was paid $1,500 during 1995, at the rate of $1,000 per day, for services
performed as a member of the Operating Committee of the Board. Directors are
also reimbursed for out-of-pocket expenses.
In addition to the compensation described above, each director who was not
a full time employee of the Company automatically received an option for 2,000
shares of Common Stock at an option price of $6.00 per share on February 16,
1995 (the effective date of the Non-Employee Directors' Stock Option Plan) and
an option for 2,000 shares of Common Stock on February 8, 1996 at an option
price of $9.25 per share, in accordance with the terms of such plan. Under
the terms of the Non-Employee Directors' Stock Option Plan, each person who
was a director on the effective date of the plan automatically received an
option for 2,000 shares of Common Stock. The plan further provides that each
person who was not a director on the effective date of the plan automatically
receives an option for 2,000 shares of Common Stock when first elected as a
non-employee director of the Company. Pursuant thereto, Messrs. Macaluso and
Miller were each granted an option for 2,000 shares of Common Stock at an
option price of $9.00 per share. Subsequent to the initial grant, each non-
employee director (who continues to serve in such capacity) automatically
receives an option to purchase an additional 2,000 shares of Common Stock on
the date of the first Board meeting of each calendar year for as long as the
plan remains in effect. Notwithstanding the above, Messrs. Stark and Swansen
have declined to accept any options under such plan. The option price for all
options granted under the Non-Employee Directors' Stock Option Plan is equal
to the last sale price of the Common Stock on the NASDAQ Stock Market on the
date of grant. Options granted to non-employee directors under the Non-
Employee Directors' Stock Option Plan terminate on the earlier of (a) ten
years after the date of grant, (b) six months after the non-employee director
ceases to be a director by reason of death, or (c) three months after the non-
employee director ceases to be a director for any reason other than death.
Options granted under the Non-Employee Directors' Stock Option Plan may not be
exercised until the plan has been approved by shareholders. A proposal to
grant such approval will be considered at the Annual Meeting. See
"NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership as of March 15,
1996 of the Common Stock by each person who is known to the Company to be the
beneficial owner of five percent or more of the Common Stock:
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class(1)
Jackson National Life
Insurance Company(2)
5901 Executive Drive
Lansing, MI 48911-5333 4,228,382(2) 41.31%
SSP, Inc.(3)
3801 Kennett Pike
Wilmington, DE 19807
1,160,979(3) 11.34%(3)
Greycliff Partners(3)
89 Headquarters Plaza
Morristown, NJ 07960
Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404 774,899(4) 7.57%
____________________
(1) Calculated on the basis of 10,234,574 shares of Common Stock issued
and outstanding.
(2) According to the Schedule 13D ("13D") statement dated December 23,
1994, as amended by Amendment No. 1 thereto dated April 4, 1995
(i) JNL shares voting power and dispositive power with PPM America,
Inc. over all such shares;(ii) PPM America, Inc. serves as the
investment advisor to JNL pursuant to a Discretionary Investment
Management Agreement between JNL and PPM America, Inc. dated as of
April 14, 1993; and (iii) JNL and PPM America, Inc. are both indirect,
wholly-owned subsidiaries of Prudential Corporation plc, a corporation
organized under the laws of the United Kingdom.
(3) According to a 13D dated June 16, 1995, Greycliff Partners shares
voting and dispositive power over 1,160,979 shares of Common Stock
with Mikael Salovaara and Alfred C. Eckert, III, its general partners.
The 13D also states that Greycliff Partners is the investment advisor
for and shares voting and dispositive power with the South Street
Corporate Recovery Fund I, L.P., the South Street Leveraged Corporate
Recovery Fund, L.P. and the South Street Corporate Recovery Fund I
(International), L.P. (collectively the "South Street Funds"), except
that such powers held by Greycliff Partners are subject to the
supervision and control of the South Street Funds' respective general
partners. Such funds share voting and dispositive power over 914,908
shares, 223,297 shares and 22,774 shares of Common Stock,
respectively. The 13D also states that SSP, Inc., the ultimate
general partner for both the South Street Corporate Recovery Fund I,
L.P. and the South Street Leveraged Corporate Recovery Fund, L.P.,
shares voting and dispositive power over 1,138,205 shares of Common
Stock, and that SSP International, Inc., the ultimate general partner
for the South Street Corporate Recovery Fund I (International), L.P.,
shares voting and dispositive power over 22,774 shares of Common
Stock. Notwithstanding the above reference to Greycliff Partners, it
is the Company's understanding that since the filing of the 13D, SSP,
Inc. has assumed direct responsibility for exercising the voting and
dispositive power over the South Street Corporate Recovery Fund I,
L.P. and the South Street Leveraged Corporate Recovery Fund, L.P. All
such shares over which Greycliff Partners and the other parties
described herein share beneficial ownership were acquired upon the
conversion of certain debt securities of the Company during
bankruptcy. JNL has objected to the proofs of claim filed with the
Bankruptcy Court by the indenture trustees for the debt securities to
the extent that such proofs of claim related to debt securities
beneficially owned by the South Street Funds. As a result of such
objection, the Company believes that the shares of Common Stock
beneficially owned by the South Street Funds are being held in escrow
pursuant to an agreement between JNL and the South Street Funds
pending further order of the Bankruptcy Court with respect to JNL's
objection.
(4) Includes 741,331 shares of Common Stock beneficially owned by Age High
Income fund. Age High Income Fund, a Colorado organization, is a
subsidiary of Franklin Resources, Inc., a Delaware corporation.
According to the Schedule 13G statement dated February 12, 1996 filed
with the Securities and Exchange Commission by Franklin Resources,
Inc. and Age High Income Fund (i) Franklin Resources, Inc. has shared
dispositive power over and sole voting power over 774,899 shares of
Common Stock; and (ii) Age High Income Fund has sole voting power
over, shared dispositive power over, the right to receive dividends
from and the right to receive proceeds from the sale of 741,331 shares
of Common Stock.
Executive Officers and Directors
The following table sets forth the beneficial ownership as of March 15,
1996 of the Common Stock by each director and nominee, each of the executive
officers named in the Summary Compensation Table below, and by all directors
and executive officers of the Company as a group.
Amount and nature
Name of of Beneficial Percent of
Beneficial Owner Ownership(1) Class(2)
J.D. Annand 0 *
C.S. Bartlett, Jr. 4,000 (3) *
D.M. Goelzer 163 *
W.R. Hildebrand 200,000 (5) 2%
C.S. Macaluso 2,000 (4) *
C.R. Mackus 972 *
F.W. Miller 2,100 (4) *
P.W. Mork 3,242 *
T.B. Phillips 0 *
G.A. Poole, Jr. 4,000 (3) *
J.J. Radecki, Jr. 4,000 (3) (6) *
E.F. Schweitzer 729 *
F.J. Stark, III 0 (3) (7) *
T.W. Sullivan 0 *
R.W. Swansen 0 (3) (8) *
S.M. Victor 4,000 (3) *
All directors and executive officers
as a Group (16 persons) 225,206 2%
____________________
* Less than 1%.
(1) The specified persons have sole voting power and sole investment power
as to all of the shares of Common Stock.
(2) Calculated on the basis of 10,234,574 outstanding shares of Common
Stock.
(3) Includes options to purchase 4,000 shares of Common Stock awarded
under the Non-Employee Directors' Stock Option Plan. These options
may be exercised only upon stockholder approval of the plan at the
Annual Meeting. Messrs. Stark and Swansen have declined to receive
any options.
(4) Includes options to purchase 2,000 shares of Common Stock awarded
under the Non-Employee Directors' Stock Option Plan. These options
may be exercised only upon stockholder approval of the plan at the
Annual Meeting.
(5) Includes 200,000 shares subject to the exercise of a Non-Qualified
Stock Option Agreement, but does not include 100,000 shares of
Restricted Stock and 200,000 shares of Restricted Stock under a Time
Accelerated Restricted Stock Agreement, all of which shares and
agreements are subject to the approval of the 1996 Plan by the holders
of Common Stock at the Annual Meeting.
(6) Mr. Radecki was selected as a director of the Company by JNL (which is
deemed to be the beneficial owner of 4,228,382 shares of Common Stock)
pursuant to the provisions of Section 5.04(c) of the Amended Plan.
Mr. Radecki disclaims beneficial ownership of all such shares.
(7) Mr. Stark is a director and an officer of PPM America, Inc., which is
deemed to be the beneficial owner of 4,228,382 shares of Common Stock.
Mr. Stark disclaims beneficial ownership of all such shares.
(8) Mr. Swansen is a director and an officer of PPM America, Inc., which
is deemed to be the beneficial owner of 4,228,382 shares of Common
Stock. Mr. Swansen disclaims beneficial ownership of all such shares.
LEGAL PROCEEDINGS
Pursuant to a Settlement Agreement dated May 23, 1995 (the "Settlement
Agreement") between the Company and JNL, the holder of approximately 41.31% of
Common Stock, JNL agreed: (a) to execute general releases of all claims,
known or unknown, arising at any time through the date of such releases, in
favor of Messrs. William B. Winter (former Chairman of the Board of the
Company), Ray G. Olander (former Vice Chairman and former director of the
Company), Norbert J. Verville (former Vice President - Finance and Treasurer
and former director of the Company) and David M. Goelzer (former Vice
President, Secretary and General Counsel and former director of the Company)
(the "Releasees"); and (b) to discontinue with prejudice, and without costs as
against any party, its action against the Releasees pending in the United
States District Court for the Southern District of New York (the "JNL Suit").
All fees and expenses of such former officers in connection with the JNL Suit
were paid by the Company.
JNL filed an Application for Allowance of Expenses (approximately
$3,300,000) with the United States Bankruptcy Court, Eastern District of
Wisconsin (the "Bankruptcy Court"), seeking reimbursement from the Company
pursuant to Section 503(b) of the Bankruptcy Code for professional fees and
disbursements incurred by JNL during the Company's reorganization proceedings
under chapter 11 of the Bankruptcy Code (the "Section 503(b) Claim").
Pursuant to the Settlement Agreement, JNL has agreed that, in the event that
the Section 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 case began on November 29, 1995 and closing arguments are
scheduled for April 18, 1996.
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth certain information for each of the last
three fiscal years concerning compensation awarded to, earned by or paid to
each person who served as the Company's Chief Executive Officer during fiscal
1995 and each of its other most highly compensated executive officers in
office on December 31, 1995 whose total cash compensation exceeded $100,000 in
fiscal 1995 and two additional executive officers whose compensation was such
that they would have been included in the Summary Compensation Table had they
still been officers on December 31, 1995. The persons named in the table are
sometimes referred to herein as the "named executive officers."
Summary Compensation Table
Annual Compensation(1)
Name and All Other
Principal Position Year Salary($) Bonus($) Compensation($)(2)
Phillip W. Mork 1995 125,363 - 143,668
President (3) 1994 207,108 - 4,620
1993 199,140 - 4,497
Frank W. Miller 1995 (3) - -
Interim President
and Chief Executive
Officer (3)
David M. Goelzer 1995 109,575 - 55,227
Vice President, 1994 134,652 - 4,040
General Counsel and 1993 124,594 - 3,738
Secretary (4)
Elroy F. Schweitzer 1995 131,183 - 4,020
Vice President- 1994 123,937 - 3,718
Engineering 1993 116,689 - 3,501
Craig R. Mackus 1995 114,900 10,000 3,403
Controller and 1994 105,030 3,151
Assistant Secretary 1993 97,440 2,923
Timothy W. Sullivan 1995 114,932 10,000 3,798
Vice President- 1994 102,507 3,075
Marketing 1993 95,352 2,861
_______________
(1) Certain personal benefits provided by the Company to the named executive
officers are not included in the table. The aggregate amount of such
personal benefits for each named executive officer in each year
reflected in the table did not exceed the lesser of $50,000 or 10% of
the sum of such officer's salary and bonus in each respective year.
(2) "All Other Compensation" for 1995 includes the employer match under the
Company's 401(k) savings plan: P. W. Mork ($4,620), D. M. Goelzer
($4,316), E. F. Schweitzer ($4,020), C. R. Mackus ($3,403) and T. W.
Sullivan ($3,798); and payments made in 1995 in connection with
separation agreements and accrued vacations: P. W. Mork ($115,356
separation agreement, $23,692 vacation) and D. M. Goelzer ($37,987
separation agreement, $12,924 vacation).
(3) Mr. Mork resigned as President of the Company on July 25, 1995. Mr.
Miller succeeded Mr. Mork as Interim President and Chief Executive
Officer pursuant to a Management Agreement (the "Management Agreement"),
dated July 21, 1995, as amended, between the Company and Miller
Associates, Inc. ("Miller Associates"). Amounts paid by the Company
under the Management Agreement are paid to Miller Associates and
Mr. Miller is separately compensated by Miller Associates. Pursuant to
the Management Agreement, Mr. Miller served as Interim President and
Chief Executive Officer until a new President and Chief Executive
Officer was appointed by the Board. See "CERTAIN RELATIONSHIPS -
Transactions with Management."
(4) Mr. Goelzer resigned as Vice President and Secretary of the Company on
July 25, 1995, and as General Counsel of the Company on October 1, 1995.
Pension Plan Table
The following table sets forth the estimated annual benefits payable on
a straight life annuity basis (prior to offset of one-half of estimated Social
Security benefits) to participating employees, including officers, upon
retirement at normal retirement age for the years of service and the average
annual earnings indicated under the Company's defined benefit pension plan.
Years of Service
Remuneration 35 30 25 20 15
$125,000 $ 76,563 $ 65,625 $ 54,688 $ 43,750 $ 32,813
150,000 91,875 78,750 65,625 52,500 39,375
175,000 107,188 91,875 76,563 61,250 45,938
200,000 122,500 105,000 87,500 70,000 52,500
225,000 137,813 118,125 98,438 78,750 59,063
250,000 153,125 131,250 109,375 87,500 65,625
300,000 183,750 157,500 131,250 105,000 78,750
400,000 245,000 210,000 175,000 140,000 105,000
450,000 275,625 236,250 196,875 157,500 118,125
500,000 306,250 262,500 218,750 175,000 131,250
Covered compensation for purposes of the Company's defined benefit
pension plan consists of the average of a participant's highest total salary
and bonus (excluding compensation deferred pursuant to any non-qualified plan)
for a consecutive five year period during the last ten calendar years of
service prior to retirement.
The years of credited service under the defined benefit pension plan for
each of the individuals named in the Summary Compensation Table are as
follows: Mr. Mork (30), Mr. Schweitzer (34), Mr. Goelzer (24), Mr. Mackus
(20) and Mr. Sullivan (20).
Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as
amended, limit the annual benefits which may be paid from a tax-qualified
retirement plan. As permitted by the Employee Retirement Income Security Act
of 1974, the Company has supplemental plans which authorize the payment out of
general funds of the Company of any benefits calculated under provisions of
the applicable retirement plan which may be above the limits under these
sections.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board, subject to the approval of the
Board, is responsible for the various aspects of the Company's compensation
package offered to its executive officers, including the named executive
officers and the Chief Executive Officer. Until July 25, 1995, the
Compensation Committee consisted of Phillip W. Mork, President of the Company,
C. Scott Bartlett, Jr. and F. John Stark, III. After Mr. Mork's resignation
on July 25, 1995, the Compensation Committee consisted of Messrs. Bartlett and
Stark. The Company suffered losses in the last several years and entered
Chapter 11 bankruptcy proceedings in February, 1994, emerging in December,
1994. Although the Compensation Committee established an Incentive Plan in
1995, which was based on EBITDA (earnings before interest, taxes, depreciation
and amortization), no Incentive Plan payments were made to the executive
officers under such plan, since the EBITDA goals were not achieved. The
bonuses paid to Messrs. Sullivan and Mackus (see "EXECUTIVE COMPENSATION --
Summary Compensation Table") were discretionary bonuses, given in
consideration for each individual's promise not to voluntarily resign prior to
June 30, 1996 and as additional consideration for superseding prior
agreements.
Executive base salaries are reviewed annually. The Compensation
Committee seeks to link executive compensation to corporate financial
performance and return to shareholders. The Compensation Committee, where
appropriate, also considers nonfinancial performance measures. These include
increase in market share, manufacturing efficiency gains, improvements of
product quality and improvements in relations with customers, suppliers and
employees. These factors are considered on a case-by-case basis and the
Compensation Committee does not assign any specific weight to any of the
factors.
Since corporate performance has been poor in recent years, the
Compensation Committee believes base salaries have not increased relative to
other companies in its industry. Except for a specific incentive plan which
the Compensation Committee may adopt for a specific year, such as 1995, the
Company has no specific plans or arrangements which determine executive
compensation. The Compensation Committee generally begins its review by
analyzing the current base salaries of the executive officers, including the
Chief Executive Officer. Based on such review, the corporate performance of
the Company, the individual contributions of the executive officers, and the
factors discussed in the preceding paragraph, the Compensation Committee then
recommends approval of its determinations to the Board.
Under Section 162(m) of the Internal Revenue Code, the tax deduction by
corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is
otherwise excluded from the limitation. Since the Company has had no stock
options or other long-term incentive plans in past years, Section 162(m) has
never been a concern. To the greatest extent possible, the Compensation
Committee currently intends to qualify compensation paid to the Company's
executive officers for deductibility by the Company under Section 162(m) of
the Internal Revenue Code, although the Compensation Committee reserves the
right, in individual cases, to cause the Company to enter into compensation
arrangements which do not qualify for deductibility under Section 162(m) (for
example, the March 11, 1996 compensation package of Mr. Hildebrand, the new
President and Chief Executive Officer, will not so qualify).
BUCYRUS-ERIE COMPANY
COMPENSATION COMMITTEE
C. Scott Bartlett, Jr.
F. John Stark, III
Compensation Committee Interlocks and Insider Participation
The Compensation Committee, until March 11, 1996, consisted of Messrs.
Bartlett and Stark. Mr. Mork, former President of the Company, served on the
Compensation Committee until July 25, 1995 when he resigned as President and
director of the Company. The Compensation Committee now consists of Messrs.
Bartlett and Swansen. Messrs. Swansen and Stark are Executive Officers of PPM
America, Inc., which serves as investment advisor to, and is a sister company
to, JNL, owner of approximately 41.31% of the outstanding Common Stock. JNL
is also a holder of approximately $56 million face amount of the Company's
Secured Notes due December 14, 1999. For a description of such notes, see
"CERTAIN RELATIONSHIPS - Ownership of Secured Notes."
CERTAIN RELATIONSHIPS
Separation Agreements
The Company and each of Messrs. Mork and Goelzer entered into agreements
dated July 25, 1995 (the "Separation Agreements") pursuant to which each such
person resigned, on such date, all of their respective positions with the
Company, except that Mr. Goelzer remained as General Counsel until October 1,
1995. Pursuant to the Separation Agreements, the Company and each such person
terminated the existing employment agreements between the Company and each
such person. The Separation Agreements provide that each such person agrees
to perform 24 months of consulting services for the Company and provides for
certain payments to each of such individuals as follows: Mr. Mork - $419,907
payable in 18 equal monthly installments, commencing August 15, 1995 plus the
sum of $200,000 payable in 60 equal monthly installments, commencing
February 15, 1997; Mr. Goelzer - $223,206 payable in 18 equal monthly
installments commencing October 15, 1995 plus $50,000 payable in 24 equal
monthly installments, commencing April 15, 1997.
The first amount shown above for each person is called the "Separation
Payment" and the second amount is called the "Special Payment." The monthly
Separation Payments are subject to a cost of living adjustment. The
Separation Payments and the Special Payments are payable by the Company
whether or not any such individual is able to perform consulting services and
whether or not employment is available to any of them. On the death of any
such person while receiving payments, the remaining payments are converted to
a lump sum payment equal to the discounted value of such remaining payments
based on a specified formula.
The Separation Agreements also provide for continuation of insurance
benefits (including life and medical insurance and vision and dental care)
until January 15, 2002 and March 15, 1999 for Messrs. Mork and Goelzer,
respectively, provided that if full-time employment is obtained by such
persons before such respective dates, such person will first look to the new
employer for payment of the insurance benefits, with the Company being
responsible only to the extent of any excess insurance benefits under the
Company's plan over the insurance benefits available under the new employer's
plan. The 24 month consulting period will count for purposes of determining
years of credited service under the Company's retirement plans and each
individual will be entitled to participation in the Company's 401(k) Savings
Plan on the same basis as other employees with respect to compensation paid
during such consulting period. The Separation Agreements also included mutual
releases of all claims by the Company and each such individual.
Transactions with Management
The Company entered into the Management Agreement with Miller
Associates, pursuant to which the Company engaged Miller Associates to provide
certain management services, including those of Frank W. Miller as Interim
President and Chief Executive Officer and James D. Annand as Interim Chief
Financial Officer. Mr. Miller is the President of Miller Associates.
The Management Agreement provided that Messrs. Miller and Annand and
certain other employees of Miller Associates (the "Project Team") will provide
management services and expertise to the Company and manage the operations of
the Company commencing on August 2, 1995 until terminated by the Company as
described below. Pursuant to the Management Agreement, the Company agreed to
pay Miller Associates a monthly fee of $65,000 for each of August and
September, 1995 and $55,000 for each month thereafter until the Company hired
a new chief executive officer and such person commenced employment with the
Company. The Company also agreed to reimburse Miller Associates for all
reasonable out-of-pocket expenses incurred by Miller Associates in connection
with the Project Team's performance under the Management Agreement. The
Management Agreement further provided that neither Mr. Miller or Mr. Annand,
nor any other employee of Miller Associates will be considered an employee of
the Company and that Miller Associates is responsible for payment of
compensation, disability benefits and unemployment insurance, and for the
payment and withholding of payroll taxes. The Management Agreement was
terminated with the hiring of Mr. Hildebrand as President and Chief Executive
Officer on March 11, 1996.
The Management Agreement provided that notwithstanding its termination,
Mr. Miller and Mr. Macaluso, a member of the Project Team, will each use his
best efforts to provide services to the Company on an "as needed" basis for a
thirty-day period following termination of the Management Agreement if the new
chief executive officer of the Company desires the services of either or both
of Messrs. Miller and Macaluso. In the event the Company's new chief
executive officer retains either or both of Messrs. Miller or Macaluso after
the termination of the Management Agreement, the Company will pay Miller
Associates $1,500 per day for each of Mr. Miller and Mr. Macaluso and, in
addition, reimburse Miller Associates' customary and reasonable out-of-pocket
expenses. The Management Agreement also provided that notwithstanding its
termination, Mr. Annand will remain as Interim Chief Financial Officer of the
Company for a period of 30 days after the termination of the Management
Agreement in consideration of a monthly payment to Mr. Annand of $15,000. The
Management Agreement further provided that the Company may retain Mr. Annand's
services beyond such 30-day extension period upon such terms as Mr. Annand and
the Company may agree.
Employment Agreement; Change of Control
The Company and Mr. Hildebrand are parties to an Employment Agreement,
dated March 11, 1996, pursuant to which Mr. Hildebrand was employed as
President and Chief Executive of the Company. The Company also agreed to use
its best efforts to elect him as a director. The base salary provided is
$400,000 per year, subject to increase at the discretion of the Board.
Mr. Hildebrand is also eligible to participate in the Company's Short-Term
Incentive Plan for Chief Executive Officers ("Bonus Plan") (to be adopted at a
later date) which shall provide for an annual cash incentive bonus equal to
50% of base salary in the event of achievement of targeted performance and a
maximum of 100% of base salary in the event of exceptional performance, as
determined in accordance with the Bonus Plan. The Employment Agreement
provides a payment of $187,021 to compensate Mr. Hildebrand for his change of
residence as well as reimbursement of reasonable relocation costs. Mr.
Hildebrand is entitled to participate in the Company's employee benefit plan
for senior executives and is provided other fringe benefits, such as country
club membership, vacation and the use of a Company car. To reimburse Mr.
Hildebrand for lost retirement benefits, the Company has agreed to provide him
with a fully vested retirement benefit ("New Benefits") having an after-tax
value equivalent to the after-tax value of the foregone benefits (a pre-tax
value of $30,000 per year). If the Company and Mr. Hildebrand cannot agree on
all the terms and conditions of the New Benefits, the Company agrees to
provide Mr. Hildebrand with a non-qualified supplemental executive retirement
plan which will provide him a fully vested pre-tax lifetime annuity of $30,000
per year commencing at age 65, with certain survivor's benefits.
The initial term of the Employment Agreement is three (3) years, with
two (2) automatic one-year renewals unless the Company terminates at least two
(2) months before a renewal period. In addition, the Company may terminate
Mr. Hildebrand's employment at any time for "cause," as defined, and on two
(2) months' notice without "cause." Mr. Hildebrand may terminate his
employment at any time by giving at least ninety (90) days' notice. Mr.
Hildebrand is to receive different severance compensation based on whether the
termination is (i) for "cause," (ii) voluntary on Mr. Hildebrand's part, (iii)
voluntary on the Company's part without "cause," or (iv) due to death or
Disability, as defined.
The Employment Agreement provides for certain payments in the event that
Mr. Hildebrand's employment is terminated as a result of a "Qualifying
Termination," as defined, due to a "Change of Control" of the Company, defined
(i) as acquisition of 20% or more of the voting power of the Company's
securities by a person who did not own 5% or more of the Company's voting
securities on the date of the Employment Agreement, (ii) as shareholder
approval of a merger or consolidation of the Company with another corporation
where the former Company shareholders own less than 50% of the combined
entity, (iii) as shareholder approval of a sale of substantially of all of the
Company's assets, (iv) if, during any period of two (2) consecutive years,
individuals who, at the beginning of such period, constituted the Board cease
to constitute at least a majority of the directors, 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, (v) the sale by JNL or any of its affiliates of
more than 66% of the Common Stock owned by JNL on March 11, 1996, except to
JNL or any affiliate of JNL; or (vi) the Company shall become eligible to
terminate the registration of any class of its securities then registered
under the Securities Exchange Act of 1934, as amended.
One of the events of Qualifying Termination is termination by
Mr. Hildebrand for "Good Reason," which is defined as (i) assignment of duties
materially inconsistent with the President's duties, responsibilities and
status or a material reduction or material alteration thereof, (ii) basing
Mr. Hildebrand at least fifty (50) miles further from his residence than the
distance such residence is, at the date of the Change of Control, from the
Company's headquarters, (iii) a reduction in Mr. Hildebrand's base salary, or
(v) a material reduction in Mr. Hildebrand's participation in various Company
plans. Upon the termination of employment under a Qualifying Termination
within six (6) months before, or twenty-four (24) months after, a Change of
Control, the Company is obligated to pay Mr. Hildebrand's base salary for the
greater of (i) the remainder of the employment term, or (ii) one (1) year. In
addition, Mr. Hildebrand is to receive the average of the bonus compensation
paid to him in the past two (2) years, or if bonus compensation has been paid
for one (1) year or less preceding the Qualifying Termination, a fractional
share of such bonus. The Employment Agreement provides that if any
compensation which would be payable under the Employment Agreement contingent
on a Change in Control would result in the imposition of an excise tax on
Mr. Hildebrand pursuant to the Internal Revenue Code or in the non-
deductibility of such compensation by the Company for Federal income tax
purposes, then arrangements shall be made to pay Mr. Hildebrand one dollar
($1) less than the maximum which he would receive without becoming subject to
the excise tax or which the Company may pay without losing its deduction;
provided, however, such reduction will be made only if it results in
Mr. Hildebrand receiving a greater net benefit than he would have received had
a reduction not occurred and an excise tax been paid.
Pursuant to the Employment Agreement, Mr. Hildebrand was granted non-
qualified stock options for 200,000 shares of Common Stock, 100,000 shares of
Restricted Stock and 200,000 shares of Time Accelerated Restricted Stock. See
"1996 PLAN - New Plan Benefits." The agreement covering the 100,000 shares of
Restricted Stock and the 200,000 shares of Time Accelerated Restricted Stock
both provide that the restriction period ends on a Change of Control and that
all such shares will then be free of restrictions.
Employment and Consulting Agreement; Change of Control
The Company and Mr. Schweitzer, Vice President - Engineering of the
Company, entered into an agreement dated July 1, 1992, as amended on
November 28, 1994 (the "Schweitzer Agreement"), pursuant to which the Company
agreed to pay Mr. Schweitzer certain consulting fees in the event his
employment with the Company is terminated following a change in control (as
defined in the agreement) of the Company. The Schweitzer Agreement provides
that the monthly consulting fees payable pursuant thereto will be equal to
one-twelfth of the highest annual compensation Mr. Schweitzer received from
the Company during any twelve months preceding the termination date, as
adjusted for inflation. The Company will, in addition, provide such insurance
benefits as Mr. Schweitzer would have received had his employment with the
Company continued, provided, however, that if Mr. Schweitzer is employed full
time by another party during the term of the agreement, the Company is
obligated to provide only those benefits that are in excess of any similar
benefits offered by such employer. The Company will pay the consulting fees
to Mr. Schweitzer for a period of twelve months in the event of a termination
by Mr. Schweitzer or eighteen months in the event of a termination by the
Company (the "Consulting Period"). In either case, however, the Consulting
Period will cease on the last day of the month in which Mr. Schweitzer reaches
his 65th birthday.
The Schweitzer Agreement provides that the consulting fees become
payable upon the termination of Mr. Schweitzer's employment either by the
Company or by Mr. Schweitzer, if within twelve months before termination by
Mr. Schweitzer or within eighteen months before termination by the Company:
the composition of a majority of the Board has changed by reason of the
election of new directors not nominated or elected by the Board, the Company
was merged or consolidated with any other corporation, thirty percent or more
of the voting common stock of the Company was acquired by a person or
affiliated group or five percent or more of the Company's assets were acquired
by a person or affiliated group. The Schweitzer Agreement also provides that
a termination by the Company will be deemed to have occurred in the event
Mr. Schweitzer terminates his employment after any reduction of his position
to a position of lesser responsibility, a de facto reduction of
Mr. Schweitzer's duties or responsibilities, the reduction of Mr. Schweitzer's
base salary or rate of maximum potential bonus unless such salary or bonus
reduction is part of a reduction of compensation generally applicable to all
management employees of the Company, or a Company imposed requirement that
Mr. Schweitzer move his residence or principal place of business to any
location unacceptable to him.
The Schweitzer Agreement provides that if Mr. Schweitzer engages in any
activity which competes with the business of the Company or any of its
subsidiaries, or is employed by a business which competes with the business of
the Company or any of its subsidiaries, he will have no right to payments
applicable to the period thereafter during the Consulting Period and must
promptly return to the Company all amounts paid to him for such consulting
fees. The Schweitzer Agreement also provides that Mr. Schweitzer may not
disclose to any person confidential information concerning the Company or its
subsidiaries or any trade secrets of the Company or its subsidiaries at any
time after the termination of his full-time employment (except as required by
law) without the consent of the Company.
Notwithstanding any of its provisions, the Schweitzer Agreement provides
that if any compensation which would otherwise be payable under the agreement,
when added to any other applicable compensation of Mr. Schweitzer, would
result under any circumstances in the imposition of an excise tax on
Mr. Schweitzer pursuant to the Internal Revenue Code or in the
non-deductibility by the Company for Federal income tax purposes of any
portion of the related compensation expense of the Company, then the
compensation otherwise payable under the Schweitzer Agreement will not be
payable and will be forfeited by Mr. Schweitzer to the Company.
Senior Executive Termination Benefits Agreements
The Company and each of Messrs. Mackus and Sullivan (each an
"Executive") entered into Senior Executive Termination Benefits Agreements
dated December 7, 1995, which provide that if either Executive's employment
with the Company is terminated in certain cases, the Company will pay the
terminated Executive termination benefits as described below. Messrs. Mackus
and Sullivan are Controller/Assistant Secretary and Vice President -
Marketing, respectively, of the Company. The benefits that are payable
pursuant to the agreements are payment of a monthly sum equal to the
Executive's annual base salary (plus a 5% inflation rate) at the rate in
effect on the date his employment with the Company terminated (the
"Termination Date") for a period of eighteen months from the Termination Date;
payment of any accrued vacation time due but not yet taken at the Termination
Date not exceeding five weeks at the then current base salary (excluding the
inflation adjustment); continuation of 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, 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; and provision of personal
executive counseling, chosen by the Executive, in an amount not to exceed
$10,000. The agreements also provide for an increase in Mr. Sullivan's and
Mr. Mackus' base salaries to $128,000 and $123,000, respectively, and a cash
bonus of $10,000, which was paid to each in 1995.
The agreements provide that the termination benefits will become payable
if the Executive's employment with the Company is terminated for any reason
except voluntary termination by the Executive, termination with cause or
normal retirement. For purposes of the agreements, "voluntary termination"
means the voluntary resignation by the Executive of his employment with the
Company. The agreements define "termination with cause" as termination of the
Executive's employment by the Company following 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; 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 the felony conviction of the Executive.
However, a termination by the Executive will constitute a termination
event and cause the termination benefits to become payable if such termination
follows any reduction of the Executive's position to a position of lesser
responsibility, a de facto reduction of the Executive's duties or
responsibilities, the reduction of the Executive's 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 the Executive move his residence
or principal place of business to any location unacceptable to him.
Financial Advisory Agreement
The Company entered into a Letter Agreement (the "Letter Agreement")
dated June 14, 1995, as amended on August 9, 1995, with Jefferies & Company
("Jefferies") and Chanin and Company ("Chanin"), pursuant to which Jefferies
and Chanin (the "Financial Advisors") will act as the Company's exclusive
financial advisors in connection with any merger, combination or joint venture
transaction involving a specified merger (the "Merger") and with respect to an
exploration of other strategic alternatives or strategic partners for the
Company (the "Search"). The Letter Agreement provides that during its term,
the Company will not, directly or indirectly, contact, approach or negotiate
with any person or persons with respect to the Merger or the Search, other
than through the Financial Advisors. Messrs. Radecki and Victor, directors of
the Company, are Executive Vice President of Jefferies, and Executive Vice
President and a Principal of Chanin, respectively.
The Company agreed pursuant to the Letter Agreement to pay Jefferies a
one-time retainer fee and a fee for each fairness opinion that Jefferies
issues in conjunction with the Merger or the Search. The Company will, in
addition, pay the Financial Advisors a success fee (the "Success Fee") and all
reasonable out-of-pocket expenses incurred by them in connection with the
Letter Agreement without regard to whether any such transaction is
consummated. The Letter Agreement also contains standard indemnification
provisions whereby the Company will indemnify and hold harmless each of
Jefferies, Chanin and certain related parties from liabilities arising out of
the Letter Agreement.
Registration Rights Agreement
On the Effective Date pursuant to the Amended Plan, the Company entered
into a Registration Rights Agreement (the "Registration Rights Agreement")
which grants rights to each person entitled to receive in the aggregate
1,000,000 or more shares of Common Stock (a "Relevant Holder") pursuant to the
provisions of the Amended Plan. To the knowledge of the Company, JNL is the
only person or entity entitled to the benefits of the Registration Rights
Agreement. Pursuant to the Registration Rights Agreement, a Relevant Holder
has the right to (a) require the Company under certain circumstances to file a
registration statement under the Securities Exchange Act of 1933 ("Securities
Act"), to permit a public offering of Common Stock owned by such Relevant
Holders; and (b) participate in certain other registrations of Common Stock
under the Securities Act made on behalf of the Company for other holders of
Common Stock. Under the terms of the Registration Rights Agreement, Relevant
Holders holding 15% or more of the shares of Common Stock then entitled to the
benefits of such agreement may request the Company to file one or more
registration statements under the Securities Act with respect to their shares
of Common Stock, and the Company is required to use its best efforts to effect
such registration provided that the Company generally will not be required to
effect more than three such registrations. Relevant Holders also may
participate in offerings proposed by the Company. These rights are subject to
certain conditions and limitations, among them the right of the Company to
postpone for a reasonable period of time (but not exceeding 120 days) the
requested filing of a registration statement if the Company determines such
registration would interfere with a material corporate transaction,
development or other specified matters. Pursuant to the terms of the
Registration Rights Agreement, the Company must pay all expenses, other than
fees and commissions of underwriters, incident to the registration and sale of
shares of Common Stock held by Relevant Holders. The registration rights, if
not fully exercised, terminate on the third anniversary of the Effective Date.
Ownership of Secured Notes
On February 29, 1996, JNL, the holder of approximately 41.31% of Common
Stock (see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT"),
purchased from parties other than the Company approximately $56 million face
amount of the Company's Secured Notes due December 14, 1999 (the "Notes").
The Company had $58,021,000 of Notes outstanding as of December 31, 1995. The
Notes pay interest semi-annually at a rate of 10.5% per annum, if paid in
cash, or 13.0% per annum if paid in kind. Interest on the Notes is payable in
kind at the discretion of the Company. The 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, subject, however, to a prior security interest
in such assets securing not more than $16 million of indebtedness. Messrs.
Radecki, Stark and Swansen, directors of the Company, were selected by JNL
prior to the Effective Date to serve as directors (see "ELECTION OF
DIRECTORS").
Other
In July, 1995, Chanin, an investment banking firm, received 25,572
shares of Common Stock for services rendered on behalf of the official
creditors committee during the Company's reorganization under Chapter 11 of
the Bankruptcy Code. Mr. Victor, a director of the Company, is Executive Vice
President and a Principal of Chanin. Of such shares, 6,393 were later
distributed to Mr. Victor.
PERFORMANCE INFORMATION
The following graph compares the Company's 1995 cumulative total
shareholder return with the cumulative total return of the Standard & Poor's
500 Stock Index and the Machinery (Diversified) Subgroup of the Standard &
Poor's 500 Stock Index. The graph assumes $100 was invested on December 31,
1994 and assumes the reinvestment of dividends. The companies in the
Machinery (Diversified) Subgroup are Briggs & Stratton, Case Corp.,
Caterpillar, Inc., Cooper Industries, Deere & Co., Harnischfeger Industries,
Ingersoll-Rand, NACCO Industries, Timken Co. and Varity Corp. Data for only
1995 is presented since the Common Stock did not begin to publicly trade until
December 22, 1994.
Comparison of 1995 Cumulative Total Return
Among Bucyrus-Erie Company, Standard & Poor's 500 Stock Index
and Machinery (Diversified) Subgroup Index
[LINE GRAPH SHOWING THE CHART BELOW]
December 31,
1994 1995
Bucyrus-Erie Company . . . . . . . . . . . . . $100 $116
S&P 500 Stock Index. . . . . . . . . . . . . . 100 137
Machinery (Diversified) Subgroup Index . . . . 100 124
1996 PLAN
General
The purpose of the 1996 Plan is to promote the best interests of the
Company and its shareholders by providing key employees of the Company and its
affiliates with an opportunity to acquire a proprietary interest in the
Company. The 1996 Plan is intended to promote continuity of management 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.
The following summary description of the 1996 Plan is qualified in its
entirety by reference to the full text of the 1996 Plan which is attached to
this Proxy Statement as Appendix A.
Administration and Eligibility
The 1996 Plan is required to be administered by a committee of the Board
(the "Committee") consisting of no less than two directors who are
"disinterested persons" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and who are "outside
directors" within the meaning of Section 162(m)(4)(C) of the Internal Revenue
Code. In the event that the Committee is not appointed, the functions of the
Committee will be exercised by those members of the Board who qualify as
"disinterested persons" under Rule 16b-3 and as "outside directors" within the
meaning of Section 162(m)(4)(C). The Compensation Committee has been
designated as the current administrator of the 1996 Plan. Among other
functions, the Committee has the authority to establish rules for the
administration of the 1996 Plan; to select the key employees of the Company
and its affiliates to whom awards will be granted; to determine the types of
awards to be granted to key employees and the number of shares covered by such
awards; and to set the terms and conditions of such awards. The Committee may
also determine whether the payment of any proceeds of any award shall or may
be deferred by a key employee participating in the 1996 Plan. Subject to the
express terms of the 1996 Plan, determinations and interpretations with
respect thereto will be in the sole discretion of the Committee, whose
determinations and interpretations will be binding on all parties.
Any key employee of the Company or any affiliate, including any
executive officer of the Company who is not a member of the Committee, is
eligible to be granted awards by the Committee under the 1996 Plan. The
number of eligible employees may increase over time based upon future growth
of the Company.
Awards Under the 1996 Plan; Available Shares
The 1996 Plan authorizes the granting to key employees of: (a) stock
options, which may be either incentive stock options meeting the requirements
of Section 422 of the Internal Revenue Code ("ISOs") or non-qualified stock
options; (b) stock appreciation rights ("SARs"); (c) restricted stock; and (d)
performance shares. The 1996 Plan provides that up to a total of 1,000,000
shares of Common Stock (subject to adjustment as described below) will be
available for the granting of awards thereunder.
If any shares subject to awards granted under the 1996 Plan, or to which
any award relates, are forfeited or if an award otherwise terminates, expires
or is canceled prior to the delivery of all of the shares or other
consideration issuable or payable pursuant to the award, such shares will be
available for the granting of new awards under the 1996 Plan. Any shares
delivered pursuant to an award may be either authorized and unissued shares of
Common Stock or treasury shares held by the Company.
Terms of Awards
Option Awards. Options granted under the 1996 Plan to key employees may
be either ISOs or non-qualified stock options. No individual key employee may
be granted options to purchase in excess of 200,000 shares of Common Stock
under the 1996 Plan (subject to adjustment as described below).
The exercise price per share of Common Stock subject to options granted
to key employees under the 1996 Plan will be determined by the Committee,
provided that the exercise price may not be less than 55% of the fair market
value of a share of Common Stock on the date of grant. The Board intends that
the option price for options awarded in the future will generally be at 100%
of fair market value. The term of any option granted to a key employee under
the 1996 Plan will be as determined by the Committee, provided that the term
of an ISO may not exceed ten years from the date of its grant. Options
granted to key employees under the 1996 Plan will become exercisable in such
manner and within such period or periods and in such installments or otherwise
as determined by the Committee. Options may be exercised by payment in full
of the exercise price, either (at the discretion of the Committee) in cash or
in whole or in part by tendering shares of Common Stock or other consideration
having a fair market value on the date of exercise equal to the option
exercise price. All ISOs granted under the 1996 Plan will also be required to
comply with all other terms of Section 422 of the Internal Revenue Code.
SARs. An SAR granted under the 1996 Plan will confer on the key
employee holder a right to receive, upon exercise thereof, the excess of (a)
the fair market value of one share of Common Stock on the date of exercise
over (b) the grant price of the SAR as specified by the Committee. The grant
price of an SAR under the 1996 Plan may not be less than 100% of the fair
market value of a share of Common Stock on the date of grant. The grant
price, term, methods of exercise, methods of settlement (including whether the
holder of an SAR will be paid in cash, shares of Common Stock or other
consideration), and any other terms and conditions of any SAR granted under
the 1996 Plan will be determined by the Committee at the time of grant.
Pursuant to the terms of the 1996 Plan, no individual key employee may be
granted SARs thereunder with respect to in excess of 50,000 shares of Common
Stock (subject to adjustment as described below).
Restricted Stock. Shares of restricted stock granted to key employees
under the 1996 Plan will be subject to such restrictions as the Committee may
impose, including any limitation on the right to vote such shares or receive
dividends thereon. The restrictions imposed on the shares may lapse
separately or in combination at such time or times, or in such installments or
otherwise, as the Committee may deem appropriate. Except as otherwise
determined by the Committee, upon termination of a key employee's employment
for any reason during the applicable restriction period, all shares of
restricted stock still subject to restriction will be subject to forfeiture by
the key employee. No individual key employee will be granted more than
300,000 shares of restricted stock.
Performance Shares. The 1996 Plan also provides for the granting of
performance shares to key employees. The Committee will determine and/or
select the applicable 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
payment is made in such manner, and any other terms, conditions and rights
relating to the grant of performance shares. Under the terms of the 1996
Plan, the Committee may select from various performance goals, including
return on equity, return on investment, return on net assets, economic value
added, earnings from operations, pre-tax profits, net earnings, net earnings
per share, working capital as a percent of net sales, net cash provided by
operating activities, market price for the Common Stock and total shareholder
return. In conjunction with selecting the applicable performance goal or
goals, the Committee will also fix the relevant performance level or levels
(e.g., a 15% return on equity) which must be achieved with respect to the goal
or goals in order for the performance shares to be earned by the key employee.
The performance goals selected by the Committee under the 1996 Plan may, to
the extent applicable, relate to a specific division or subsidiary of the
Company or apply on a Company-wide basis.
Following completion of the applicable performance period, payment on
performance shares granted to and earned by key employees will be made in
shares of Common Stock (which, at the discretion of the Committee, may be
shares of restricted stock) equal to the number of performance shares payable.
The Committee may provide that, during a performance period, key employees
will be paid cash amounts with respect to each performance share granted to
such key employees equal to the cash dividend paid on a share of Common Stock.
Pursuant to the terms of the 1996 Plan, no key employee may receive more than
50,000 performance shares thereunder (subject to adjustment as described
below).
Adjustments
If any dividend or other distribution, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-
off, combination, repurchase or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of Common Stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the 1996
Plan, then the Committee will generally have the authority to, in such manner
as it deems equitable, adjust (a) the number and type of shares subject to the
1996 Plan and which thereafter may be made the subject of awards, (b) the
number and type of shares subject to outstanding awards, and (c) the grant,
purchase or exercise price with respect to any award, or may make provision
for a cash payment to the holder of an outstanding award.
Limits on Transferability
No award granted under the 1996 Plan (other than an award of restricted
stock on which the restrictions have lapsed) may be assigned, sold,
transferred or encumbered by any participant, otherwise than by will, by
designation of a beneficiary, or by the laws of descent and distribution.
Each award will be exercisable during the participant's lifetime only by such
participant or, if permissible under applicable law, by the participant's
guardian or legal representative.
Amendment and Termination
The Board may amend, suspend or terminate the 1996 Plan at any time,
except that no such action may adversely affect any award granted and then
outstanding thereunder without the approval of the respective participant.
The 1996 Plan further provides that shareholder approval of any amendment
thereto must also be obtained if required by (a) the rules and/or regulations
promulgated under Section 16 of the Exchange Act (in order for the 1996 Plan
to remain qualified under Rule 16b-3), (b) the Internal Revenue Code or any
rules promulgated thereunder (in order to allow for ISOs to be granted
thereunder) or (c) the quotation or listing requirements of the exchange or
market on which the Common Stock is then traded (in order to maintain the
trading of the Common Stock on such exchange or market).
Withholding
Not later than the date of which an amount first becomes includible in
the gross income of a key employee for federal income tax purposes with
respect to any award under the 1996 Plan, the key employee will be required to
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
under the 1996 Plan to be settled with shares of Common Stock (other than
shares of restricted stock), including shares of Common Stock 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 1996 Plan
are conditional on such payment or arrangements, and the Company and any
affiliate will, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the key employee. The Committee
may establish such procedures as it deems appropriate for the settling of
withholding obligations with shares of Common Stock.
Certain Federal Income Tax Consequences
Stock Options. The grant of a stock option under the 1996 Plan will
create no income tax consequences to the key employee or the Company. A key
employee who is granted a non-qualified stock option will generally recognize
ordinary income at the time of exercise in an amount equal to the excess of
the fair market value of the Common Stock at such time over the exercise
price. The Company will be entitled to a deduction in the same amount and at
the same time as ordinary income is recognized by the key employee. A
subsequent disposition of the Common Stock will give rise to capital gain or
loss to the extent the amount realized from the sale differs from the tax
basis, i.e., the fair market value of the Common Stock on the date of
exercise. This capital gain or loss will be a long-term capital gain or loss
if the Common Stock has been held for more than one year from the date of
exercise.
In general, a key employee will recognize no income or gain as a result
of exercise of an ISO (except that the alternative minimum tax may apply).
Except as described below, any gain or loss realized by the key employee on
the disposition of the Common Stock acquired pursuant to the exercise of an
ISO will be treated as a long-term capital gain or loss and no deduction will
be allowed to the Company. If the key employee fails to hold the shares of
Common Stock acquired pursuant to the exercise of an ISO for at least two
years from the date of grant of the ISO and one year from the date of
exercise, the key employee will recognize ordinary income at the time of the
disposition equal to the lesser of (a) the gain realized on the disposition,
or (b) the excess of the fair market value of the shares of Common Stock on
the date of exercise over the exercise price. The Company will be entitled to
a deduction in the same amount and at the same time as ordinary income is
recognized by the key employee. Any additional gain realized by the key
employee over the fair market value at the time of exercise will be treated as
a capital gain. This capital gain will be a long-term capital gain if the
Common Stock has been held for more than one year from the date of exercise.
Stock Appreciation Rights. The grant of an SAR will create no income
tax consequences for the key employee or the Company. Upon exercise of an
SAR, the key employee will recognize ordinary income equal to the amount of
any cash and the fair market value of any shares of Common Stock or other
property received, except that if the key employee receives an option or
shares of restricted stock upon exercise of an SAR, recognition of income may
be deferred in accordance with the rules applicable to such other awards. The
Company will be entitled to a deduction in the same amount and at the same
time as income is recognized by the key employee.
Restricted Stock. A key employee will not recognize income at the time
an award of restricted stock is made under the 1996 Plan, unless the election
described below is made. However, a key employee who has not made such an
election will recognize ordinary income at the time the restrictions on the
stock lapse in an amount equal to the fair market value of the restricted
stock at such time. The Company will be entitled to a corresponding deduction
in the same amount and at the same time as the key employee recognizes income.
Any otherwise taxable disposition of the restricted stock after the time the
restrictions lapse will result in capital gain or loss (long-term or short-
term depending on the length of time the restricted stock is held after the
time the restrictions lapse). Dividends paid in cash and received by a
participant prior to the time the restrictions lapse will constitute ordinary
income to the participant in the year paid. The Company will be entitled to a
corresponding deduction for such dividends. Any dividends paid in stock will
be treated as an award of additional restricted stock subject to the tax
treatment described herein.
A key employee may, within 30 days after the date of the award of
restricted stock, elect to recognize ordinary income as of the date of the
award in an amount equal to the fair market value of such restricted stock on
the date of the award. The Company will be entitled to a corresponding
deduction in the same amount and at the same time as the key employee
recognizes income. If the election is made, any cash dividends received with
respect to the restricted stock will be treated as dividend income to the key
employee in the year of payment and will not be deductible by the Company.
Any otherwise taxable disposition of the restricted stock (other than by
forfeiture) will result in capital gain or loss (long-term or short-term
depending on the holding period). If the key employee who has made an
election subsequently forfeits the restricted stock, the key employee will not
be entitled to deduct any loss. In addition, the Company would then be
required to include as ordinary income the amount of the deduction it
originally claimed with respect to such shares.
Performance Shares. The grant of performance shares will create no
income tax consequences for the key employee or the Company. Upon the receipt
of shares of Common Stock at the end of the applicable performance period, the
key employee will recognize ordinary income equal to the fair market value of
the shares of Common Stock received, except that if the key employee receives
shares of restricted stock in payment of performance shares, recognition of
income may be deferred in accordance with the rules applicable to such
restricted stock. In addition, the key employee will recognize ordinary
income equal to the dividend equivalents paid on performance shares prior to
or at the end of the performance period. The Company will be entitled to a
deduction in the same amount and at the same time as income is recognized by
the key employee.
New Plan Benefits
The following table sets forth information with respect to awards that
were granted under the 1996 Plan since the adoption of the 1996 Plan on March
11, 1996 to the individual and groups identified below:
New Plan Benefits
Number of Shares Number of Shares
Name and Position Subject to Option of Restricted Stock
Willard R. Hildebrand
President and Chief
Executive Officer 200,000(1) 300,000(2)
All executive officers
as a group (1 person) 200,000(1) 300,000(2)
_______________
(1) Such award consists of nonstatutory stock options which vest
immediately, expire in ten (10) years and have an exercise price per
share of $5.0875 (55% of the closing price of the Common Stock on
March 8, 1996).
(2) Consisting of 100,000 shares of restricted stock which vest in equal
amounts over a three-year period (assuming continued employment),
commencing March 11, 1996, and 200,000 shares of restricted stock under
a Time Accelerated Restricted Stock Agreement ("TARSA"). Restricted
Stock under the TARSA vests in eight years (assuming continued
employment, with certain exceptions) and provides for earlier release in
the third, fourth and fifth years if certain earnings targets are
reached by the Company.
On March 15, 1996, the last reported sale price per share of the Common
Stock on the NASDAQ Stock Market was $8.25.
Vote Required
The affirmative vote of the holders of a majority of the shares of
Common Stock represented and voted at the Annual Meeting with respect to the
1996 Plan (assuming a quorum is present) is required to approve the 1996 Plan.
Any shares not voted at the Annual Meeting with respect to the 1996 Plan
(whether as a result of broker non-votes or otherwise, except abstentions)
will have no impact on the vote. Shares of Common Stock as to which holders
abstain from voting will be treated as votes against the 1996 Plan.
THE BOARD RECOMMENDS A VOTE "FOR" THE 1996 PLAN. SHARES OF COMMON STOCK
REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED PROXIES WILL BE
VOTED "FOR" THE 1996 PLAN.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
General
The purpose of the Non-Employee Directors' Stock Option Plan is to
promote the best interests of the Company and its shareholders by providing
members of the Board who are not employees of the Company or its affiliates,
with an opportunity to acquire a proprietary interest in the Company. By
encouraging stock ownership by directors who are not employees of the Company
or its affiliates, the Company seeks to attract and retain on the Board
persons of exceptional competence and to provide a further incentive to serve
as a director of the Company.
The following summary description of the Non-Employee Directors' Stock
Option Plan is qualified in its entirety by reference to the full text of the
Non-Employee Directors' Stock Option Plan which is attached to this Proxy
Statement as Exhibit B.
Administration and Eligibility
The Non-Employee Directors' Stock Option Plan is required to be
administered by the Board or by a committee of the Board (the "Committee")
consisting of no less than two non-employee members of the Board. Unless
otherwise noted, references to the Committee in this description of the Non-
Employee Directors' Stock Option Plan will mean either the Board or the
Committee, as the case may be. The Committee shall administer the Non-
Employee Directors' Stock Option Plan and adopt such rules and regulations for
carrying out the Non-Employee Directors' Stock Option Plan as it may deem
proper and the best interests of the Company. Subject to the express terms of
the Non-Employee Directors' Stock Option Plan, determinations and
interpretations with respect thereto will be in the sole discretion of the
Committee, whose determinations and interpretations will be binding on all
parties.
Each non-employee director of the Company is automatically entitled, as
described below, to receive stock options under the Non-Employee Directors'
Stock Option Plan. Initially, eight directors are eligible to participate in
the Non-Employee Directors' Stock Option Plan.
Awards Under the Non-Employee Directors' Stock Option Plan; Available Shares
The Non-Employee Directors' Stock Option Plan provides for the automatic
grant of non-qualified stock options to non-employee directors of the Company.
The Non-Employee Directors' Stock Option Plan provides that up to 60,000
shares of Common Stock (subject to adjustment as described below) will be
available for the granting of options thereunder.
If any shares subject to options granted under the Non-Employee
Directors' Stock Option Plan are forfeited or if an option otherwise
terminates, expires or is canceled prior to the delivery of all of the shares
or other consideration issuable or payable pursuant to the option, such shares
will be available for the granting of new options under the Non-Employee
Directors' Stock Option Plan. Any shares delivered pursuant to an award may
be either authorized and unissued shares of Common Stock or treasury shares
held by the Company.
Terms of Awards
Under the Non-Employee Directors' Stock Option Plan, each person who was
a non-employee director of the Company on the effective date of the plan
(February 16, 1995) was automatically granted a non-qualified stock option to
purchase 2,000 shares of Common Stock at a price of $6.00 per share. In
addition, any person who is first elected as a non-employee director of the
Company after the effective date of the Non-Employee Directors' Stock Option
Plan will automatically be granted, on the date of such election, a non-
qualified stock option to purchase 2,000 shares of Common Stock (subject to
adjustment as described below). The Non-Employee Directors' Stock Option Plan
further provides that each non-employee director (if he or she continues to
serve in such capacity) will, on the day of the first Board meeting in each
calendar year after the effective date of the Non-Employee Directors' Stock
Option Plan, automatically be granted an option to purchase 2,000 shares of
Common Stock (subject to adjustment as described below). Non-employee
directors' automatically received an additional non-qualified option for 2,000
shares of Common Stock on February 8, 1996, the date of the first Board
meeting in 1996. The option exercise price was $9.25 per share.
Additionally, Messrs. Macaluso and Miller each received a non-qualified option
on March 11, 1996 upon their election to the Board, at an exercise price of
$9.00 per share. Non-employee directors will be entitled to receive the
automatic grants under the Non-Employee Directors' Stock Option Plan as
described above only for so long as the Non-Employee Directors' Stock Option
Plan remains in effect and a sufficient number of shares are available for the
granting of such options thereunder. All options granted before shareholder
approval of the Non-Employee Directors' Stock Option Plan will be subject to
such approval and will not be exercisable until after shareholders have
approved the Non-Employee Directors' Stock Option Plan.
The option price per share of any option granted to a non-employee
director will be the last sale price per share for the Common Stock on the
NASDAQ Stock Market on the grant date; provided, however, that if the
principal market for the Common Stock is then a national securities exchange,
the option price shall be the closing price per share for the Common Stock on
such securities exchange on the date of grant, or, in either case above, if no
trading occurred on the date of grant, then the option price per share shall
be determined with reference to the next preceding date on which the shares
were traded. An option granted to a non-employee director will become
exercisable immediately on the date of grant.
Options granted to non-employee directors will terminate on the earlier
of (a) ten years after the date of grant, (b) six months after the non-
employee director ceases to be a director of the Company by reason of death,
or (c) three months after the non-employee director ceases to be a director
for any reason other than death. Options granted to non-employee directors
may be exercised under the Non-Employee Directors' Stock Option Plan by
payment in full of the exercise price in cash.
The Committee has no discretion to alter the provisions governing
options granted to non-employee directors.
Adjustments
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 Non-Employee
Directors' Stock Option Plan, the number of shares subject to options to be
granted under such plan and the number of shares under option in outstanding
option agreements will be adjusted in a manner consistent with such capital
adjustment; provided that the Company will not be required to sell any
fractional shares as a result of such adjustment. The price of any shares
under option will be adjusted so that there will be no change in the aggregate
purchase price upon the exercise of any such option.
Limits of Transferability
No option granted under the Non-Employee Directors' Stock Option Plan
may be transferred by any optionee, otherwise than by will, or by the laws of
descent and distribution. Each award will be exercisable during the
optionee's lifetime only by such optionee or, if permissible under applicable
law, by the optionee's guardian or legal representative.
Amendment and Termination
The Board may amend, suspend or terminate the Non-Employee Directors'
Stock Option Plan at any time, except that no such action may adversely affect
any award granted and then outstanding thereunder without the approval of the
respective participant. The Non-Employee Directors' Stock Option Plan
provides that the Non-Employee Directors' Stock Option Plan may not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules promulgated thereunder. The Non-Employee Directors'
Stock Option Plan further provides that shareholder approval of any amendment
thereto must also be obtained if required by (a) the rules and/or regulations
promulgated under Section 16 of the Exchange Act (in order for the Non-
Employee Directors' Stock Option Plan to remain qualified under Rule 16b-3),
or (b) the quotation or listing requirements of the exchange or market on
which the Common Stock is then traded (in order to maintain the trading of the
Common Stock on such exchange or market) or if the amendment (x) materially
modifies the eligibility requirements of the Non-Employee Directors' Stock
Option Plan, (y) increases the total number of shares of Common Stock which
may be purchased pursuant to the exercise of options granted under the Non-
Employee Directors' Stock Option Plan, or (z) reduces the minimum option price
per share at which options may be granted.
Certain Federal Income Tax Consequences
The grant of a stock option under the Non-Employee Directors' Stock
Option Plan will create no income tax consequences to the non-employee
director or the Company. A director who is granted a non-qualified stock
option will generally recognize ordinary income at the time of exercise in an
amount equal to the excess of the fair market value of the Common Stock at
such time over the exercise price. The Company will be entitled to a
deduction in the same amount and at the same time as ordinary income is
recognized by the non-employee director. A subsequent disposition of the
Common Stock will give rise to capital gain or loss to the extent the amount
realized from the sale differs from the tax basis, i.e., the fair market value
of the Common Stock on the date of exercise. This capital gain or loss will
be a long-term capital gain or loss if the Common Stock has been held for more
than one year from the date of exercise.
Awards Under The Non-Employee Directors' Stock Option Plan
The following table sets forth information with respect to non-qualified
options granted under the Non-Employee Directors' Stock Option Plan:
All non-employee directors
as a group (6 persons) 20,000
Vote Required
The affirmative vote of the holders of a majority of the shares of
Common Stock represented and voted at the Annual Meeting with respect to the
Non-Employee Directors' Stock Option Plan (assuming a quorum is present) is
required to approve the Non-Employee Directors' Stock Option Plan. Any shares
not voted at the Annual Meeting with respect to the Non-Employee Directors'
Stock Option Plan (whether as a result of broker non-votes or otherwise,
except abstentions) will have no impact on the vote. Shares of Common Stock
as to which holders abstain from voting will be treated as votes against the
Non-Employee Directors' Stock Option Plan.
THE BOARD RECOMMENDS A VOTE "FOR" THE NON-EMPLOYEE DIRECTORS' STOCK
OPTION PLAN. SHARES OF COMMON STOCK REPRESENTED AT THE ANNUAL MEETING BY
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED "FOR" THE NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN.
NAME CHANGE AMENDMENT
General
The Board has approved and recommends that the shareholders adopt an
amendment to Article I of the Company's Restated Certificate of Incorporation
which would change the name of the Company from Bucyrus-Erie Company to
Bucyrus International, Inc. The provisions of Article I of the Company's
Restated Certificate of Incorporation, as proposed to be amended by the Name
Change Amendment, are set forth in Exhibit C to this Proxy Statement.
The Board believes that the proposed Name Change Amendment is desirable
to more accurately reflect the Company's status as an international
manufacturer and supplier of mining equipment. It also preserves the
corporate identity and culture in consonance with the perceptions of the
Company's investors, customers, employees, suppliers and community.
Vote Required
The affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting with respect to the Name
Change Amendment (assuming a quorum is present) is required to approve the
Name Change Amendment. Any shares not voted at the Annual Meeting with
respect to the Name Change Amendment (whether as a result of broker non-votes
or otherwise, except abstentions) will have the effect of a vote against the
Name Change Amendment. Shares of Common Stock as to which holders abstain
from voting will be treated as votes against the Name Change Amendment.
THE BOARD RECOMMENDS A VOTE "FOR" THE NAME CHANGE AMENDMENT. SHARES OF
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED "FOR" THE NAME CHANGE AMENDMENT.
INDEPENDENT PUBLIC AUDITORS
On February 8, 1996, the Board, based on the recommendation of the Audit
Committee, appointed the firm of Arthur Andersen LLP, to serve as the
Company's independent auditors for the current fiscal year. It is expected
that representatives of such firm will be present at the Annual Meeting to
answer appropriate questions and, if they so desire, to make a statement.
Arthur Andersen LLP has served as the Company's independent auditors
since May 31, 1995. On May 31, 1995, the Company dismissed Deloitte &
Touche LLP as its independent auditors. Deloitte & Touche LLP's reports on
the Company's financial statements for the period January 1, 1994 to
December 13, 1994 and the period December 14, 1994 to December 31, 1994
contained no adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles. The
Board approved the decision to change the Company's independent auditors upon
the recommendation of the Audit Committee. During the Company's two most
recent fiscal years and through May 31, 1995 there have been no disagreements
with Deloitte & Touche LLP on any matters of accounting principles or
practices, financial statement disclosures or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Deloitte & Touche
LLP, would have caused that firm to make reference to the subject matter of
the disagreement in connection with its report on the financial statements for
such years. During the Company's two most recent fiscal years and through
May 31, 1995, there have been no reportable events.
Although not required by law to submit the appointment to a vote by
shareholders, the Board believes it appropriate, as a matter of policy, to
request that the shareholders ratify the appointment of Arthur Andersen LLP as
independent auditors for 1996. If the shareholders should not so ratify, the
Board will reconsider the appointment.
Vote Required
The affirmative vote of a majority of the shares of Common Stock
represented and voted at the Annual Meeting (assuming a quorum is present) is
required to ratify the appointment of Arthur Andersen LLP. Any shares not
voted at the Annual Meeting with respect to the ratification of the
appointment (whether as a result of broker non-votes or otherwise, except
abstentions) will have no impact on the vote. Shares of Common Stock as to
which holders abstain from voting will be treated as votes against the
ratification of the appointment of Arthur Andersen LLP.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR 1996. SHARES OF
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED "FOR" SUCH RATIFICATION.
OTHER MATTERS
Expenses of Solicitation
All expenses of solicitation of proxies will be borne by the Company.
In addition to soliciting proxies by mail, proxies may be solicited personally
and by telephone by certain officers and regular employees of the Company.
The Company has retained D. F. King to assist in the solicitation of proxies,
and expects to pay such firm a fee of approximately $4,000 plus out-of-pocket
expenses. Brokers, nominees and custodians who hold Common Stock in their
names and who solicit proxies from the beneficial owners will be reimbursed by
the Company for out-of-pocket and reasonable clerical expenses.
Section 16(a) Matters
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. The regulations of the
Securities and Exchange Commission require officers and directors to furnish
the Company with copies of all Section 16(a) forms they file. Based on such
forms, the Company believes that all its officers and directors have complied
with the Section 16(a) filing requirements, except for Mr. Victor who
inadvertently failed to file on a timely basis a report reflecting an
acquisition of Common Stock. Mr. Victor subsequently made a filing correcting
this oversight.
SHAREHOLDER PROPOSALS
A shareholder who intends to present a proposal for action at any annual
meeting and who desires that such proposal be included in the Company's proxy
materials must submit the proposal to the Company in advance of the meeting.
Proposals for the annual meeting to be held in 1997 must be received by the
Company at its principal office no later than ____________, 1996. In
addition, a shareholder who otherwise intends to present business at any
annual meeting (including nominating persons for election as directors) must
comply with, among other things, the notice requirements set forth in the
Company's By-laws.
By Order of the Board of Directors
BUCYRUS-ERIE COMPANY
Craig R. Mackus
Assistant Secretary
The Company will furnish to any shareholder, without charge, a copy of
its Annual Report on Form 10-K for the fiscal year 1995. Requests for Form
10-K must be in writing and addressed to Investor Relations, Bucyrus-Erie
Company, Post Office Box 500, 1100 Milwaukee Avenue, South Milwaukee,
Wisconsin 53172.
<PAGE>
EXHIBIT A
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.
<PAGE>
EXHIBIT B
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.
<PAGE>
EXHIBIT C
PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION OF BUCYRUS-ERIE COMPANY
Proposed additions reflecting the Name Change Amendment are italicized
and in bold face. Deletions caused by the Name Change Amendment are indicated
by overstriking.
------------------------------------
1. The name of the corporation (which is hereinafter referred to as
the "Corporation") is ["Bucyrus-Erie Company"] *"Bucyrus International,
Inc."*
(FOR EDGAR PURPOSES ONLY ADDITIONS ARE INDICATED BETWEEN ASTERICKS AND
DELETIONS ARE INDICATED BETWEEN BRACKETS.)
<PAGE>
<TABLE>
<S> <C>
P R E L I M I N A R Y C O P Y
This Proxy is Solicited on Behalf of the Board of Directors
BUCYRUS-ERIE COMPANY The undersigned hereby appoints Craig R. Mackus and J. F. Bosbous,
P. O. Box 500 and each of them, as Proxies with the power of substitution (to
1100 Milwaukee Avenue act jointly or if only one acts then by that one) and hereby
South Milwaukee, Wisconsin 53172 authorizes them to represent and to vote as designated below all of
the shares of Common Stock of Bucyrus-Erie Company held of record by
the undersigned on April 12, 1996, at the annual meeting of
shareholders to be held on May 23, 1996, or any adjournment or
postponement there of.
1. Election of Directors
PROXY [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Charles S. Macaluso and Frank W. Miller
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.
_____________________________________________________________________
2. Approval of the Bucyrus-Erie Company 1996 Employees' Stock
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the Bucyrus-Erie Company Non-Employee Directors' Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of the amendment to the Company's Restated Certificate of
Incorporation, to change the Company's name to Bucyrus
International, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Ratify the appointment of Arthur Andersen LLP to serve as
independent auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued on reverse side)
<PAGE>
This proxy when properly executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted "FOR" the election of the Board's nominees,
"FOR" Item 2, "FOR" Item 3, "FOR" Item 4 and "FOR" Item 5.
Please sign exactly as your name appears hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED:____________, 1996.
__________________________________________________________________
Signature
__________________________________________________________________
Signature (if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
</TABLE>
