SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Terex Corporation
(Name of Registrant as Specified in Its Charter)
Terex Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $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:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
TEREX CORPORATION
500 Post Road East, Westport, Connecticut 06880
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 1995
The Annual Meeting of Stockholders of Terex Corporation (hereafter the
"Company") will be held at the Westport Inn, 1595 Post Road East, Westport,
Connecticut, on Friday, June 23, 1995, at 10:00 a.m., local time, for the
following purposes:
1. To elect eight directors to hold office for one year or until their
successors are duly elected and qualified.
2. To ratify the selection of Price Waterhouse as independent
accountants of the Company for 1994 and 1995.
3. To ratify the 1994 Terex Corporation Long-Term Incentive Plan and the
initial awards granted thereunder.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are described more fully in the Proxy Statement
accompanying this Notice.
The Board of Directors of the Company has fixed the close of business on May
22, 1995 as the record date for determining the stockholders entitled to notice
of, and to vote at, the meeting.
YOUR VOTE IS IMPORTANT. STOCKHOLDERS ARE URGED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF THE
PROXY CARD IS MAILED IN THE UNITED STATES. STOCKHOLDERS WHO ARE PRESENT AT THE
MEETING MAY WITHDRAW THEIR PROXY AND VOTE IN PERSON IF THEY SO DESIRE. IT IS
IMPORTANT THAT YOUR PROXY CARD BE RETURNED PROMPTLY IN ORDER TO AVOID THE
ADDITIONAL EXPENSE OF FURTHER SOLICITATION.
By order of the Board of Directors,
Marvin B. Rosenberg
Secretary
May 26, 1995
Westport, Connecticut
<PAGE>
TEREX CORPORATION
500 Post Road East
Westport, Connecticut 06880
Proxy Statement for the
Annual Meeting of Stockholders
to be held on June 23, 1995
This Proxy Statement is furnished to stockholders of Terex Corporation ("Terex"
or the "Company") in connection with the solicitation of proxies by and on
behalf of the Company's Board of Directors (the "Board") for use at the Annual
Meeting of Stockholders of the Company to be held on June 23, 1995, at the
Westport Inn, 1595 Post Road East, Westport, Connecticut, and any adjournments
or postponements thereof (collectively, the "Meeting"), for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders (the
"Notice").
The Notice and proxy card (the "Proxy") accompany this Proxy Statement. This
Proxy Statement and the accompanying Notice, Proxy and related materials are
being mailed on or about May 26, 1995, to each stockholder entitled to vote at
the Meeting. As of May 22, 1995, the record date for determining the
stockholders entitled to notice of, and to vote at, the Meeting, the Company
had outstanding 10,314,217 shares of common stock, $.01 par value per share
(the "Common Stock"). Each share of Common Stock is entitled to one vote on
all matters to be voted on at the Meeting.
A majority of the outstanding shares of Common Stock must be represented at the
Meeting in person or by proxy to constitute a quorum for the transaction of
business at the Meeting. All matters other than the election of directors will
be decided by the affirmative vote of the holders of a majority of the shares
of Common Stock represented at the Meeting in person or by proxy. Directors
shall be elected by a plurality of the votes of shares of Common Stock
represented at the Meeting in person or by proxy.
Proxy solicitations will be made primarily by mail, but solicitations may also
be made by telephone, telegraph or personal interviews conducted by officers or
employees of the Company. All costs of solicitations, including (a) printing
and mailing of this Proxy Statement and accompanying material, (b) the
reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the Company's stock and (c)
supplementary solicitations to submit Proxies, if any, will be borne by the
Company.
If the enclosed Proxy is properly executed and returned in time to be voted at
the Meeting, the shares of Common Stock represented thereby will be voted in
accordance with the instructions marked on the Proxy. If no instructions are
marked on the Proxy, the Proxy will be voted FOR election of the nominees for
Director, FOR the selection of Price Waterhouse as the independent accountants
of the Company, FOR the ratification of the 1994 Terex Corporation Long-Term
Incentive Plan and the initial awards granted thereunder and FOR any other
matters that may properly come before the Meeting and that are deemed
appropriate. Management does not presently know of any other matters which may
come before the Meeting.
Any stockholder giving a Proxy has the right to attend the Meeting to vote his
or her shares of Common Stock in person (thereby revoking any prior Proxy) and
also has the right to revoke the Proxy at any time by written notice received
by the Secretary of the Company prior to the time the Proxy is voted. All
properly executed and unrevoked Proxies delivered pursuant to this
solicitation, if received in time, will be voted at the Meeting.
In order that your shares of Common Stock may be represented at the Meeting,
you are requested to:
_ indicate your instructions on the Proxy;
_ date and sign the Proxy;
_ mail the Proxy promptly in the enclosed envelope; and
_ allow sufficient time for the Proxy to be received by the Company
prior to the Meeting.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH
INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED AND THE DELIVERY
OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF
THIS PROXY STATEMENT.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, eight directors of the Company are to be elected to hold office
until the Company's next Annual Meeting of Stockholders or until their
respective successors are duly elected and qualified. Directors shall be
elected by a plurality of the votes of shares of Common Stock represented at
the Meeting in person or by proxy. Unless marked to the contrary, the Proxies
received by the Company will be voted FOR the election of the eight nominees
listed below, all of whom are presently members of the Board. Each nominee has
consented to being named in this Proxy Statement and to serve as a director if
elected. However, should any of the nominees for director decline or become
unable to accept nomination if elected, it is intended that the Board will vote
for the election of such other person as director as it shall designate. The
Company has no reason to believe that any nominee will decline or be unable to
serve if elected.
The information set forth below has been furnished to the Company by the
nominees and sets forth for each nominee, as of April 1, 1995, such nominee's
name, business experience during the past five years, other directorships held
and age. There is no family relationship between any nominee and any other
nominee or executive officer of the Company. For information regarding the
beneficial ownership of the Common Stock by the current directors of the
Company, see "Security Ownership of Management and Certain Beneficial Owners"
below.
The Board recommends that the stockholders vote FOR the following nominees for
director.
Name Age Positions and First Year
Offices with Company Elected Director
Randolph W. Lenz 48 Chairman of the Board 1983
and Director
Ronald M. DeFeo 43 President, Chief Executive 1993
Officer, Chief Operating
Officer and Director
Marvin B. Rosenberg 54 Senior Vice President, 1992
General Counsel, Secretary
and Director
G. Chris Andersen 56 Director 1992
William H. Fike 58 Director 1995
Bruce I. Raben 41 Director 1992
David A. Sachs 35 Director 1992
Adam E. Wolf 81 Director 1983
Randolph W. Lenz joined the Company as Chairman of the Board and a director in
1983. He joined Terex's predecessor, Northwest Engineering, as Chairman of the
Board and a director in 1983 and continues to serve in such capacities with the
Company. In addition, Mr. Lenz has been the Chairman of the Board and a
director of CBC Bancorp, Inc., a bank holding company, since 1992.
Ronald M. DeFeo became a director of the Company in 1993 and was appointed
President and Chief Operating Officer of the Company on October 4, 1993 and
Chief Executive Officer of the Company on March 24, 1995. He also served as
the President of the Company's subsidiary Clark Material Handling Company
("CMHC") from May 1993 to March 1994. Prior to joining Terex on May 1, 1992,
Mr. DeFeo was a Senior Vice President of J.I. Case Company, the farm and
construction equipment division of Tenneco Inc., and also served as a Managing
Director of Case Construction Equipment throughout Europe. While at J.I. Case,
Mr. DeFeo was also a Vice President of North American Construction Equipment
Sales and General Manager of Retail Operations.
Marvin B. Rosenberg was appointed a director of the Company in 1992 and was
appointed a Senior Vice President of the Company effective January 1, 1994. He
has served as Secretary and General Counsel of the Company since 1987. Mr.
Rosenberg is a director of Fruehauf Trailer Corporation ("Fruehauf") and served
as Secretary of Fruehauf from its organization in March 1989 until August 1993.
Since 1987, he has also been General Counsel of KCS Industries, L.P., a
Connecticut limited partnership ("KCS"), an entity that, until December 31,
1993, provided administrative, financial, marketing, technical, real estate and
legal services to the Company and its subsidiaries.
G. Chris Andersen was appointed director of the Company in 1992 and served as a
director of Fruehauf from July 1991 until August 1993. Mr. Andersen has been
Vice Chairman of PaineWebber Incorporated ("PaineWebber") since March 1990.
Prior to joining PaineWebber, Mr. Andersen was Managing Director for nine years
at Drexel Burnham Lambert Incorporated ("Drexel Burnham"), an investment
banking firm which filed for protection under Chapter 11 of the United States
Bankruptcy Code in 1990. Mr. Andersen is also a director of Sunshine Mining
Company.
Bruce I. Raben was appointed director of the Company in 1992. Mr. Raben is an
Executive Vice President of Jefferies & Company, Inc. Mr. Raben was employed
by Drexel Burnham from 1978 to 1990 where he served in various capacities,
including Managing Director.
William H. Fike was appointed a director of the Company in April 1995. Mr.
Fike is the Vice Chairman and Executive Vice President of Magna International,
Inc., an automotive parts manufacturer based in Ontario, Canada ("Magna").
Prior to joining Magna in September 1994, Mr. Fike was employed by Ford Motor
Company from 1966 to 1994, where he served most recently as President of Ford
Europe.
David A. Sachs was appointed director of the Company in 1992. Mr. Sachs is
President of Alpha Onyx Asset Management, LLC, an investment advisory firm and
a principal of Onyx Partners, Inc., a merchant banking firm. From 1990 to
1994, Mr. Sachs was employed at TMT-FW, Inc., an affiliate of Taylor & Co., a
private investment firm based in Fort Worth, Texas. TMT-FW, Inc. is one of two
general partners of EBD, L.P., which is the sole general partner of The Airlie
Group L.P. ("Airlie"). At TMT-FW, Inc., Mr. Sachs was engaged in the
investment activities of both Airlie and Taylor & Co. Prior to joining TMT-FW,
Inc. in 1990, Mr. Sachs was employed by Columbia Savings and Loan Association
from 1984 to 1990, where he served in various capacities, including Executive
Vice President.
Adam E. Wolf became a director of the Company in 1983. Mr. Wolf has been
principally self-employed as an attorney throughout his career. He has
previously served on several boards of directors, including those of a
telephone company, a bank and a hospital.
The Board met 11 times in 1994 at regularly scheduled and special meetings
including telephonic meetings. Except for Mr. Andersen, all of the directors
in office during 1994 attended at least 75% of the meetings which took place
during their tenures as directors. The Board has an Audit Committee and a
Compensation Committee. The Board does not have a Nominating Committee.
The Audit Committee of the Board of Directors consists of Messrs. Andersen,
Raben, Sachs and Wolf. The Audit Committee met twice during 1994. The Audit
Committee recommends the engagement of the independent accountants and makes
other recommendations to the Board based on its review of all of the financial
matters of the Company. The Audit Committee also reviews related party
transactions.
The Compensation Committee of the Board of Directors consists of Messrs.
Andersen and Wolf. The Compensation Committee met once during 1994. The
Compensation Committee recommends to the Board compensation arrangements for
executive officers and for certain other key management personnel. See
"Executive Compensation - Compensation Committee Report."
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock by each person known by the Company to own
beneficially more than 5% of the Company's Common Stock, by each director, by
each executive officer of the Company named in "Management of the Company"
below, and by all directors and executive officers as a group, as of April 1,
1995. Each person named in the following table has sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
such person, except as otherwise set forth in the notes to the table. Shares
of Common Stock that any person has a right to acquire within 60 days after
April 1, 1995 pursuant to an exercise of options, warrants or other rights or
conversion of preferred stock or otherwise are deemed to be outstanding for the
purpose of computing the percentage ownership of such person, but are not
deemed to be outstanding for computing the percentage ownership of any other
person shown in the table.
Name and Address of Amount Percent
Beneficial Owner Beneficially Owned of Class
Randolph W. Lenz (1) 5,019,237(3) 48.18%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
The Airlie Group L.P. (2) 981,400(4) 9.35%
201 Main Street
Fort Worth, TX 76102
Dort A. Cameron, III (2) 1,037,400(4) 9.89%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
Thomas A. Taylor (2) 1,260,900(4) 12.01%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
EBD L.P. (2) 981,400(4) 9.35%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
TMT-FW, Inc. (2) 981,400(4) 9.35%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
The Prudential Insurance Company 609,282(4) 5.88%
of America (5)
Prudential Plaza
Newark, NJ 07102-3777
G. Chris Andersen 10,000 *
1285 Avenue of the Americas
New York, NY 10019
Ronald M. DeFeo 30,306(6) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Bruce I. Raben 34,151(7) *
11100 Santa Monica Boulevard
Suite 1000
Los Angeles, CA 90025
Marvin B. Rosenberg 103,000(8) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
David A. Sachs 19,800(4)(9) *
2141 Hidden Creek Road
Fort Worth, TX 76107
Adam E. Wolf 8,100 *
875 East Donges Lane
Milwaukee, WI 53217
David J. Langevin 118,500(10) 1.14%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Ralph T. Brandifino 0 *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
All directors and 5,346,569(6)(8) 50.07%
executive officers
as a group (11 persons)
_____________________
* Amount owned does not exceed one percent (1%) of the class so owned.
(1) Mr. Lenz currently pledges, and intends to pledge in the future, shares of
the Common Stock owned by him as collateral for loans. If Mr. Lenz does not
pay such loans when due, the pledgee may have the right to sell the shares of
the Common Stock pledged to it in satisfaction of Mr. Lenz's obligations. The
sale of a significant amount of such pledged shares could result in a change of
control of the Company and may require the Company to make an offer to purchase
certain of its outstanding debt instruments.
(2) Dort A. Cameron, III and TMT-FW, Inc., a Texas corporation, are general
partners of EBD L.P., a Delaware limited partnership which is the sole general
partner of Airlie. Thomas M. Taylor is the President, sole director and sole
stockholder of TMT-FW, Inc. By reason of such relationships, Messrs. Cameron
and Taylor may each be deemed the beneficial owner of the shares deemed
beneficially owned by Airlie. Each of the indicated individuals, together with
certain other persons, reported ownership of an aggregate of 1,136,500 shares
of Common Stock, 40,000 shares of the Company's Series A Cumulative Redeemable
Convertible Preferred Stock (the "Series A Preferred Stock") and 40,000 of the
Company's Series A Common Stock Purchase Warrants (the "Series A Warrants"), or
approximately 12.55% of all outstanding Common Stock, assuming the conversion
of such shares of Series A Preferred Stock and the exercise of such Series A
Warrants (but not the conversion of any Series A Preferred Stock or the
exercise of any Series A Warrants by any other holder). Except as otherwise
reflected in this table or the footnotes thereto, each of the indicated
individuals disclaims the beneficial ownership of any shares held by any other
party.
(3) Includes (a) 4,839,037 shares of Common Stock, representing approximately
46.92% of the outstanding Common Stock directly owned by Mr. Lenz, (b) 77,200
shares of Common Stock indirectly owned by Mr. Lenz through a corporation that
he indirectly owns and controls and (c) 38,800 shares of Series B Cumulative
Redeemable Convertible Preferred Stock (the "Series B Preferred Stock")
convertible into 87,300 shares of Common Stock and the Company's Series B
Common Stock Purchase Warrants (the "Series B Warrants") exercisable into
15,700 shares of Common Stock received in connection with the termination of
the Company's management agreement with KCS (see "Certain Relationships and
Related Transactions").
(4) For each of Airlie, Dort A. Cameron, III, Thomas M. Taylor, EBD L.P.,
TMT-TW, Inc., The Prudential Insurance Company of America ("Prudential") and
David A. Sachs, the amount shown assumes the conversion of the shares of Series
A Preferred Stock owned by such beneficial owner (but not by any other holder
of Series A Preferred Stock), and assumes the exercise of any Series A Warrants
owned by such beneficial owner (but not by any other holder of Series A
Warrants).
(5) Prudential filed a Schedule 13G Statement, dated February 9, 1995,
pursuant to Section 13(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), reflecting the ownership of an aggregate of 557,200
shares of Common Stock and 23,045 Series A Warrants, or approximately 5.88% of
all of the outstanding Common Stock, assuming the exercise of such Series A
Warrants (but not the exercise of any Series A Warrants by any other holder).
Such securities are held for the benefit of Prudential's clients by
Prudential's registered investment companies and its subsidiary Prudential
Securities Incorporated, and Prudential disclaims the beneficial ownership of
such shares.
(6) Includes 23,334 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days held by Mr. DeFeo (see "Executive
Compensation").
(7) Does not include 10,000 shares owned by Mr. Raben's wife as to which Mr.
Raben does not have dispositive or voting power and disclaims beneficial
ownership. Includes 10,244 Series A Warrants exercisable for 23,151 shares of
Common Stock.
(8) Includes 25,500 shares of Series B Preferred Stock convertible into 57,375
shares of Common Stock and Series B Warrants exercisable for 45,625 shares of
Common Stock received by Mr. Rosenberg in connection with the termination of
the Company's management agreement with KCS (see "Certain Relationships and
Related Transactions").
(9) Includes 3,300 shares of Common Stock owned by Mr. Sachs' wife. Mr. Sachs
disclaims the beneficial ownership of such shares.
(10) Includes 25,500 shares of Series B Preferred Stock convertible into 57,375
shares of Common Stock and Series B Warrants exercisable for 45,625 shares of
Common Stock received by Mr. Langevin in connection with the termination of the
Company's management agreement with KCS (see "Certain Relationships and Related
Transactions").
MANAGEMENT OF THE COMPANY
The following table sets forth, as of April 1, 1995, the respective names
and ages of the Company's executive officers, indicating all positions and
offices held by each such person. Each officer is elected by the Board to hold
office for one year or until his successor is duly elected and qualified.
Name Age Positions and Offices with Company
Randolph W. Lenz 48 Chairman of the Board and Director
Ronald M. DeFeo 43 President, Chief Executive Officer,
Chief Operating Officer and Director
David J. Langevin 43 Executive Vice President
Marvin B. Rosenberg 54 Senior Vice President, General Counsel,
Secretary and Director
Ralph T. Brandifino 49 Senior Vice President, Chief Financial
Officer and Treasurer
For information regarding Messrs. Lenz, DeFeo and Rosenberg, refer to the
table listing nominees in the prior section "Proposal 1: Election of
Directors."
David J. Langevin became Executive Vice President of the Company effective
January 1, 1994 and had been appointed Acting Chief Financial Officer of the
Company on March 9, 1993. He has been employed as a Vice President of KCS
since 1988.
Ralph T. Brandifino was appointed to the position of Senior Vice President
and Chief Financial Officer on December 6, 1993. Mr. Brandifino was previously
the Chief Financial Officer at the Long Island Lighting Company from 1987
through 1993, after serving as Chief Financial Officer at Chicago Pneumatic
Tool Company, a capital goods manufacturer.
EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table below shows the compensation for the past
three fiscal years of the Company's Chief Executive Officer and its four
highest paid executive officers with 1994 earned qualifying compensation in
excess of $100,000 (the "Named Executive Officers").
Long-Term
Annual Compensation Compensation
Securi-
Restric- ties All
Name Other ted Under- Other
and Annual Stock lying Compen-
Principal Salary Bonus Compen- Awards(1) Options/ sation
Position Year ($) ($) sation ($) ($) SARS (#) ($)
Randolph W. 1994 486,000 243,000 - 118,250 43,000(4) -
Lenz 1993 483,508 - - - - -
Chairman of 1992 504,692 - - - - -
the Board
(2)(3)
Ronald M. 1994 350,000 325,000 - 84,700 30,800(4) 3,080(6)
DeFeo 1993 237,500 60,000 222,693(7) - 10,000 3,148(6)
President, 1992 127,145 66,666 - - 20,000 -
Chief
Executive
Officer and
Chief Operating
Officer (5)
David J. 1994 303,600 150,000 - 75,350 27,400(4) -
Langevin 1993 - - - - - -
Executive 1992 - - - - - -
Vice President
Marvin B. 1994 250,000 75,000 - 62,150 22,600(4) -
Rosenberg 1993 - - - - - -
Senior Vice 1992 - -- - - -
President,
Secretary and
General Counsel
(3)(9)
Ralph T. 1994 235,000 100,000 - 58,300 21,200(4) -
Brandifino 1993 16,913 - - - - -
Senior Vice 1992 - - - - - -
President,
Chief
Financial
Officer and
Treasurer (10)
_____________________________
(1) Includes shares of Restricted Stock (as defined in "Compensation
Committee Report" below) conditionally granted under the 1994 Terex Long-Term
Incentive Plan (the "1994 Incentive Plan"), subject to stockholder approval.
See "Proposal 3: Approval of the 1994 Incentive Plan and the Initial Awards
Granted Thereunder." Restricted Stock valued at the closing stock price of
$5.50 per share on June 23, 1994, the date of grant. Dividends are paid on
Restricted Stock awards at the same rate as paid to all stockholders. The
number and market value, based on the closing stock price of $7.00, of
Restricted Stock awards on December 31, 1994 for each of the Named Executive
Officers are: Mr. Lenz, 21,500 shares, $150,500; Mr. DeFeo, 15,400 shares,
$107,800; Mr. Langevin, 13,700 shares, $95,900; Mr. Rosenberg 11,300 shares,
$79,100; and Mr. Brandifino, 10,600 shares, $74,200. The shares of Restricted
Stock covered by the Restricted Stock awards of each of the Named Executive
Officers become vested to the extent of one-fourth of the shares of covered
thereby on each of the first four anniversaries of June 23, 1994; however, upon
the earliest to occur of a change of control of the Company and the death or
disability of such Named Executive Officer, any unvested portion of such
Restricted Stock will immediately vest. See "Proposal 3: Approval of the 1994
Incentive Plan and the Initial Awards Granted Thereunder - Description of the
1994 Incentive Plan and the Initial Awards - Stock Awards."
(2) Mr. Lenz was Chief Executive Officer of the Company during 1992, 1993
and 1994.
(3) In conjunction with the termination of the Company's management
agreement with KCS, Mr. Lenz, together with Messrs. Langevin and Rosenberg (who
became employees of the Company on January 1, 1994), received cash and certain
securities of the Company. Such payments are not included as part of annual
compensation. See "Certain Relationships and Related Transactions."
(4) Includes shares of Common Stock underlying stock options
conditionally granted under the 1994 Incentive Plan, subject to stockholder
approval. See "Proposal 3: Approval of the 1994 Incentive Plan and the Initial
Awards Granted Thereunder."
(5) Mr. DeFeo joined Terex on May 1, 1992 and became Chief Executive
Officer on March 24, 1995.
(6) Company's matching contribution to defined contribution plan account.
(7) Includes relocation payments of $214,604.
(8) Mr. Langevin was acting Chief Financial Officer of the Company from
March 9, 1993 through December 5, 1993, but did not receive compensation from
the Company until he became Executive Vice President of the Company effective
January 1, 1994. Prior to 1994, Mr. Langevin was employed as an executive
officer of KCS and received compensation from KCS.
(9) Although Mr. Rosenberg has acted as Secretary and General Counsel of
the Company since 1987, he did not receive compensation from the Company until
he was appointed Senior Vice President of the Company effective January 1,
1994. Prior to 1994, Mr. Rosenberg was employed as an executive officer of KCS
and received compensation from KCS.
(10) Mr. Brandifino joined Terex on December 6, 1993.
Option Grants in 1994
In May 1986, the stockholders approved an incentive stock option plan covering
key management employees (the "1986 Incentive Plan"). As further amended by
action of the stockholders and the Board, 108,228 shares of the Common Stock
are currently available for purchase pursuant to incentive stock options
granted or to be granted under the 1986 Incentive Plan, subject to adjustment
in the event of changes in the outstanding Common Stock by reason of certain
corporate events such as stock splits and mergers. The exercise price of the
options equals or exceeds the fair market price of the Common Stock at the time
of the grant. Options granted under the 1986 Incentive Plan vest ratably over
three years from the date of grant. No options were granted during 1994 to any
Named Executive Officers under the 1986 Incentive Plan.
The table below summarizes options conditionally granted under the 1994
Incentive Plan, subject to stockholder approval, during 1994 to the Named
Executive Officers listed in the Summary Compensation Table. See "Proposal 3:
Approval of the 1994 Incentive Plan and the Initial Awards Granted Thereunder."
Individual Grants
% of Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Exercise Annual Rates of Stock
Underlying Employees or Price Appreciation
Options in Fiscal Base Price Expiration For Option Term
Name Granted (#)(1) Year ($/Sh) Date 5%($) 10%($)
Randolph W.
Lenz 43,000 15.6% 5.50 6/23/04 148,734 376,920
Ronald M.
DeFeo 30,800 11.2% 5.50 6/23/04 106,535 269,980
David J.
Langevin 27,400 10.0% 5.50 6/23/04 94,774 240,177
Marvin B.
Rosenberg 22,600 8.2% 5.50 6/23/04 78,172 198,102
Ralph T.
Brandifino 21,200 7.7% 5.50 6/23/04 73,329 185,830
__________________
(1) All the options become vested to the extent of one-fourth of the shares of
Common Stock covered thereby on each of the first four anniversaries of June
23, 1994, the date of grant.
Aggregated Option Exercises in 1994 and Year-End Option Values
The table below summarizes options exercised during 1994 and year-end
option values of the Named Executive Officers listed in the Summary
Compensation Table.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Value Year-end (#) Year-end (#)
on Realized Exercisable/ Exercisable/
Name Exercise(#) $ Unexercisable Unexercisable
Randolph W. Lenz - - 0/43,000(1) 0/64,500
Ronald M. DeFeo - - 16,668/44,132(2) 0/46,200
David J. Langevin - - 0/27,400(1) 0/41,100
Marvin B. Rosenberg - - 0/22,600(1) 0/33,900
Ralph T. Brandifino - - 0/21,200(1) 0/31,800
__________________
(1) Consist of shares of Common Stock underlying options conditionally granted
under the 1994 Incentive Plan, subject to stockholder approval. See "Proposal
3: Approval of 1994 Incentive Plan and the Initial Awards Granted Thereunder."
(2) Of such 44,132 shares of Common Stock, 30,800 consist of shares underlying
options conditionally granted under the 1994 Incentive Plan, subject to
stockholder approval. See "Proposal 3: Approval of 1994 Incentive Plan and the
Initial Awards Thereunder."
Pension Plans
The Company maintains four defined benefit pension plans covering certain
domestic employees, including, as described below, certain officers of the
Company. Retirement benefits for the plans covering the salaried employees are
based primarily on years of service and employees' qualifying compensation
during the final years of employment.
Messrs. Lenz and DeFeo participate in the Terex Corporation Salaried Employees'
Retirement Plan (the "Retirement Plan"). Messrs. Brandifino, Langevin and
Rosenberg do not participate because participation in the Retirement Plan was
frozen as of May 7, 1993, prior to their employment with the Company.
Participants of the Retirement Plan with five or more years of eligible service
are fully vested and entitled to annual pension benefits beginning at age 65.
Retirement benefits under the Retirement Plan are equal to the product of (i)
the participant's years of service (as defined in the Retirement Plan) and (ii)
1.02% of final average earnings (as defined in the Retirement Plan) plus 0.71%
of such compensation in excess of amounts shown on the applicable Social
Security Integration Table for participants born prior to 1938. For
participants born during 1938-1954, the formula is modified by replacing the
1.02% and 0.71% figures with 1.08% and 0.65%, respectively. For participants
born after 1954, the formula is modified by replacing the 1.02% and 0.71%
figures with 1.13% and 0.60%, respectively. Service in excess of 25 years is
not recognized. There is no offset for primary Social Security.
Participation in the Retirement Plan was frozen as of May 7, 1993, and no
participants, including Mr. Lenz and Mr. DeFeo, will be credited with service
following such date. However, participants not currently fully vested,
including Mr. DeFeo, will be credited with service for purposes of determining
vesting only. Mr. Lenz is already fully vested. The annual retirement
benefits payable at normal retirement age under the Retirement Plan will be
$31,530 for Mr. Lenz and $4,503 for Mr. DeFeo (assuming full vesting).
Compensation of Directors
The directors who are officers of the Company receive no additional
compensation by virtue of their being directors of the Company. Non-officer
directors receive an annual fee of $24,000. No additional compensation is paid
for participation in special or committee meetings of the Board. All directors
of the Company are reimbursed for travel, lodging and related expenses incurred
in attending Board and committee meetings.
In addition, subject to stockholder approval of the 1994 Incentive Plan,
outside directors will be awarded (i) an option to purchase 10,000 shares of
Common Stock after having completed two years of service as a member of the
Board of Directors, and (ii) an option to purchase an additional 10,000 shares
after having completed five years of service as a member of the Board of
Directors. Years of service completed include all years served on the Board of
Directors, whether prior to, or subsequent to, the adoption of the 1994
Incentive Plan. The options will have a term of five years and the exercise
price of the options will be equal to the fair market value of the Common Stock
on the date preceding the day the grant is authorized. The options will not
vest until at least one year following the date of grant, provided, however,
that the options will vest immediately in the event of a change in control of
the Company. On June 23, 1994, pursuant to such provisions of the 1994
Incentive Plan, (i) each of G. Chris Andersen, Bruce I. Raben and David A.
Sachs was conditionally granted an option to purchase 10,000 shares of Common
Stock and (ii) Adam E. Wolf was conditionally granted an option to purchase
20,000 shares of Common Stock, in each case at an option price of $5.50 per
share. See "Proposal 3: Approval of the 1994 Incentive Plan and the Initial
Awards granted thereunder -- Director Options."
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
Ronald M. DeFeo has an agreement which provides that in the event of a change
in ownership of the Company which prevents him from continuing in his position
as President and Chief Operating Officer, the Company will provide for a
continuance of his income for a period of 24 months.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board during fiscal 1994 consisted of G.
Chris Andersen and Adam E. Wolf. There are no Compensation Committee
interlocks or insider participation with respect to such individuals.
Compensation Committee Report
Although all final decisions regarding executive compensation are made by the
Board of Directors, in making such decisions the Board takes into consideration
the recommendations of its Compensation Committee. The Compensation Committee
is responsible for reviewing compensation levels for all executive officers of
the Company and for any employee with an employment or severance contract, and
for making recommendations to the Board with respect to such contracts and
compensation. Its objective is to provide compensation that is fair and
equitable to both the employee and the Company. Consideration is given to the
employee's overall responsibilities, professional qualifications, business
experience, job performance, technical expertise and their resultant combined
value to the Company's long-term performance and growth.
The Company's executive officer compensation program, administered by the
Compensation Committee of the Board of Directors, is based upon the following
guiding principles:
1. Competitive compensation and benefits that allow the Company to attract
and retain people with the skills critical to the long-term success of the
Company.
2. Compensation for performance to motivate and reward individual and team
performance in attaining business objectives and maximizing stockholder value.
3. Granting of equity-based awards over cash compensation so as to align the
interests of executive officers with those of the stockholders.
The Compensation Committee reviews the Company's executive compensation program
each year. This review includes a comparison of the Company's executive
compensation, corporate performance, growth, share appreciation and total
return to stockholders with that of similar companies.
The key elements of the Company's executive compensation package consist of
base salary, annual bonus, stock options and Common Stock, including Common
Stock subject to restrictions on transfer, conditions of forfeitability or any
other limitations or restrictions ("Restricted Stock"). The Company's policies
with respect to each of these elements are discussed below. In addition, while
the elements of compensation described below are considered separately, the
Compensation Committee also considers and will review from time to time the
full compensation package afforded by the Company to individuals.
Base Salaries. An executive officer's base salary is determined by evaluating
the responsibilities of the position held, the individual's experience and the
competitive marketplace for executive talent. The base salary is intended to
be competitive with base salaries paid to executive offers with comparable
qualifications, experience and responsibilities at similar companies.
Annual Bonuses. In addition to a base salary, each executive officer is
eligible for an annual cash bonus, which may consist of performance awards
under the 1994 Incentive Plan. See "Proposal 3: Approval of the 1994 Incentive
Plan and the Initial Awards granted thereunder." Bonuses are based upon
objective criteria, such as annual net earnings of the Company, as well as
criteria established for each executive officer at the beginning of the fiscal
year. Executive officers may earn a bonus of up to 50% of their base salary if
certain individualized goals are attained. In addition, such bonus may be
increased or decreased based upon the overall performance of the Company in
comparison to preestablished targets.
Stock Options and Common Stock. The purpose of long-term awards, currently in
the form of stock options and grants of Common Stock including Restricted
Stock, is to align the interests of the executive officers with the interests
of the stockholders. Additionally, long-term awards offer executive officers
an incentive for the achievement of superior performance over time and foster
the retention of key management personnel. The Compensation Committee favors
the granting of equity-based awards over cash compensation for such reasons and
believes that the granting of stock options and Common Stock better motivates
executive officers to exert their best efforts on behalf of the Company and the
stockholders. In determining stock option grants, the Compensation Committee
bases its decision on the individual's performance and a potential to improve
stockholder value.
Compensation of Chief Executive Officer. The compensation of the Chief
Executive Officer ("CEO") is determined pursuant to the principles noted above.
Specific consideration is given to the CEO's responsibilities and experience in
the industry and the compensation package awarded to chief executive officers
of other comparable companies.
As a result of such considerations, the base salary of Randolph W. Lenz, the
CEO in fiscal 1994, was fixed at $486,000 for the fiscal year ended December
31, 1994. Mr. Lenz was awarded a bonus of $243,000 for such fiscal year, and
was conditionally granted under the 1994 Incentive Plan, subject to stockholder
approval, (i) options to purchase 43,000 shares of Common Stock and (ii) 21,500
shares of Restricted Stock.
Federal Tax Implications for Executive Compensation. It is the responsibility
of the Compensation Committee of the Board to address the issues raised by the
Federal tax law which makes certain non-performance-based compensation to
executives of public companies, including the Company, in excess of $1,000,000
non-deductible beginning in 1994. No executive officer received in 1994 such
compensation in excess of $1,000,000. Therefore, during 1994, it was not
necessary for the Compensation Committee to take any action to comply with the
limit. At this time, it is not anticipated that any executive officer of the
Company will receive in 1995 any such compensation in excess of this limit.
The Compensation Committee will continue to monitor this situation and will
take appropriate action if it is warranted in the future.
COMPENSATION COMMITTEE
G. Chris Andersen
Adam E. Wolf
Performance Graph
The following table compares the cumulative total stockholder return on the
Common Stock, based on the market price of the Common Stock and assuming
reinvestment of dividends, for the period commencing December 31, 1989 through
December 31, 1994, with the cumulative total return of companies on the
Standard & Poor's 500 Stock Index and the peer/industry index set forth below
(the "Peer Group") over the same period. The stockholder return shown on the
graph below is not indicative of future performance.
(DESCRIPTION OF GRAPHICAL MATERIAL)
Located herein in the company's paper format copy of this document is a line
graph titled:
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
Terex Corporation, S&P 500 Index, Peer Group
(Performance results through December 31, 1994)
The vertical axis of the line graph is scaled from $0.00 at the origin
extneding upwards to $250.00, marked in increments of $25.00. The horizontal
axis begins with the year 1989 at the origin extending to the right through the
year 1994, marked in one year increments. The value of an assumed initial
investment of $100.00 in the company's stock, in the S&P 500, and in the Peer
Group is plotted for each year on the horizontal axis using the data listed
below:
1989 1990 1991 1992 1993 1994
Terex 100.00 52.66 74.36 57.91 39.32 40.04
S&P 500 Index 100.00 96.83 126.41 136.25 150.00 151.97
Peer Group 100.00 79.38 88.42 96.15 153.00 161.81
Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in Common Stock, S&P 500 and
Peer Group.
* Cumulative total return assumes reinvestment of dividends.
The Peer Group consists of the following companies, which are in similar
lines of business as the Company (manufacturing of heavy equipment):
Caterpillar, Inc., Clark Equipment Company, Deere & Company, Harnischfeger
Industries, Inc., Ingersoll Rand Company, JLG Industries, Inc., The Manitowoc
Company and NACCO Industries, Inc.
Source: Value Line, Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Under a contract dated July 1, 1987, as amended, KCS, principally owned by
Randolph W. Lenz, Chairman of the Board of the Company, provided
administrative, financial, marketing, technical, real estate and legal services
to the Company and its subsidiaries until December 31, 1993. KCS also provided
assistance in the evaluation, negotiation and consummation of potential
acquisitions of other companies, products and processes, as well as the
development of new areas of business for the Company. During 1993, the Company
made payments to KCS for fees and out-of-pocket expenses of $2.9 million and
$0.1 million respectively.
During 1993, the Board concluded that it would be in the Company's best
interest to terminate the Company's contract with KCS and integrate the
management services of KCS directly into the Company. Pursuant to an agreement
between the Company and KCS, the contract between the Company and KCS was
suspended as of the close of business on December 31, 1993. David J. Langevin
and Marvin B. Rosenberg, employees of KCS, became salaried employees of the
Company effective January 1, 1994, with the titles of Executive Vice President
and Senior Vice President, respectively. In addition, in consideration of the
termination of the contract, the Company issued 89,800 shares of Series B
Preferred Stock and 106,950 Series B Warrants to certain executives of KCS, the
terms of which are substantially similar to the terms of the Company's
outstanding Series A Preferred Stock and Series A Warrants, respectively. Of
such amounts, Mr. Lenz received 38,800 shares of Series B Preferred Stock and
Series B Warrants exercisable for 15,700 shares of Common Stock, and Messrs.
Langevin and Rosenberg each received 25,500 shares of Series B Preferred Stock
and Series B Warrants exercisable for 45,625 shares of Common Stock. In
addition, Messrs. Lenz, Langevin and Rosenberg received cash payments of
$515,000, $82,000 and $82,000, respectively.
In 1992, the Board approved a program to consolidate Fruehauf's parts
warehousing and administration functions with the Company. During the fourth
quarter of 1992, Fruehauf announced its intention to close its parts warehouse
in Westerville, Ohio and transfer its replacement parts inventory to the Terex
distribution center in Southaven, Mississippi. In November 1992, in
contemplation of the parts consolidation, Terex transferred $2.0 million to
Fruehauf. As a result of a debt restructuring of Fruehauf, the proposed
arrangement was not effectuated and, in May 1993, Terex entered into an
agreement with an operating unit of Fruehauf, whereby such operating unit was
to provide products and manufacturing services to Terex. This agreement
required Terex to make a $2.0 million payment to such operating unit, which
Terex effected on May 11, 1993 by instructing Fruehauf to transfer the $2.0
million Fruehauf owed to Terex directly to such operating unit. The operating
unit of the Fruehauf unit in question subsequently ceased operations. The
Company is in discussions with Fruehauf concerning the satisfaction of
Fruehauf's obligations under the May 1993 agreement.
The Company, certain directors and executives of the Company, and KCS are named
parties in various legal proceedings. During 1994, the Company incurred
$319,000 of legal fees and expenses on behalf of the Company, directors and
executives of the Company and KCS named in the lawsuits.
The Company intends that all transactions with affiliates are on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board will be advised in advance of any such proposed
transaction or agreement and will utilize such procedures in evaluating their
terms and provisions as are appropriate in light of the Board's fiduciary
duties under Delaware law. In addition, the Company has an Audit Committee
consisting solely of independent directors. One of the responsibilities of the
Audit Committee is to review related party transactions.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and each person who is the beneficial owner of more than
10% of the Company's outstanding equity securities, to file with the Securities
and Exchange Commission ("SEC") and the New York Stock Exchange ("NYSE")
initial reports of ownership and changes in ownership of equity securities of
the Company. Specific due dates for these reports have been established by the
SEC and the Company is required to disclose in this Proxy Statement any failure
to file such reports by the prescribed dates during 1994. Officers, directors
and greater than 10% beneficial owners are required by SEC regulation to
furnish the Company with copies of all reports filed with the SEC pursuant to
Section 16(a) of the Exchange Act.
To the Company's knowledge, based solely on review of the copies of reports
furnished to the Company and written representations that no other reports were
required, all filings required pursuant to Section 16(a) of the Exchange Act
applicable to the Company's officers, directors and greater than 10% beneficial
owners were complied with during the year ended December 31, 1994.
PROPOSAL 2: INDEPENDENT ACCOUNTANTS
At meetings held on March 17, 1994 and March 24, 1995, the Board approved the
selection of Price Waterhouse as the Company's independent accountants for the
fiscal years ended December 31, 1994 and December 31, 1995, respectively.
Price Waterhouse were the Company's independent accountants for the fiscal year
ended December 31, 1993 and have been the independent accountants of the
Company since 1992.
The Board recommends that the stockholders vote FOR the ratification of Price
Waterhouse as independent accountants for 1994 and 1995.
Representatives of Price Waterhouse are expected to be present at the Meeting
with the opportunity to make a statement if they desire to do so, and they are
expected to be available to respond to appropriate questions.
PROPOSAL 3: APPROVAL OF THE 1994 INCENTIVE PLAN AND
THE INITIAL AWARDS GRANTED THEREUNDER
General
The Board of Directors adopted the 1994 Terex Corporation Long-Term Incentive
Plan (the "1994 Incentive Plan") on June 23, 1994, subject to stockholder
approval as described below. The purpose of the 1994 Incentive Plan is to (a)
advance the interests of the Company and its stockholders by providing
incentives and rewards to those employees who are in a position to contribute
to the long-term growth and profitability of the Company and to outside
directors, (b) assist the Company and its subsidiaries and affiliates in
attracting, retaining and motivating highly qualified employees and outside
directors for the successful conduct of their business and (c) make the
Company's compensation program competitive with those of other major employers.
The 1994 Incentive Plan authorizes the granting of (i) options ("Stock Option
Awards") to purchase shares of Common Stock, including Restricted Stock, (ii)
shares of Common Stock, including Restricted Stock ("Stock Awards"), and (iii)
cash bonus awards based upon a participant's job performance ("Performance
Awards"). Subject to adjustment as described below under "Adjustments," the
aggregate number of shares of Common Stock (including Restricted Stock, if any)
optioned or granted under the 1994 Incentive Plan shall not exceed 750,000
shares. The 1994 Incentive Plan provides that a committee (the "Committee") of
the Board of Directors consisting of two or more members thereof who are
nonemployee directors, shall administer the 1994 Incentive Plan and has
provided the Committee with the flexibility to respond to changes in the
competitive and legal environments, thereby protecting and enhancing the
Company's current and future ability to attract and retain directors and
officers and other key employees and consultants.
On June 23, 1994, the Committee also conditionally granted, subject to
stockholder approval, to the Named Executive Officers options to purchase
shares of Common Stock at an exercise price of $5.50 per share (which was the
closing price of the Common Stock on the NYSE on the date of grant) as follows
(together, the "Initial Executive Options"): Mr. Lenz, 43,000; Mr. DeFeo,
30,800; Mr. Langevin, 27,400; Mr. Rosenberg, 22,600; and Mr. Brandifino,
21,200. At the same time the Committee conditionally granted, subject to
stockholder approval, to the Named Executive Officers shares of Restricted
Stock as follows (together, the "Initial Executive Restricted Stock Awards"):
Mr. Lenz, 21,500; Mr. DeFeo, 15,400; Mr. Langevin, 13,700; Mr. Rosenberg,
11,300; and Mr. Brandifino, 10,600.
In furtherance of the purpose of the 1994 Incentive Plan, on June 23, 1994, the
Committee conditionally granted, subject to stockholder approval, Stock Option
Awards with respect to an aggregate of 115,200 shares of Common Stock to a
group of 74 officers and other key employees of the Company, not including the
Named Executive Officers, at an option price of $5.50 per share, which was the
closing price of the Common Stock on the NYSE on the date of grant. At the
same time, the Committee also conditionally granted, subject to stockholder
approval, awards of 57,600 shares of Restricted Stock to such group of 74
officers and other key employees of the Company, not including the Named
Executive Officers. Subsequent to grant, Stock Option Awards for an aggregate
of 11,900 shares of Common Stock and awards of an aggregate of 5,950 shares of
Restricted Stock have been forfeited as a result of nine employees' voluntary
termination. During the remainder of 1994, the Committee granted, subject to
stockholder approval, additional Stock Option Awards with respect to an
aggregate of 6,000 shares of Common Stock, at option prices ranging from $4.875
to $7.25 per share, and additional awards of 3,000 shares of Restricted Stock
to an additional three key employees. During 1995, the Committee granted,
subject to stockholder approval, additional Stock Option Awards with respect to
an aggregate of 39,700 shares of Common Stock, at an option price of $6.75 per
share, and additional awards of 19,850 shares of Restricted Stock to an
additional 32 key employees. All such Stock Option Awards conditionally
granted in 1994 and 1995 and which remain outstanding are hereinafter referred
to as the "Initial Key Employee Options," and all such awards of Restricted
Stock conditionally granted in 1994 and 1995 and which remain outstanding are
hereinafter referred to as the "Initial Key Employee Restricted Stock Awards."
The 1994 Incentive Plan also provides for automatic grants of Stock Option
Awards to nonemployee directors in accordance with Rule 16b-3(c)(2)(ii) under
the Exchange Act. Under the 1994 Incentive Plan, any individual who is a
nonemployee director on or after January 1, 1994 shall (a) after completing two
years of service as a member of the Board of Directors (including service prior
to the adoption of the 1994 Incentive Plan), be awarded an option to purchase
10,000 shares of Common Stock and (b) after completing five years of service
(including service prior to the adoption of the 1994 Incentive Plan), be
awarded an option to purchase an additional 10,000 shares of Common Stock.
Accordingly, pursuant to such provision, on June 23, 1994, (i) each of G. Chris
Andersen, Bruce I. Raben and David A. Sachs was conditionally granted a Stock
Option Award to purchase 10,000 shares of Common Stock and (ii) Adam E. Wolf
was conditionally granted a Stock Option Award to purchase 20,000 shares of
Common Stock, in each case at an option price of $5.50 (together, the "Initial
Director Options"). The Initial Executive Options, the Initial Executive
Restricted Stock Awards, the Initial Key Employee Options, the Initial Key
Employee Restricted Stock Awards and the Initial Director Options are sometimes
hereinafter referred to collectively as the "Initial Awards."
All actions taken to date by the Board of Directors and the Committee under and
with respect to the 1994 Incentive Plan, including the Initial Awards, are
conditioned upon approval by the Company's stockholders of the 1994 Incentive
Plan. The full text of the 1994 Incentive Plan is attached hereto as Exhibit
A. Set forth below is a general description of the 1994 Incentive Plan and the
Initial Awards. The following description of the 1994 Incentive Plan is
qualified in its entirety by reference to Exhibit A.
Description of the 1994 Incentive Plan and the Initial Awards
Shares Available
Subject to adjustment as described below under "Adjustments," the aggregate
number of shares of Common Stock (including Restricted Stock, if any) optioned
or granted under the 1994 Incentive Plan shall not exceed 750,000 shares. The
1994 Incentive Plan further provides that no participant may be granted, in the
aggregate, awards which would result in such participant receiving more than
15% of the maximum number of shares available under the 1994 Incentive Plan.
Eligibility
Employees (including officers of the Company as well as officers of the Company
who are also directors of the Company) serving in managerial, administrative or
professional positions with the Company or any of its subsidiaries or
affiliates participating in the 1994 Incentive Plan, may be selected by the
Committee to receive benefits under the 1994 Incentive Plan. Members of the
Board of Directors who are not employees of the Company or any of its
subsidiaries or affiliates will receive automatic grants of stock option awards
as described below under "Director Options."
Stock Option Awards
The Committee may grant Stock Option Awards that entitle an optionee to
purchase shares of Common Stock at a price per share determined by the
Committee but such price shall not be less than the closing price of a share of
Common Stock on the NYSE on the trading day immediately preceding the date the
award is authorized. Notwithstanding the foregoing, (a) the Committee may
specify such other price as it deems appropriate and (b) if the participant to
whom an Incentive Stock Option (as defined below) is granted owns, at the time
of the grant, more than 10% of the combined voting power of the Company or a
subsidiary of the Company, the option price of each share of Common Stock
subject to such grant shall not be less than 110% of the closing price
described in the immediately preceding sentence. The option price is payable
within 10 business days after the date of exercise (i) in cash, (ii) by the
transfer to the Company of whole shares of Common Stock that are already owned
by the optionee, (iii) by any combination of cash and such shares of Common
Stock or (iv) on such other terms and conditions as the Committee may
determine.
A Stock Option Award shall be exercisable upon the earlier of (a) such period
of time as the Committee shall determine and specify in the grant, but in no
event less than one year following the date of grant, (b) the participant's
death or disability or (c) a change of control of the Company (as defined
below). In addition, a Stock Option Award may only be exercised while the
participant is an active employee of the Company except (i) in the case of the
participant's death or disability, (ii) during a six-month period commencing on
the date of a participant's termination of employment by the Company other than
for cause, (iii) during the three-year period commencing on the date of the
participant's termination of employment, by the participant or the Company,
after a change of control of the Company, unless such termination is for cause
or (iv) if the Committee decides that it is in the best interest of the Company
to permit individual exceptions.
No Stock Option Award may be exercised more than ten years from the date of
grant except that no Incentive Stock Option granted to a participant who, at
the time of the grant, owns more than 10% of the combined voting power of the
Company, may be exercised more than five years from the date of grant.
Under the terms of the 1994 Incentive Plan, a "change of control of the
Company" will be deemed to have occurred (i) if the direct or indirect holdings
of Randolph W. Lenz, the Company's Chairman of the Board and Chief Executive
Officer, in the voting power or fair market value of the Common Stock, fall
below 20%, unless such holdings fall below 20% as a result of the voluntary
transfer by Mr. Lenz of his shares of Common Stock, (ii) if any "person" or
"group" within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act
become the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act,
of more of the then outstanding voting securities of the Company than are then
held either directly or indirectly by Mr. Lenz, otherwise than through a
transaction or transactions arranged by, or consummated with the prior approval
of, the Company's Board of Directors and (iii) if during any period of 12
consecutive months (not including any period prior to the adoption of the 1994
Incentive Plan), Present Directors and/or New Directors cease for any reason to
constitute a majority of the thereof. "Present Directors" means individuals
who at the beginning of such period constituted the members of the Board of
Directors, and "New Directors" means individuals whose election by the Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of at least two-thirds of the Directors then still in
office who were Present Directors or New Directors.
Stock Option Awards granted under the Incentive Plan may be options that are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986 (the "Code") ("Incentive Stock
Options") or options that are not intended to so qualify ("Non-Qualified Stock
Options").
Initial Executive Options and Initial Key Employee Options. The Initial
Executive Options and the Initial Key Employee Options are Incentive Stock
Options and become vested to the extent of one-fourth of the shares covered
thereby on each of the first four anniversaries of the date of grant. Upon the
termination of employment of the optionee with the Company and its subsidiaries
and affiliates, all non-vested options are forfeited except in the event of the
optionee's death or disability. Non-vested options which have not been so
forfeited become fully vested upon the earliest to occur of (a) the schedule
set forth above, (b) the optionee's death or disability and (c) a change of
control of the Company. The Initial Executive Options expire on June 23, 2004,
and the Initial Key Employee Options expire on various days in 2004, depending
on the date of grant.
Under the terms of the Initial Executive Options and the Initial Key Employee
Options, vested options are exercisable by the executive or key employee while
he or she is in active employment with the Company or a subsidiary or affiliate
except (a) in the case of the participant's death or disability, (b) during a
six-month period commencing on the date of the participant's termination of
employment by the Company other than for cause and (c) during the three-year
period commencing on the date of the participant's termination of employment,
by the participant or the Company, after a change of control of the Company,
unless such termination is for cause.
Stock Awards
A Stock Award involves the immediate transfer by the Company to a participant
of ownership of a specific number of shares of Common Stock, including
Restricted Stock, in consideration of the performance of services. Stock
Awards may be granted alone or in addition to other awards granted under the
1994 Incentive Plan under such terms as the Compensation Committee may
determine.
Restricted Stock may not be sold or transferred by the participant until all
restrictions that have been established by the Committee have lapsed; however,
the participant receiving Restricted Stock is immediately entitled to voting,
dividend and other ownership rights in the shares unless the Committee shall
otherwise determine. Upon a participant's termination of employment during any
period any restrictions are in effect, all Restricted Stock shall be forfeited
without compensation to the participant unless the Committee decides it is in
the best interest of the Company to permit individual exceptions.
At or after the date of grant of any Stock Award, the Committee may provide for
the payment of a cash bonus intended to offset the amount of any tax that the
participant may incur in connection with the award (the "Tax-Offset Rights").
Initial Executive Restricted Stock Awards and Initial Key Employee Restricted
Stock Awards. The Initial Executive Restricted Stock Awards were granted in
consideration of services theretofore rendered by the Named Executive Officers
to the Company, and the Initial Key Employee Restricted Stock Awards were
granted in consideration of services theretofore rendered by a group of 109
employees (nine of whom have voluntarily terminated their employment), not
including the Named Executive Officers, to the Company, and the shares of
Common Stock covered by those awards will not be issued or transferred until
the stockholders have approved the 1994 Incentive Plan.
The shares of Restricted Stock covered by the Initial Executive Restricted
Stock Awards and the Initial Key Employee Restricted Stock Awards become vested
to the extent of one-fourth of the shares covered thereby on each of the first
four anniversaries of the date of grant. Certificates for the shares of
Restricted Stock covered by such Stock Awards are to be issued in the name of
the executive or the key employee, as the case may be, and held in escrow by
the Company until all restrictions lapse or such shares are forfeited by the
executive or key employee.
Director Options
The 1994 Incentive Plan provides for automatic grants of Stock Option Awards
("Director Options") to individuals who are nonemployee directors on or after
January 1, 1994 as follows:
(i) A Director Option to purchase 10,000 shares of Common Stock shall
automatically be granted to each such individual after completion of two years
of service as a member of the Board of Directors; and
(ii) A Director Option to purchase an additional 10,000 shares of Common
Stock shall automatically be granted to each such individual after completion
of five years of service as a member of the Board of Directors.
Years of service completed includes all years served on the Board of Directors,
whether prior to, or subsequent to, the adoption of the 1994 Incentive Plan.
Director Options are subject to the terms and conditions governing Stock Option
Awards granted to other directors and employees, except that (a) Director
Options have a duration of five years and (b) the option price of each share of
Common Stock subject to a Director Option shall be the closing price of a share
of Common Stock on the NYSE on the trading day immediately preceding the date
of the award.
Transferability
A Stock Option Award is not transferable by a participant except by will or the
laws of descent and distribution, and during the participant's lifetime, shall
be exercisable only by the participant.
Adjustments
The number of shares of Common Stock covered by Stock Option Awards and the
option prices applicable thereto are subject to adjustment in the event of
stock splits, stock dividends, recapitalizations, mergers, consolidations,
combinations or exchanges of shares or other similar corporate changes
(including the exercise of currently existing warrants and the conversion of
currently existing preferred stock) or in the event of any special distribution
to the stockholders. The Committee may also make adjustments in the aggregate
number of shares that may be thereafter be available for Stock Option Awards or
other awards, both under the 1994 Incentive Plan as a whole and with respect to
individuals.
Performance Awards
The Committee may grant, either alone or in addition to other awards granted
under the 1994 Incentive Plan, Performance Awards consisting of cash, or any
other form of property as the Committee shall determine, based upon a
participant's job performance. Performance Awards shall entitle the
participant to receive cash, or such other property, if such participant
achieves the measures of performance or other criteria established by Committee
in its absolute discretion.
Administration and Amendments
The 1994 Incentive Plan is to be administered by a committee of not less than
two nonemployee directors who are "disinterested persons" within the meaning of
Rule 16b-3 under the Exchange Act. If the Board has a Compensation Committee,
the Committee will be comprised of members of the Compensation Committee who
are nonemployee directors. The Committee may make grants to participants under
any or a combination of all of the various categories of awards that are
authorized under the 1994 Incentive Plan.
The Board of Directors may amend the 1994 Incentive Plan, including amendments
as may be necessary or desirable as a result of changes in federal income tax
or other applicable laws, but may not, without the approval of the Terex
stockholders, (a) increase the total number of shares of Common Stock that may
be optioned or granted under the 1994 Incentive Plan or (b) amend any provision
of the 1994 Incentive Plan which, with respect to directors and officers (as
defined in Rule 16a-1(f) under the Exchange Act) of the Company, materially
modifies the eligibility requirements, materially increases benefits or
materially increases the number of shares issuable. In addition, the
provisions relating to Director Options may not be amended more than once in
any six-month period, except to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974 or the rules thereunder.
The 1994 Incentive Plan also provides that to the extent that any provision
thereof or action by the Committee fails to comply with Rule 16b-3 under the
Exchange Act, such provision or act shall be null and void. Furthermore,
should the requirements of Rule 16b-3 change, the Board of Directors may amend
the 1994 Incentive Plan to comply with the requirements of such Rule.
Incentive Plan Benefits
Set forth in the table below are the numbers of shares of Common Stock covered
by Stock Option Awards and Stock Awards, including the Initial Executive
Options, the Initial Executive Restricted Stock Awards, the Initial Director
Options, the Initial Key Employee Options and the Initial Key Employee
Restricted Stock Awards, that have been granted and remain outstanding under
the 1994 Incentive Plan to date.
Number of Shares Covered Number of Shares
Name and Position by Stock Option Awards Covered by Stock Awards
Randolph W. Lenz 43,000 21,500
Chairman of the Board
Ronald M. DeFeo 30,800 15,400
President,
Chief Executive Officer
and Chief Operating Officer
David J. Langevin 27,400 13,700
Executive Vice President
Marvin B. Rosenberg 22,600 11,300
Senior Vice President,
General Counsel and
Secretary
Ralph T. Brandifino 21,200 10,600
Senior Vice President,
Chief Financial Officer
and Treasurer
Named Executive Officers 145,00 72,500
as a group (5 persons)
All nonemployee directors 50,000 0
as a group (4 persons)
All employees, 149,000 74,500
not including Named
Executive Officers,
as a group (100 persons)
Except as described above under "Director Options," the types of awards, and
the amounts and recipients thereof, that will be granted under the 1994
Incentive Plan in the future are not determinable at this time.
Federal Income Tax Consequences
The following is a brief summary of certain of the federal income tax
consequences of certain transactions under the 1994 Incentive Plan based on
federal income tax laws currently in effect. This summary is not intended to
be exhaustive and does not describe state, local or foreign tax consequences.
Tax Consequences to Participants
Non-Qualified Stock Options. In general: (i) no income will be recognized by
an optionee at the time a Non-Qualified Stock Option is granted; (ii) at the
time of exercise of a Non-Qualified Stock Option, ordinary income will be
recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares if
they are nonrestricted on the date of exercise; and (iii) at the time of sale
of shares acquired pursuant to the exercise of a Non-Qualified Stock Option,
any appreciation (or depreciation) in the value of the shares after the date of
exercise will be treated as either short-term or long-term capital gain (or
loss) depending on how long the shares have been held.
Incentive Stock Options. No income generally will be recognized by an optionee
upon the grant or exercise of an Incentive Stock Option. For purposes of the
alternative minimum tax, however, the difference between the option price and
the fair market value of the Common Stock on the date of exercise is an
adjustment in computing the optionee's alternative minimum taxable income. If
shares of Common Stock are issued to an optionee pursuant to the exercise of an
Incentive Stock Option and no disqualifying disposition of the shares is made
by the optionee within two years after the date of grant or within one year
after the transfer of the shares to the optionee, then upon the sale of the
shares any amount realized in excess of the option price will be taxed to the
optionee as long-term capital gain and any loss sustained will be a long-term
capital loss.
If shares of Common Stock acquired upon the exercise of an Incentive Stock
Option are disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to any excess of the fair market value
of the shares at the time of exercise (or, if less, the amount realized on the
disposition of the shares in a sale or exchange) over the option price paid for
the shares. Any further gain (or loss) realized by the optionee generally will
be taxed as short-term or long-term capital gain (or loss) depending on the
holding period.
Restricted Stock. A recipient of shares of Restricted Stock generally will be
subject to tax at ordinary income rates on the fair market value of the shares,
reduced by any amount paid by the recipient, at such time as the shares are no
longer subject to a risk of forfeiture or restrictions on transfer for purposes
of Section 83 of the Code. However, a recipient who so elects under Section
83(b) of the Code within 30 days of the date of transfer of the shares will
recognize ordinary income on the date of transfer of the shares equal to the
excess of the fair market value of the shares (determined without regard to the
risk of forfeiture or restrictions on transfer) over any purchase price paid
for the shares. If a Section 83(b) election has not been made, any dividends
received with respect to shares of Restricted Stock that are subject at that
time to a risk of forfeiture or restrictions on transfer generally will be
treated as compensation that is taxable as ordinary income to the recipient.
A recipient of Tax-Offset Rights with respect to a Restricted Stock award will
be subject to tax at ordinary income rates on the amount of any cash received.
Performance Awards. A recipient of a Performance Award will be subject to tax
at ordinary income rates on the amount of any cash received.
Special Rules Applicable to Directors and Officers. In limited circumstances
where the sale of stock that is received as the result of a grant of an award
could subject a director or an officer to suit under Section 16(b) of the
Exchange Act, the tax consequences to the director or officer may differ from
the tax consequences described above. In these circumstances, unless a Section
83(b) election has been made, the principal difference usually will be to
postpone valuation and taxation of the stock received so long as the sale of
the stock received could subject the director or officer to suit under Section
16(b) of the Exchange Act, but not longer than six months.
Tax Consequences to the Company or Subsidiary
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company or subsidiary for which the
participant performs services will be entitled to a corresponding deduction
provided that, among other things, (i) such deduction is reasonable in amount,
constitutes an ordinary and necessary business expense, is not subject to the
$1,000,000 annual compensation limitation set forth in Section 162(m) of the
Code and does not constitute an "excess parachute payment" within the meaning
of Section 280G of the Code, and (ii) any applicable withholding obligations
are satisfied.
Recommendation
The Board of Directors believes that the approval of the 1994 Incentive Plan
and the Initial Awards is in the best interests of the Company and the Terex
stockholders because the 1994 Incentive Plan and the Initial Awards will enable
the Company to provide competitive equity incentives to directors and officers
and other key employees to enhance the profitability of the Company and
increase stockholder value.
The Board of Directors recommends that the stockholders vote FOR approval of
the 1994 Incentive Plan and the Initial Awards.
OTHER BUSINESS
The Board does not know of any other business to be brought before the Meeting.
In the event any such matters are brought before the Meeting, the persons named
in the enclosed Proxy will vote the Proxies received by them as they deem best
with respect to all such matters.
STOCKHOLDER PROPOSALS
All proposals of stockholders intended to be included in the proxy statement to
be presented at the 1996 Annual Meeting of Stockholders must be received at the
Company's offices at 500 Post Road East, Westport, Connecticut 06880, no later
than December 15, 1995.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994, including financial statements, has previously been mailed to stockholders
of the Company. The Annual Report does not constitute a part of the Proxy
solicitation materials.
STOCKHOLDERS ARE URGED TO FORWARD THEIR PROXIES WITHOUT DELAY. A PROMPT
RESPONSE WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
Marvin B. Rosenberg
Secretary
May 26, 1995
Westport, Connecticut
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TEREX CORPORATION
The undersigned hereby appoint Randolph W. Lenz, Ronald M. DeFeo and
Marvin B. Rosenberg, and any one or more of them, proxies with power of
substitution to act, by unanimous vote, or if only one votes or acts then by
that one to vote for the undersigned at the Annual Stockholders' Meeting of
Terex Corporation, to be held at 10:00 A.M. local time, June 23, 1995 at the
Westport Inn, 1595 Post Road East, Westport, Connecticut, and any adjournment
thereof, as follows:
(Please date and sign on reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE DIRECTORS NOMINATED IN ITEM 1. FOR THE RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS IN ITEM 2, AND IN THE DISCRETION OF THE BOARD OF
DIRECTORS IN CONNECTION WITH ITEM 3. PLEASE MARK BOX [ ] OR [X].
1. ELECTION OF DIRECTORS: Randolph W. Lenz, Ronald M. DeFeo,
Marvin B. Rosenberg, G. Chris Andersen,
William H. Fike, Bruce I. Raben,
David A. Sachs, Adam E. Wolf
FOR all WITHHOLD (INSTRUCTION: To withhold authority
2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. RATIFICATION OF 1994 TEREX CORPORATION LONG-TERM INCENTIVE PLAN AND
INITIAL AWARDS GRANTED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please date, sign and mail this card in the enclosed envelope.
4. Upon such other business as may properly come before the meeting or
any adjournments, hereby revoking any proxy heretofore given.
(Stockholder's Signature)
(Stockholder's Signature)
Dated , 1995
Please sign exactly as name appears above. When signing as attorney, executor,
administrator, trustee, etc., use full title. If stock is held jointly, each
owner must sign.
1995 ANNUAL MEETING
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
<PAGE>
EXHIBIT A
1994 TEREX CORPORATION
LONG-TERM INCENTIVE PLAN
Article I
Purpose
The purpose of the 1994 Terex Long-Term Incentive Plan (hereinafter referred to
as the "Plan") is to (a) advance the interests of Terex Corporation (the
"Corporation") and its stockholders by providing incentives and rewards to
those employees who are in a position to contribute to the long-term growth and
profitability of the Corporation and to outside directors; (b) assist the
Corporation and its subsidiaries and affiliates in attracting, retaining, and
motivating highly qualified employees and outside directors for the successful
conduct of their business; and (c) make the Corporation's compensation program
competitive with those of other major employers.
Article II
Definitions
2.1 A "Change in Control of the Corporation" shall be deemed to
occur in the event that any of the following circumstances have occurred:
(i) the direct and indirect holdings of Randolph W. Lenz
("RWL"), in the voting power or fair market value of the stock of the
corporation, fall below 20 percent, provided, however, that if such holdings of
RWL fall below 20 percent as a result of the voluntary sale or other voluntary
transfer by RWL of his shares of stock of the Corporation, solely for purposes
of the Plan, a Change in Control of the corporation shall not be deemed to
occur with respect to RWL;
(ii) any "person" or "group" within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act becomes the "beneficial owner", as
defined in rule 13d-3 under the Exchange Act, of more of the then outstanding
voting securities of the Corporation than are then held either directly or
indirectly by Randolph W. Lenz, otherwise than through a transaction or
transactions arranged by, or consummated with the prior approval of, the Board
of Directors; or
(iii) if during any period of 12 consecutive months (not
including any period prior to the adoption of this section), Present Directors
and/or New Directors cease for any reason to constitute a majority of the
Board.
For purposes of Section 2.1, the rules of Section 318(a) of the
Code and the regulations issued thereunder shall be used to determine stock
ownership.
For purposes of subsection (iii) of Section 2.1, "Present
Directors" shall mean individuals who at the beginning of such consecutive 12
month period were members of the Board of Directors and "New Directors" shall
mean any director whose election by the Board or whose nomination for election
by the Corporation's stockholders was approved by a vote of at least two-thirds
of the Directors then still in office who were Present Directors or New
Directors.
2.2 "Code" means the Internal Revenue Code of 1986, as now or
hereafter amended.
2.3 "Committee" means the committee established pursuant to Article
IV.
2.4 "Disability" means a Participant's inability to engage on any
substantial gainful activity because of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted,
or can be expected to last, for a continuous period of six (6) months or
longer.
2.5 "Employee" means all employees of the Corporation or of a
subsidiary or affiliate of the Corporation participating in the Plan, including
officers of the Corporation, as well as officers of the Corporation who are
also directors of the Corporation. However, an individual who is a member of
the Committee shall not be an "Employee" for the purposes of this Plan.
2.6 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
2.7 "Incentive Stock Option" means any stock option granted pursuant
to this Plan which is designated as such by the Committee and which complies
with Section 422 of the Code.
2.8 "Market Price" is the closing sale price of a share of Stock as
reported by the New York Stock Exchange on the last trading day immediately
prior to the date an option hereunder is exercised or such other date as the
value of a share of Stock is to be determined.
2.9 "Non-Qualified Stock Option" means any stock option granted
pursuant to this Plan which is not an Incentive Stock Option.
2.10 "Outside Director" means a member of the Board of Directors of
the Corporation who is a "disinterested person" within the meaning of Rule
16b-3(c)(2)(i) of the Exchange Act, and (ii) an "outside director" within the
meaning of Section 162(m) of the Code or any successor provision thereto (as
may be interpreted from time to time by Treasury Regulations promulgated
thereunder):
2.11 "Participant" means a Participant as defined in Article III.
2.12 "Restricted Stock" means Stock subject to restrictions on the
transfer of such Stock, conditions of forfeitability of such Stock, or any
other limitations or restrictions as determined by the Committee.
2.13 "Stock" means Stock as defined in Section 5.1.
ARTICLE III
Participation
The participants in the Plan ("Participants") shall be (a) those
Employees serving in a managerial, administrative, or professional position who
are selected to participate in the Plan by the Committee of the Board of
Directors of the Corporation named to administer the Plan pursuant to Article
IV and (b) Outside Directors.
ARTICLE IV
Administration
The Plan shall be administered and interpreted by a committee of two
or more members of the Board of Directors who are Outside Directors
(hereinafter referred to as the "Committee") appointed by the Board. If the
Board has appointed a Compensation Committee, the Committee shall be comprised
of the members of the Compensation Committee that are Outside Directors. All
decisions and acts of the Committee shall be final and binding upon all
Participants. The Committee shall: (i) determine the number and types of
awards to be made under the Plan; (ii) select the awards to be made to
Participants; (iii) set the option price, the number of options to be awarded,
and the number of shares to be awarded out of the total number of shares
available for award; (iv) delegate to the Chairman, President, Executive Vice
President and Chief Financial Officer (acting as a group) of the Corporation
the right to allocate awards among Employees who are not directors or officers
(as defined in Rule 16a-1(f) under the Exchange Act) of the Corporation, such
delegation to be subject to such terms and conditions as the Committee in its
discretion shall determine; (v) establish administrative regulations to further
the purpose of the Plan; and (vi) take any other action desirable or necessary
to interpret, construe or implement properly the provisions of the Plan.
ARTICLE V
Awards
5.1 Form of Awards. Awards under this Plan may be in any of the
following forms (or a combination thereof): (i) stock option awards in
accordance with Article VI; (ii) grants of Stock, including Restricted Stock,
in accordance with Article VII; or (iii) Performance Awards in accordance with
Article VIII. "Stock" shall mean the common stock, $.01 par value, of the
Corporation. All awards (other than Performance Awards) shall be made pursuant
to award agreements between the Participant and the Corporation. The
agreements shall be in such form as the Committee approves from time to time.
5.2 Maximum Amount Available. The total number of shares of Stock
(including Restricted Stock, if any) optioned or granted under this Plan during
the term of the Plan shall not exceed 750,000 shares except as increased or
otherwise adjusted in accordance with Section 5.3 . During the 10-year period
commencing on the effective date of this Plan, no Participant may be granted,
in the aggregate, awards which would result in the Participant receiving more
than 15% of the maximum number of shares available for award under the Plan.
Solely for the purpose of computing the total number of shares of Stock
optioned or granted under this Plan, there shall not be counted any shares
which have been forfeited if the Participant received no benefits of ownership
from the Stock and any shares covered by an option which, prior to such
computation, has terminated in accordance with its terms or has been canceled
by the Participant or the Corporation.
5.3 Adjustment in the Event of Recapitalization, Etc. In the event
of any change in the capital structure of the Corporation by reason of any
stock split, stock dividend, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change (including
the exercise of currently existing Warrants and the conversion of currently
existing Preferred Stock) or in the event of any special distribution to the
stockholders, the Committee shall make such equitable adjustments in the number
of shares and prices per share applicable to options then outstanding and in
the number of shares which are available thereafter for Stock Option Awards (as
defined in Section 6.1) or other awards, both under the Plan as a whole and
with respect to individuals, as the Committee determines are necessary and
appropriate. Any such adjustments shall be conclusive and binding for all
purposes of the Plan.
ARTICLE VI
Stock Options
6.1 Grant of Award. The Corporation may award options to purchase
Stock, including Restricted Stock, (hereinafter referred to as "Stock Option
Awards") to such Participants (other than Outside Directors) as the Committee,
or the Chairman, President, Executive Vice President and Chief Financial
Officer (acting as a group) of the Corporation, if the Committee in its
discretion delegates the right to allocate awards pursuant to Article IV,
authorizes and under such terms as the Committee establishes. The Committee
shall determine with respect to each Stock Option Award and designate in the
grant whether a Participant is to receive an Incentive Stock Option or a
Non-Qualified Stock Option.
6.2 Awards to Outside Directors. Any individual who is an Outside
Director on or after January 1, 1994 shall (a) after completing two years of
service as a member of the Board of Directors, be awarded an option to purchase
10,000 shares of Stock and (b) after completing five years of service as a
member of the Board of Directors, be awarded an option to purchase an
additional 10,000 shares of Stock. A stock option awarded under either clauses
(a) or (b) of the preceding sentence shall have a duration of five years
commencing on the date of the award. The option price of each share of Stock
subject to a Stock Option Award under this Section 6.2 shall be the closing
price of a share of Stock on the trading day immediately preceding the date of
the award as reported on the New York Stock Exchange. Years of service
completed shall include all years served whether prior to, or subsequent to,
the adoption of this Plan. Options awarded under this section 6.2 shall be
subject to the terms and conditions of Sections 6.4, 6.5 and 6.6 except to the
extent that the provisions of such Sections are inconsistent with the
provisions of this Section 6.2
6.3 Option Price. Except as otherwise provided in Section 6.2 and
this Section 6.3, the option price of each share of Stock subject to a Stock
Option Award shall be (i) determined by the Committee but shall be no less than
the closing price of a share of Stock on the trading day immediately preceding
the date the award is authorized as reported on the New York Stock Exchange and
(ii) specified in the grant. Notwithstanding the above to the contrary, (a)
the Committee may specify such other price as it deems appropriate and (b)) in
the Participant to whom an Incentive Stock Option is granted owns, at the time
of the grant, more than ten percent (10%) of the combined voting power of the
Corporation or a subsidiary of the Corporation, the option price of each share
of Stock subject to such grant shall be not less than one hundred ten percent
(110%) of the closing price described in the preceding sentence.
6.4 Terms of Option. A stock option by its terms shall not be
transferable by the Participant other than by will or the laws of descent and
distribution, and, during the Participant's lifetime, shall be exercisable only
by the Participant. A stock option by its terms also shall be of no more than
ten years' duration, except that an Incentive Stock Option granted to a
Participant who, at the time of the grant, owns Stock representing more than
ten percent (10%) of the combined voting power of the Corporation shall by its
terms be of no more than five years' duration. Except as otherwise provided in
Section 6.2, a stock option by its terms shall be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but in no event less than one year following the date of
the grant of such award; (ii) the Participant's death or Disability; or (iii) a
Change in Control of the Corporation.
Except as otherwise provided in Section 6.2, an option is only
exercisable by a Participant while the Participant is in active employment with
the Corporation, or its subsidiary or affiliate, except (i) in the case of a
Participant's death or Disability; (ii) during a six-month period commencing on
the date of a Participant's termination of employment by the Corporation other
than for cause; (iii) during the three-year period commencing on the date of
the Participant's termination of employment, by the participant or the
Corporation, after a Change in Control of the Corporation, unless such
termination of employment is for cause; or (iv) if the Committee decides that
it is in the best interest of the Corporation to permit individual exceptions.
An option may not be exercised pursuant to this paragraph after the expiration
date of the option.
6.5 Exercise of Option. An option may be exercised with respect to
part or all of the shares subject to the option by giving written notice to the
Corporation of the exercise of the option. The option price for the shares for
which an option is exercised shall be paid on or within ten business days after
the date of exercise in cash, in whole shares of Stock owned by the Participant
prior to exercising the option, or in a combination of cash and such shares of
Stock or on such terms and conditions as the Committee determines. The value
of any share of Stock delivered in payment of the option price shall be its
Market Price on the date the option is exercised.
6.6 Dividends on Shares Covered By Options. The Committee may, in
its discretion, grant to Participants holding stock options the right to
receive with respect to each share covered by an option payments of amounts
equal to the regular cash dividends paid to holders of stock during the period
that the option is outstanding.
ARTICLE VII
Grants of Stock
The Committee may grant, either alone or in addition to other awards
granted under the Plan, shares of Stock (including Restricted Stock) to such
Participants as the Committee, or the Chairman, President, Executive Vice
President and Chief Financial Officer (acting as a group) of the Corporation,
if the Committee in its discretion delegates the right to allocate awards
pursuant to Section 4, authorizes and under such terms as the Committee
establishes. The Committee, in its discretion, may also make a cash payment to
a Participant granted shares of Stock under the Plan to allow such Participant
to satisfy tax obligations arising out of receipt of the Stock.
ARTICLE VIII
Performance Awards
The Committee may grant, either alone or in addition to other awards
granted under the Plan, cash bonus awards based on a Participant's job
performance ("Performance Awards") to such Participants as the Committee, or
the Chairman, President, Executive Vice President and Chief Financial Officer
(acting as a group) of the Corporation, if the Committee in its discretion
delegates the right to allocate awards pursuant to Section 4, authorizes and
under such terms as the Committee establishes. Performance awards may be paid
in cash or any other form of property as the Committee shall determine.
Performance Awards shall entitle the Participant to receive an award if the
measures of performance or other criteria established by the Committee are met.
The measures of performance or other criteria shall be established by the
Committee in its absolute discretion. The Committee shall determine the times
at which Performance Awards are to be made and all conditions of such awards.
Performance awards shall be subject to any applicable federal, state or local
withholding tax requirements.
ARTICLE IX
Withholding
In order to enable the Corporation to meet any application federal,
state or local withholding tax requirements arising as a result of the exercise
of a stock option, the grant of shares of Stock, or the vesting of Restricted
Stock, a Participant shall pay to the Corporation the amount of tax to be
withheld. In the alternative, the Participant may elect to satisfy such
obligation (i) by having the Corporation withhold shares that otherwise would
be delivered to the Participant pursuant to the exercise of the option, the
grant of Stock, or the vesting of Restricted Stock for which the tax is being
withheld, (ii) by delivering to the Corporation other shares of Stock owned by
the Participant prior to exercising the option, receiving the awarded shares,
or becoming vested in the Restricted Stock or (iii) by making a payment to the
Corporation consisting of a combination of cash and such shares of Stock. Such
an election shall be subject to the following: (a) the election shall be made
in such manner as may be prescribed by the Committee; (b) the election shall be
made prior to the date to be used to determine the tax to be withheld; and (c)
if the Participant is a person subject to Section 16 of the Exchange Act, the
election shall be irrevocable and shall not be made within six months after the
grant of the option, except that this six-month limitation shall not apply in
the event the Participant delivers to the Corporation previously owned shares
of Stock, and shall be made either at least six months prior to the date to be
used to determine the tax to be withheld or during a ten-day period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings of the Corporation and ending
on the 12th business day following such date.
ARTICLE X
General Provisions
10.1 Any assignment or transfer of any awards without the written
consent of the Corporation shall be null and void.
10.2 Nothing contained herein shall require the Corporation to
segregate any monies from its general funds, or to create any trusts, or to
make any special deposits for any immediate or deferred amounts payable to any
Participant for any year.
10.3 Participation in this Plan shall not (i) affect the
Corporation's right to discharge a Participant or (ii) constitute an agreement
of employment between a Participant and the Corporation.
10.4 Restricted Stock may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed.
10.5 The Participant shall have, with respect to Restricted Stock,
all of the rights of a stockholder of the Corporation, including the right to
vote the shares and the right to receive any dividends, unless the Committee
shall otherwise determine.
10.6 Upon a Participant's termination of employment during the
period any restrictions are in effect, all Restricted Stock shall be forfeited
without compensation to the Participant unless the Committee decides that it is
in the best interest of the Corporation to permit individual exceptions.
ARTICLE XI
Amendment, Suspension, or Termination
11.1 General Rule. The Board of Directors may suspend, terminate, or
amend the Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the federal income tax laws
and other applicable laws, but may not, without approval by the holders of a
majority of all outstanding shares entitled to vote on the subject at a meeting
of stockholders of the Corporation, (a) increase the total number of shares of
Stock that may be optioned or granted under the Plan or (b) amend any provision
of the Plan which, with respect to directors and officers (as defined in Rule
16a-1(f) of the Exchange Act) of the Corporation, materially modifies the
eligibility requirements, materially increases benefits or materially increases
the number of shares issuable. However, in no event shall any provision of the
Plan applicable to Stock option Awards to Outside Directors be amended more
often than once in any six-month period, except to comport to changes in the
Code, ERISA or the rules thereunder.
11.2 Compliance with Rule 16b-3. With respect to persons subject to
Section 16 of the Exchange Act, transactions under the Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as
applicable during the term of the Plan. To the extent that any provision of
the Plan or action by the Committee or its delegates fail to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. Should the requirements of Rule 16b-3 change, the
Board of Directors may amend this plan to comply with the requirements of that
rule or its successor provision or provisions.
ARTICLE XII
Effective Date and Duration of the Plan
This Plan shall be effective on the date of the approval of the Plan
by the holders of a majority of the shares of Stock; provided, however, that
the adoption of the Plan is subject to such shareholder approval within 12
months before or after the date of adoption of the Plan by the Board of
Directors. The Plan shall be null and void and of no effect if the foregoing
condition is not fulfilled, and in such event each Stock Option Awards and
Stock grant hereunder shall, notwithstanding any of the preceding provisions of
the Plan, be null and void and of no effect.
