APPENDIX B
TEREX CORPORATION 2000 INCENTIVE PLAN
Terex Corporation (the "Company") hereby establishes and
adopts the following 2000 Incentive Plan (the "Plan").
RECITALS
WHEREAS, the Company desires to encourage high levels of
performance by those individuals who are key to the success of the Company, to
attract new individuals who are highly motivated and who will contribute to the
success of the Company and to encourage such individuals to remain as directors,
officers, employees, consultants and/or advisors of the Company and its
subsidiaries and affiliates by increasing their proprietary interest in the
Company's growth and success.
WHEREAS, to attain these ends, the Company has formulated the
Plan embodied herein to authorize the granting of incentive awards through
grants of stock options, grants of stock appreciation rights, grants of share
purchase awards, grants of restricted share awards and grants of performance
awards to those individuals whose judgment, initiative and efforts are, have
been or are expected to be responsible for the success of the Company.
NOW, THEREFORE, the Company hereby constitutes, establishes
and adopts the following Plan and agrees to the following provisions:
ARTICLE I
DEFINITIONS
1.1. "Award" shall include a grant of an Option, a grant of a stock
appreciation right, a grant of a Share Purchase Award, a grant of a Restricted
Share Award, a grant of a Performance Award or any other award made under the
terms of the Plan.
1.2. "Cause" shall mean: (i) conviction in a court of law of, or guilty
plea or no contest plea to, a felony charge or a misdemeanor charge involving
moral turpitude, (ii) willful, substantial and continued failure to perform
duties, (iii) willful engagement in conduct that is demonstrably and materially
injurious to the Company, (iv) entry by a court or quasi-judicial governmental
agency of the United States or a political subdivision thereof of an order
barring an Employee from serving as an officer or director of a public company,
(v) gross negligence resulting in material economic harm to the Company, or (vi)
a breach by an Employee of any agreement between such Employee and the Company.
For the purposes of clauses, (ii), (iii) and (v) of this definition, no act or
failure to act shall be deemed "willful" or "gross negligence" (x) if caused by
a Disability or (y) unless done, or omitted to be done, not in good faith or
without reasonable belief that such act or omission was in the best interest of
the Company.
1.3. A "Change in Control of the Company" shall mean:
(i) the sale, assignment, lease, transfer or conveyance (in
one transaction or a series of transactions) of all or
substantially all of the Company's assets;
(ii) the Company shall be merged or consolidated with
another corporation, and as a result of such merger or
consolidation either (a) the Company is not the continuing or
surviving corporation or (b) less than 51% of the outstanding
voting securities of the surviving or resulting corporation shall
be owned directly or indirectly in the aggregate by the
shareholders of the Company immediately prior to such merger or
consolidation;
(iii) the liquidation or dissolution of the Company or the
adoption of a plan by the stockholders of the Company relating to
the dissolution or liquidation of the Company;
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(iv) the acquisition by any person or group (as such term is
used in Section 13(d)(3) of the Exchange Act) of a direct or
indirect majority in interest (more than 50%) of the voting power
of the Shares of the Company by way of purchase, merger or
consolidation or otherwise, or
(v) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of the Company (which includes any new directors whose
nomination for election by such Board of Directors was approved
by a vote of at least 66 2/3% of the directors then still in
office who were either directors at the beginning of such period
or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Board of Directors of the Company.
For purposes of this Section 1.3, the term "person" shall mean any
individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other entity.
For purposes of Section 1.3, the rules of Section 318(a) of the Code
and the regulations issued thereunder shall be used to determine stock
ownership.
1.4. "Code" means the Internal Revenue Code of 1986, as now or
hereafter amended.
1.5. "Committee" means the committee established pursuant to Section
4.2.
1.6. "Directors" means the members of the Board of Directors of the
Company.
1.7. "Disability" means a Participant's inability to engage in 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 twelve (12)
months or longer.
1.8. "Employee" means all employees of the Company or of a subsidiary
or affiliate of the Company participating in the Plan, including officers
of the Company who are also directors of the Company.
1.9. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.10. "Fair Market Value" shall have the meaning set forth in Section
10.2.
1.11. "Non-Employee Director" is a Director who is a "Non-Employee
Director" within the meaning of Rule 16b-3(b)(3)(i) of the Exchange Act.
1.12. "Option" means options to purchase Shares.
1.13. "Outside Director" is a Director who is an "outside director"
within the meaning of Section 162(m)(4)(C)(i) of the Code.
1.14. "Participant" means a person who receives an Award under the
Plan.
1.15. "Performance Awards" means cash bonuses or other Awards under
the Plan, including Options, Share Purchase Awards, Restricted Share Awards
and stock appreciation rights, based on performance measures.
1.16. "Qualifying Performance Awards" means Performance Awards which
the Committee intends to qualify for a tax deduction under the Code.
1.17. "Restricted Shares" shall have the meaning set forth in Section
8.1.
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1.18. "Restricted Share Awards" means Shares subject to restrictions
on their transfer, conditions of forfeitability, or any other limitations
or restrictions as determined by the Committee.
1.19. "Shares" means shares of Common Stock, par value $.01, of the
Company.
1.20. "Share Purchase Awards" shall have the meaning set forth in
Section 7.1.
ARTICLE 2
PURPOSE OF THE PLAN
2.1 Purpose. The purpose of the Plan is to assist the Company in
attracting and retaining selected individuals to serve as directors,
officers, consultants, advisors and Employees of the Company and its
subsidiaries and affiliates who will contribute to the Company's success
and to achieve long-term objectives which will inure to the benefit of all
stockholders of the Company through the additional incentive inherent in
the ownership of the Company's Shares. Options granted under the Plan will
be either "incentive stock options," intended to qualify as such under the
provisions of Section 422 of the Code, or "nonqualified stock options." For
purposes of the Plan, the term "subsidiary" shall mean "subsidiary
corporation," as such term is defined in Section 424(f) of the Code, and
"affiliate" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act.
ARTICLE 3
SHARES SUBJECT TO AWARDS
3.1. Number of Shares. Subject to the adjustment provisions of Section
10.11 hereof, the maximum number of Shares that may be delivered pursuant
to all Awards granted under this Plan shall be 2,000,000 Shares. This
aggregate Share limit, as adjusted, shall constitute and be referred to as
the "Share Limit." For purposes of this Section 3.1, the Shares that shall
be counted toward the Share Limit shall include all Shares:
(1) issued or issuable pursuant to Options that have been or may be
exercised;
(2) issued or issuable pursuant to Share Purchase Awards; and
(3) issued as, or subject to issuance as, a Restricted Share Award.
3.2. Shares Subject to Terminated Awards. The Shares covered by any
unexercised portions of terminated or expired Options granted under the
Plan, Shares covered by a Restricted Share Award that is forfeited as
provided in the Plan and Shares subject to any Awards which are otherwise
surrendered by the Participant without receiving any payment or other
benefit with respect thereto may again be subject to new Awards under the
Plan. In the event the exercise price of an Option is paid in whole or in
part through the delivery of Shares, the number of Shares issuable in
connection with the exercise of the Option shall not again be available for
the grant of Awards under the Plan. Shares subject to Options, or portions
thereof, which have been surrendered in connection with the exercise of
stock appreciation rights shall not again be available for the grant of
Awards under the Plan.
3.3. Character of Shares. Shares delivered under the Plan may be
authorized and unissued Shares or Shares acquired by the Company, or both.
3.4. Limitations on Grants to Individual Participant. Subject to
adjustments pursuant to the provisions of Section 10.11 hereof, the number
of Shares which may be granted hereunder to any Employee during any fiscal
year under all forms of Awards shall not exceed 750,000 Shares.
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ARTICLE 4
ELIGIBILITY AND ADMINISTRATION
4.1. Awards to Employees and Directors. (a) Participants shall consist
of such key officers, employees, consultants, advisors and directors of the
Company or any of its subsidiaries or affiliates as the Committee shall
select from time to time, provided, however, that an Option that is
intended to qualify as an "incentive stock option" may be granted only to
an individual that is an Employee. The Committee's designation of a
Participant in any year shall not require the Committee to designate such
person to receive Awards or grants in any other year. The designation of a
Participant to receive Awards or grants under one portion of the Plan shall
not require the Committee to include such Participant under other portions
of the Plan.
(b) No Option which is intended to qualify as an "incentive stock
option" may be granted to any Employee who, at the time of such grant,
owns, directly or indirectly (within the meaning of Sections 422(b)(6) and
424(d) of the Code), Shares possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
of its subsidiaries or affiliates, unless at the time of such grant, (i)
the exercise price is fixed at not less than 110% of the Fair Market Value
of the Shares subject to such Option, determined on the date of the grant,
and (ii) the exercise of such Option is prohibited by its terms after the
expiration of five years from the date such Option is granted.
4.2. Administration. (a) The Plan shall be administered by a committee
(the "Committee") consisting of not fewer than two Directors as designated
by the Directors. The Directors may remove from, add members to, or fill
vacancies in the Committee. Each member of the Committee shall be a
Non-Employee Director and an Outside Director, except that if the Directors
determine that (i) the Plan cannot or need not satisfy the requirements of
Rule 16b-3 of the Exchange Act (such that grants of Awards are not or need
not be exempt from Section 16(b) of the Exchange Act), then there may be
less than two members of the Committee and the members of the Committee
need not be Non-Employee Directors or (ii) they no longer want the Plan to
comply with the requirements of Section 162(m) of the Code and the
regulations thereunder or the Plan need not comply with such requirements,
then there may be less than two members of the Committee and the members of
the Committee need not be Outside Directors. The Compensation Committee of
the Board of Directors of the Company shall comprise the Committee under
the Plan so long as the members of the Compensation Committee meet the
requirements set forth in this clause (a).
(b) The Committee is authorized, subject to the provisions of the
Plan, to establish such rules and regulations as it may deem appropriate
for the conduct of meetings and proper administration of the Plan. All
actions of the Committee shall be taken by majority vote of its members.
Subject to the requirements of Section 16(b) of the Exchange Act and
Section 162(m) of the Code (in each case to the extent applicable), the
Committee in its discretion may delegate to the Chairman of the Board
and/or Chief Executive Officer of the Company the right to grant Awards
under the Plan on such terms and conditions as the Committee may from time
to time establish.
(c) Subject to the provisions of the Plan, the Committee shall have
authority, in its sole discretion, to grant Awards under the Plan, to
interpret the provisions of the Plan and, subject to the requirements of
applicable law, including (if applicable) Rule 16b-3 of the Exchange Act,
to prescribe, amend, and rescind rules and regulations relating to the Plan
or any Award thereunder as it may deem necessary or advisable. All
decisions made by the Committee pursuant to the provisions of the Plan
shall be final, conclusive and binding on all persons, including the
Company, its stockholders, Directors and Employees, and other Plan
Participants.
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ARTICLE 5
OPTIONS
5.1. Grant of Options. The Committee shall determine, within the
limitations of the Plan, those key individuals and the Directors and
Employees to whom Options are to be granted under the Plan, the number of
Shares that may be purchased under each such Option and the exercise price
of each such Option, and shall designate such Options at the time of the
grant as either "incentive stock options" or "nonqualified stock options";
provided, however, that Options granted to Employees of an affiliate (that
is not also a subsidiary) or to non-employees of the Company may only be
"nonqualified stock options."
5.2. Share Option Agreements; etc. All Options granted pursuant to the
Plan (a) shall be authorized by the Committee and (b) shall be evidenced in
writing by stock option agreements ("Share Option Agreements") in such form
and containing such terms and conditions as the Committee shall determine
which are not inconsistent with the provisions of the Plan, and, with
respect to any Share Option Agreement granting Options which are intended
to qualify as "incentive stock options," are not inconsistent with Section
422 of the Code. Granting of an Option pursuant to the Plan shall impose no
obligation on the recipient to exercise such Option. Any individual who is
granted an Option pursuant to the Plan may hold more than one Option
granted pursuant to the Plan at the same time and may hold both "incentive
stock options" and "nonqualified stock options" at the same time. To the
extent that any Option does not qualify as an "incentive stock option"
(whether because of its provisions, the time or manner of its exercise or
otherwise) such Option or the portion thereof which does not so qualify
shall constitute a separate "nonqualified stock option."
5.3. Option Exercise Price. Subject to Section 4.1(b), the exercise
price per each Share purchasable under any Option granted pursuant to the
Plan shall not be less than 100% of the Fair Market Value of such Share on
the date of the grant of such Option.
5.4. Other Provisions. Options granted pursuant to this Article 5
shall be made in accordance with the terms and provisions of Article 10
hereof and any other applicable terms and provisions of the Plan.
ARTICLE 6
STOCK APPRECIATION RIGHTS
6.1. Grant and Exercise. Share appreciation rights may be granted in
conjunction with all or part of any Option granted under the Plan provided
such rights are granted at the time of the grant of such Option. A "stock
appreciation right" is a right to receive cash or Shares, as provided in
this Article 6, in lieu of the purchase of a Share under a related Option.
A stock appreciation right or applicable portion thereof shall terminate
and no longer be exercisable upon the termination or exercise of the
related Option, and a stock appreciation right granted with respect to less
than the full number of Shares covered by a related Option shall not be
reduced until, and then only to the extent that, the exercise or
termination of the related Option exceeds the number of Shares not covered
by the stock appreciation right. A stock appreciation right may be
exercised by the holder thereof in accordance with Section 6.2 by giving
written notice thereof to the Company and surrendering the applicable
portion of the related Option. Upon giving such notice and surrender, the
holder shall be entitled to receive an amount determined in the manner
prescribed in Section 6.2. Options which have been so surrendered, in whole
or in part, shall no longer be exercisable to the extent the related stock
appreciation rights have been exercised.
6.2. Terms and Conditions. Share appreciation rights shall be subject
to such terms and conditions, not inconsistent with the provisions of the
Plan, as shall be determined from time to time by the Committee, including
the following:
(a) Share appreciation rights shall be exercisable only at such time
or times and to the extent that the Options to which they relate shall be
exercisable in accordance with the provisions of the Plan.
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(b) Upon the exercise of a stock appreciation right, a holder shall be
entitled to receive up to, but no more than, an amount in cash or whole
Shares equal to the excess of the then Fair Market Value of one Share over
the exercise price per Share specified in the related Option multiplied by
the number of Shares in respect of which the stock appreciation right shall
have been exercised. The holder of a stock appreciation right shall specify
in his written notice of exercise, whether payment shall be made in cash or
in whole Shares. Each stock appreciation right may be exercised only at the
time and so long as a related Option, if any, would be exercisable or as
otherwise permitted by applicable law.
(c) Upon the exercise of a stock appreciation right, the Option or
part thereof to which such stock appreciation right is related shall be
deemed to have been exercised for the purpose of the Share Limit.
(d) With respect to stock appreciation rights granted in connection
with an Option that is intended to be an "incentive stock option," the
following shall apply: (i) no stock appreciation right shall be
transferable otherwise than by will or by the laws of descent and
distribution, and stock appreciation rights shall be exercisable, during
the holder's lifetime, only by the holder; and (ii) stock appreciation
rights granted in connection with an Option may be exercised only when the
Fair Market Value of the Shares subject to the Option exceeds the exercise
price at which Shares can be acquired pursuant to the Option.
ARTICLE 7
STOCK PURCHASE AWARDS
7.1. Grant of Share Purchase Awards. The term "Share Purchase Award"
means the right to purchase Shares of the Company and to pay for such
Shares through a loan made by the Company to an Employee (a "Purchase
Loan") as set forth in this Article 7.
7.2. Terms of Purchase Loans. (a) Purchase Loan. Each Purchase Loan
shall be evidenced by a promissory note. The term of the Purchase Loan
shall be for a period of years as determined by the Committee, and the
proceeds of the Purchase Loan shall be used exclusively by the Participant
for purchase of Shares from the Company at a purchase price equal to their
Fair Market Value on the date of the Share Purchase Award.
(b) Interest on Purchase Loan. A Purchase Loan shall be non-interest
bearing or shall bear interest at whatever rate the Committee shall
determine (but not in excess of the maximum rate permissible under
applicable law), payable in a manner and at such times as the Committee
shall determine. Those terms and provisions as the Committee shall
determine shall be incorporated into the promissory note evidencing the
Purchase Loan.
(c) Forgiveness of Purchase Loan. Subject to Section 7.4 hereof, the
Company may forgive the repayment of up to 100% of the principal amount of
the Purchase Loan, subject to such terms and conditions as the Committee
shall determine and set forth in the promissory note evidencing the
Purchase Loan. A Participant's Purchase Loan can be prepaid at any time,
and from time to time, without penalty.
7.3. Security for Loans. (a) Stock Power and Pledge. Purchase Loans
granted to Participants shall be secured by a pledge of the Shares acquired
pursuant to the Share Purchase Award. Such pledge shall be evidenced by a
pledge agreement (the "Pledge Agreement") containing such terms and
conditions as the Committee shall determine. Purchase Loans shall be
recourse or nonrecourse with respect to a Participant, as determined from
time to time by the Committee. The share certificates for the Shares
purchased by a Participant pursuant to a Share Purchase Award shall be
issued in the Participant's name, but shall be held by the Company as
security for repayment of the Participant's Purchase Loan together with a
stock power executed in blank by the Participant (the execution and
delivery of which by the Participant shall be a condition to the issuance
of the Share Purchase Award). The Participant shall be entitled to exercise
all rights applicable to such Shares, including, but not limited to, the
right to vote such Shares and the right to receive dividends and other
distributions made with respect to such Shares; provided, however, that any
Shares distributed as a dividend or otherwise with respect to such Shares
shall be subject to the same restrictions as such Shares and held by the
Company as security for repayment of the Participant's Purchase Loan as
provided in this Section 7.3. When the Purchase Loan and any accrued but
unpaid interest thereon has been repaid or otherwise satisfied in full, the
Company shall deliver to the Participant the share certificates for the
Shares purchased by a Participant under the Share Purchase Award.
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(b) Release and Delivery of Share Certificates During the Term of the
Purchase Loan. The Company shall release and deliver to each Participant
certificates for Shares purchased by a Participant pursuant to a Share
Purchase Award, in such amounts and on such terms and conditions as the
Committee shall determine, which shall be set forth in the Pledge
Agreement.
(c) Release and Delivery of Share Certificates Upon Repayment of the
Purchase Loan. The Company shall release and deliver to each Participant
certificates for the Shares purchased by the Participant under the Share
Purchase Award and then held by the Company, provided the Participant has
paid or otherwise satisfied in full the balance of the Purchase Loan and
any accrued but unpaid interest thereon. In the event the balance of the
Purchase Loan is not repaid, forgiven or otherwise satisfied within 90 days
after (i) the date repayment of the Purchase Loan is due (whether in
accordance with its term, by reason of acceleration or otherwise), or (ii)
such longer time as the Committee, in its discretion, shall provide for
repayment or satisfaction, the Company shall retain those Shares then held
by the Company in accordance with the Pledge Agreement.
(d) Recourse Purchase Loans. Notwithstanding Sections 7.3(a), (b) and
(c) above, in the case of a recourse Purchase Loan, the Committee may make
a Purchase Loan on such terms as it determines, including without
limitation not requiring a pledge of the acquired Shares.
7.4. Termination of Employment. (a) Termination of Employment by Death
or Disability; Change in Control of the Company; Termination of Employment
Without Cause. In the event of a Participant's termination of employment by
reason of death or Disability, or in the event of a Change of Control of
the Company, the remaining unpaid amount (principal and interest) of any
outstanding Purchase Loan shall be forgiven in whole as of the date of such
occurrence.
(b) Other Termination of Employment. Subject to Section 7.4(a) above,
in the event of a Participant's termination of employment for any reason,
the Participant shall repay to the Company the entire balance of the
Purchase Loan and any accrued but unpaid interest thereon, which amounts
shall become immediately due and payable, unless otherwise determined by
the Committee.
7.5. Restrictions on Transfer. No Share Purchase Award or Shares
purchased through such an Award and pledged to the Company as collateral
security for the Participant's Purchase Loan (and accrued and unpaid
interest thereon) may be otherwise pledged, sold, assigned or transferred
(other than by will or by the laws of descent and distribution).
ARTICLE 8
RESTRICTED STOCK AWARDS
8.1. Restricted Share Awards. (a) Grant. A grant of Shares made
pursuant to this Article 8 is referred to as a "Restricted Share Award."
The Committee may grant to any Employee an amount of Shares in such manner,
and subject to such terms and conditions relating to vesting,
forfeitability and restrictions on delivery and transfer (whether based on
performance standards, periods of service or otherwise) as the Committee
shall establish (such Shares, "Restricted Shares"). The terms of any
Restricted Share Award granted under this Plan shall be set forth in a
written agreement (a "Restricted Share Agreement") which shall contain
provisions determined by the Committee and not inconsistent with this Plan.
The provisions of Restricted Share Awards need not be the same for each
Participant receiving such Awards.
(b) Issuance of Restricted Shares. As soon as practicable after the
date of grant of a Restricted Share Award by the Committee, the Company
shall cause to be transferred on the books of the Company, Shares
registered in the name of the Company, as nominee for the Participant,
evidencing the Restricted Shares covered by the Award; provided, however,
such Shares shall be subject to forfeiture to the Company retroactive to
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the date of grant, if a Restricted Share Agreement delivered to the
Participant by the Company with respect to the Restricted Shares covered by
the Award is not duly executed by the Participant and timely returned to
the Company. All Restricted Shares covered by Awards under this Article 8
shall be subject to the restrictions, terms and conditions contained in the
Plan and the Restricted Share Agreement entered into by and between the
Company and the Participant. Until the lapse or release of all restrictions
applicable to an Award of Restricted Shares, the share certificates
representing such Restricted Shares shall be held in custody by the Company
or its designee.
(c) Shareholder Rights. Beginning on the date of grant of the
Restricted Share Award and subject to execution of the Restricted Share
Agreement as provided in Sections 8.1(a) and (b), the Participant shall
become a stockholder of the Company with respect to all Shares subject to
the Restricted Share Agreement and shall have all of the rights of a
stockholder, including, but not limited to, the right to vote such Shares
and the right to receive distributions made with respect to such Shares;
provided, however, that any Shares distributed as a dividend or otherwise
with respect to any Restricted Shares as to which the restrictions have not
yet lapsed shall be subject to the same restrictions as such Restricted
Shares and shall be represented by book entry and held as prescribed in
Section 8.1(b).
(d) Restriction on Transferability. None of the Restricted Shares may
be assigned or transferred (other than by will or the laws of descent and
distribution), pledged or sold prior to lapse or release of the
restrictions applicable thereto.
(e) Delivery of Shares Upon Release of Restrictions. Upon expiration
or earlier termination of the forfeiture period without a forfeiture and
the satisfaction of or release from any other conditions prescribed by the
Committee, the restrictions applicable to the Restricted Shares shall
lapse. As promptly as administratively feasible thereafter, subject to the
requirements of the Plan, the Company shall deliver to the Participant or,
in case of the Participant's death, to the Participant's beneficiary, one
or more stock certificates for the appropriate number of Shares, free of
all such restrictions, except for any restrictions that may be imposed by
law.
8.2. Terms of Restricted Shares. (a) Forfeiture of Restricted Shares.
Subject to Section 8.2(b), all Restricted Shares shall be forfeited and
returned to the Company and all rights of the Participant with respect to
such Restricted Shares shall terminate unless the Participant continues in
the service of the Company as an Employee until the expiration of the
forfeiture period for such Restricted Shares and satisfies any and all
other conditions set forth in the Restricted Share Agreement. The Committee
in its sole discretion, shall determine the forfeiture period (which may,
but need not, lapse in installments) and any other terms and conditions
applicable with respect to any Restricted Share Award.
(b) Waiver of Forfeiture Period. Notwithstanding anything contained in
this Article 8 to the contrary, the Committee may, in its sole discretion,
waive the forfeiture period and any other conditions set forth in any
Restricted Share Agreement under appropriate circumstances (including the
death, Disability or retirement of the Participant or a material change in
circumstances arising after the date of an Award) and subject to such terms
and conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate.
ARTICLE 9
PERFORMANCE AWARDS
The Committee may grant, either alone or in addition to other Awards
granted under the Plan, Performance Awards to such Participants as the Committee
authorizes on such terms as the Committee may from time to time establish. With
respect to Qualifying Performance Awards, the Committee shall establish targets
only in terms of one or more of the following objective measures: Share price,
earnings per Share, total shareholder return, return on equity, return on
investment, cost control, working capital, cash flow management, operating
income, gross or operating margins, cash flow margins, revenue growth,
management development, succession planning, earnings before interest and taxes,
earnings before interest, taxes, depreciation and amortization, net income,
market share, customer satisfaction or employee satisfaction. If the Committee
does not desire the Performance Award to qualify for a tax deduction, the
measures of performance or other criteria for such Performance Awards shall be
established by the Committee in its absolute discretion. Performance Awards,
including Qualifying Performance Awards, may be paid in cash, by grant of
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Options, Share Purchase Awards, Restricted Share Awards, stock appreciation
rights or any other form of property as the Committee shall determine.
Performance Awards shall entitle the Participant to receive up to a maximum of
100% of the Performance Award if the measures of performance established by the
Committee are met. 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. The maximum amount of Qualifying Performance Awards that may be
granted to any Participant with respect to each calendar year (whether or not
then vested) cannot exceed $5,000,000. Qualifying Performance Awards shall be
made in a manner that satisfies Section 162(m) of the Code.
ARTICLE 10
GENERALLY APPLICABLE PROVISIONS
10.1. Option Period. Subject to Section 4.1(b), the period for which an
Option is exercisable shall not exceed ten years from the date such Option is
granted, provided, however, in the case of an Option that is not intended to be
an "incentive stock option," the Committee may prescribe a period in excess of
ten years. After the Option is granted, the option period may not be reduced,
subject to expiration due to termination of employment or a Change in Control of
the Company.
10.2. Fair Market Value. If the Shares are listed or admitted to trading on
a securities exchange registered under the Exchange Act, the "Fair Market Value"
of a Share as of a specified date shall mean the per Share closing price of the
Shares for the day immediately preceding the date as of which Fair Market Value
is being determined (or if there was no reported closing price on such date, on
the last preceding date on which the closing price was reported) reported on the
principal securities exchange on which the Shares are listed or admitted to
trading. If the Shares are not listed or admitted to trading on any such
exchange but are listed as a national market security on the NASDAQ Stock
Market, Inc. ("NASDAQ"), traded in the over-the-counter market or listed or
traded on any similar system then in use, the Fair Market Value of a Share shall
be the last sales price for the day immediately preceding the date as of which
the Fair Market Value is being determined (or if there was no reported sale on
such date, on the last preceding date on which any reported sale occurred)
reported on such system. If the Shares are not listed or admitted to trading on
any such exchange, are not listed as a national market security on NASDAQ and
are not traded in the over-the-counter market or listed or traded on any similar
system then in use, but are quoted on NASDAQ or any similar system then in use,
the Fair Market Value of a Share shall be the average of the closing high bid
and low asked quotations on such system for the Shares on the date in question.
If the Shares are not publicly traded, Fair Market Value shall be determined by
the Committee in its sole discretion using appropriate criteria, including
without limitation the respective values of other companies comparable to the
Company in terms of product lines, markets, profitability, growth rates, and
other considerations. The Committee may, in its sole discretion, seek the advice
of outside experts in connection with any such determination. An Option shall be
considered granted on the date the Committee acts to grant the Option or such
later date as the Committee shall specify.
10.3. Exercise of Awards. Vested Awards granted under the Plan shall be
exercised by the Participant thereof (or by his executors, administrators,
guardian or legal representative, as provided in Sections 10.6 and 10.7) as to
all or part of the Shares covered thereby, by the giving of written notice of
exercise to the Company, specifying the number of Shares to be purchased or
stock appreciation rights to be exercised, accompanied by payment of the full
purchase price for the Shares being purchased or exercise price for the stock
appreciation rights being exercised. Full payment of such purchase price or
exercise price shall be made at the time of exercise and shall be made (i) in
cash or by certified check or bank check, (ii) with the consent of the
Committee, by delivery of a promissory note in favor of the Company upon such
terms and conditions as determined by the Committee, (iii) with the consent of
Committee, by tendering previously acquired Shares (valued at Fair Market Value,
as determined by the Committee as of the date of tender), (iv) if the Shares are
traded on a national securities exchange, NASDAQ or quoted on a national
quotation system sponsored by the National Association of Securities Dealers,
Inc. and the Committee authorizes exercise through the delivery of irrevocable
instructions to a broker, to deliver promptly to the Company an amount of Shares
having a Fair Market Value equal to the purchase price, or (v) with the consent
of the Committee, any combination of (i), (ii), (iii) and (iv); provided,
however, that payment may not be pursuant to (iii) above unless the Participant
shall have owned the Shares being tendered in payment for a period of at least
<PAGE>
six months prior to the date of exercise of the Option or stock appreciation
right. In connection with a tender of previously acquired Shares pursuant to
clause (iii) above, the Committee, in its sole discretion, may permit the
Participant to constructively exchange Shares already owned by the Participant
in lieu of actually tendering such Shares to the Company, provided that adequate
documentation concerning the ownership of the Shares to be constructively
tendered is furnished in form satisfactory to the Committee. The notice of
exercise, accompanied by such payment, shall be delivered to the Company at its
principal business office or such other office as the Committee may from time to
time direct, and shall be in such form, containing such further provisions
consistent with the provisions of the Plan, as the Committee may from time to
time prescribe. In no event may any Award granted hereunder be exercised for a
fraction of a Share. The Company shall effect the transfer of Shares purchased
pursuant to an Award as soon as practicable, and, within a reasonable time
thereafter, such transfer shall be evidenced on the books of the Company. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date of such issuance.
10.4. Non-Transferability of Awards. Except as provided in Section 10.12,
no unvested Award or Award subject to a forfeiture period shall be assignable or
transferable by the Participant, other than by will or the laws of descent and
distribution.
10.5. Termination of Employment. Except with respect to Share Purchase
Awards covered by Section 7.4, in the event of the termination of employment of
a Participant or the termination or separation from service of an advisor or
consultant or a Director (who is a Participant) for any reason (other than by
reason of death, Disability or Change in Control of the Company as provided
below), the term of any Awards granted to such Participant under this Plan and
not previously exercised or expired, to the extent vested on the date of or as a
result of such termination, shall expire six (6) months after the date of such
termination or separation, provided, however, that in no instance may the term
of an Award, as so extended, exceed the maximum term established pursuant to
Section 4.1(b)(ii) or 10.1 above.
10.6. Death. Except for Share Purchase Awards covered by Section 7.4, in
the event a Participant dies while employed or otherwise engaged by the Company
or any of its subsidiaries or affiliates or during his term as a Director of the
Company or any of its subsidiaries or affiliates, as the case may be, (i) any
unvested Awards granted to such Participant under the Plan shall immediately
vest and (ii) any Awards granted to such Participant not previously expired or
exercised shall be exercisable by the estate of such Participant or by any
person who acquired such Option by bequest or inheritance, at any time within
one year after the death of such Participant, unless earlier terminated pursuant
to its terms, provided, however, that if the term of such Option would expire by
its terms within twelve (12) months after such Participant's death, the term of
such Option shall be extended until twelve (12) months after such Participant's
death, provided further, however, that in no instance may the term of the
Option, as so extended, exceed the maximum term established pursuant to Section
4.1(b)(ii) or 10.1 above.
10.7. Disability. Except for Share Purchase Awards covered by Section 7.4,
the event of the termination of employment of a Participant or the separation
from service of a Director (who is a Participant) due to Disability, (i) any
unvested Awards granted to such Participant shall immediately vest and (ii) such
Participant, or his guardian or legal representative, shall have the unqualified
right to exercise any Awards which have not been previously exercised or expired
at any time within one year after such termination or separation, unless earlier
terminated pursuant to its terms, provided, however, that if the term of such
Award would expire by its terms within twelve (12) months after such termination
or separation, the term of such Award shall be extended until twelve (12) months
after such termination or separation, provided further, however, that in no
instance may the term of the Award, as so extended, exceed the maximum term
established pursuant to Section 4.1(b)(ii) or 10.1 above.
10.8. Change in Control of the Company. Except for Share Purchase Awards
covered by Section 7.4, in the event of a Change in Control of the Company, (i)
any unvested Awards granted to a Participant shall immediately vest and (ii)
such Participant shall have the unqualified right to exercise any Awards which
have not been previously exercised or expired within three (3) years after such
Change in Control of the Company, provided, however, that if the term of such
Awards would expire by its terms within three (3) years after such Change in
Control of the Company, the term of such Awards shall be extended until three
(3) years after such Change in Control of the Company, provided further,
<PAGE>
however, that in no instance may the term of the Awards, as so extended, exceed
the maximum term established pursuant to Section 4.1(b)(ii) or 10.1 above.
10.9. Six-Month Holding Period. Notwithstanding anything to the contrary in
the Plan, each Option (or the Shares underlying the Option) granted to an
individual who is subject to Section 16 of the Exchange Act, must be held by
such individual for a combined period of at least six (6) months from the date
the Option is granted (or until such earlier date as satisfies any legal
requirement for exemption under Rule 16b-3 of the Exchange Act and as satisfies
all other applicable law); provided that the sale, transfer or other disposition
of any Shares underlying any such Option shall be permitted within such period
to the extent the sale, transfer or other disposition is exempt under Rule 16b-3
of the Exchange Act and all other applicable law.
10.10 Amendment and Modification of the Plan. The Board of Directors of the
Company may, from time to time, alter, amend, suspend or terminate the Plan as
it shall deem advisable, subject to any requirement for stockholder approval
imposed by applicable law or any rule of any stock exchange or quotation system
on which Shares are listed or quoted; provided that the Board of Directors may
not, without the approval of the Company's stockholders, (a) amend the Plan to
increase the number of Shares that may be the subject of Awards under the Plan
(except for adjustments pursuant to Section 10.11) or (b) amend the exercise
price of any Option granted to an amount lower than the exercise price of such
Option on the date of grant. In addition, no amendments to, or termination of,
the Plan shall in any way impair the rights of a Participant under any Award
previously granted without such Participant's consent.
10.11. Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities, the issuance of warrants
or other rights to purchase Shares or other securities, or other similar
corporate transaction or event affects the Shares with respect to which Awards
have been or may be issued under the Plan, such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as the Committee may deem
equitable, adjust any or all of (i) the number and type of Shares that
thereafter may be made the subject of Awards, (ii) the number and type of Shares
subject to outstanding Awards, and (iii) the grant or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of any outstanding Award; provided, in each case, that
with respect to "incentive stock options," no such adjustment shall be
authorized to the extent that such adjustment would cause such options to
violate Section 422(b) of the Code or any successor provision; and provided
further, that the number of Shares subject to any Award denominated in Shares
shall always be a whole number. In the event of any reorganization, merger,
consolidation, split-up, spin-off, or other business combination involving the
Company (each, a "Reorganization"), the Committee may cause any Award
outstanding as of the effective date of the Reorganization to be canceled in
consideration of a cash payment or alternate Award made to the holder of such
canceled Award equal in value to the fair market value of such canceled Award.
The determination of fair market value shall be made by the Committee, as the
case may be, in its sole discretion.
10.12. Other Provisions. Notwithstanding anything in this Plan to the
contrary, if the Board of Directors determines that the Plan cannot, or that an
Award need not, satisfy the requirements of Rule 16b-3 of the Exchange Act (such
that grants of Awards are not or need not be exempt from Section 16(b) of the
Exchange Act), then the Committee shall have the authority to waive or modify
those provisions of the Plan which are intended to satisfy such Rule 16b-3
requirements. In addition, the Committee may allow a Participant who has been
granted "nonqualified stock options" and any stock appreciation rights granted
in tandem therewith to transfer any or all of such Options (along with any
tandem stock appreciation rights) to a Family Member (defined below) in whole or
in part and in such circumstances, and under such conditions as specified by the
Committee. An Award that is transferred to a Family Member pursuant to the
preceding sentence (i) may not be subsequently transferred otherwise than by
will or by the laws of descent and distribution and (ii) remains subject to the
terms of this Plan and the Award agreement. "Family Member" means, solely to the
extent provided for in Securities Act Form S-8, any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
<PAGE>
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the employee's household (other than a tenant or employee), a trust in
which these persons have more than 50% of the beneficial interest, a foundation
in which these persons (or the employee) control the management of assets, and
any other entity in which these persons (or the employee) own more than 50% of
the voting interests or as otherwise defined in Securities Act Form S-8. The
Company shall cooperate with a Participant's transferee and the Company's
transfer agent in effectuating any transfer permitted pursuant to this Section
10.12.
ARTICLE 11
MISCELLANEOUS
11.1. Tax Withholding. The Company shall have the right to make all
payments or distributions made pursuant to the Plan to a Participant (or
permitted transferee) net of any applicable federal, state and local withholding
taxes arising as a result of the grant of any Award, exercise of an Option or
stock appreciation rights or any other event occurring pursuant to this Plan.
The Company shall have the right to withhold from such Participant (or permitted
transferee) such withholding taxes as may be required by law, or to otherwise
require the Participant (or permitted transferee) to pay such withholding taxes.
If the Participant (or permitted transferee) shall fail to make such tax
payments as are required, the Company or its subsidiaries or affiliates shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to such Participant (or permitted transferee)
or to take such other action as may be necessary to satisfy such withholding
obligations. In satisfaction of the requirement to pay withholding taxes, the
Participant (or permitted transferee) may make a written election, which may be
accepted or rejected in the discretion of the Committee, to have withheld a
portion of the Shares then issuable to the Participant (or permitted transferee)
pursuant to the Plan, having an aggregate Fair Market Value equal to the
withholding taxes.
11.2. Right of Discharge Reserved. Nothing in the Plan nor the grant of an
Award hereunder shall confer upon any Employee, Director or other individual the
right to continue in the employment or service of the Company or any subsidiary
or affiliate of the Company or affect any right that the Company or any
subsidiary or affiliate of the Company may have to terminate the employment or
service of (or to demote or to exclude from future Awards under the Plan) any
such Employee, Director or other individual at any time for any reason. Except
as specifically provided by the Committee, the Company shall not be liable for
the loss of existing or potential profit from an Award granted in the event of
termination of an employment or other relationship even if the termination is in
violation of an obligation of the Company or any subsidiary or affiliate of the
Company to the Employee or Director.
11.3. Nature of Payments. All Awards made pursuant to the Plan are in
consideration of services performed or to be performed for the Company or any
subsidiary or affiliate of the Company. Any income or gain realized pursuant to
Awards under the Plan constitutes a special incentive payment to the Participant
and shall not be taken into account, to the extent permissible under applicable
law, as compensation for purposes of any of the employee benefit plans of the
Company or any subsidiary or affiliate of the Company except as may be
determined by the Committee or by the Directors or directors of the applicable
subsidiary or affiliate of the Company.
11.4. Severability. If any provision of the Plan shall be held unlawful or
otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which remain in full force and effect. If the making of
any payment or the provision of any other benefit required under the Plan shall
be held unlawful or otherwise invalid or unenforceable, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full would
be unlawful or otherwise invalid or unenforceable, then such unlawfulness,
invalidity or unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not be unlawful,
invalid or unenforceable, and the maximum payment or benefit that would not be
unlawful, invalid or unenforceable shall be made or provided under the Plan.
11.5. Gender and Number; Definition of Company. In order to shorten and to
improve the understandability of the Plan document by eliminating the repeated
usage of such phrases as "his or her" and any masculine terminology herein shall
<PAGE>
also include the feminine, and the definition of any term herein in the singular
shall also include the plural except when otherwise indicated by the context. In
addition, the term Company as used herein shall include subsidiaries and
affiliates of Terex Corporation where the context makes such inclusion
appropriate.
11.6. Governing Law. The Plan and all determinations made and actions taken
thereunder, to the extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the State of Delaware and
construed accordingly.
11.7. Effective Date of the Plan; Termination of the Plan. (a) The Plan
shall be effective on the date of the approval of the Plan by the holders of a
majority of the Shares present in person or by proxy at a duly constituted
meeting of the stockholders; provided, however, that the adoption of the Plan is
subject to such stockholder approval within 12 months 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 any Award
made under and pursuant to this Plan shall, notwithstanding any of the preceding
provisions of the Plan, be null and void and of no effect.
(b) Awards may be granted under the Plan at any time and from time to time
after the effective date of the Plan and on or prior to March 8, 2010, on which
date the Plan will terminate except as to Awards then outstanding under the
Plan. Such outstanding Awards shall remain in effect and unimpaired until they
have been exercised or have terminated or expired.
11.8. Captions. The captions in this Plan are for convenience of reference
only, and are not intended to narrow, limit or affect the substance or
interpretation of the provisions contained herein.
