TEREX CORPORATION AMENDED AND RESTATED DEFERRED COMPENSATION PLAN
THIS TEREX CORPORATION AMENDED AND RESTATED DEFERRED COMPENSATION PLAN,
dated as of March 11, 2004, established by TEREX CORPORATION, a Delaware
corporation authorized to do business in the State of Connecticut, 500 Post Road
East, Suite 320, Westport, CT 06880 (hereinafter referred to as the
"Corporation"),
WITNESSETH THAT:
WHEREAS, the Corporation established the Terex Deferred Compensation Plan
effective January 1, 1997 as amended as of February 1, 1997 (the "Original
Plan"), and the Original Plan provided that the Corporation may amend the Plan
at any time;
WHEREAS, the Corporation amended and restated the Original Plan as of
December 1, 1997, January 1, 2002 and January 1, 2004 (the Original Plan as
amended and restated shall be referred to as the "Plan");
WHEREAS, the Corporation recognizes the valuable services heretofore
performed for it by the employees and the outside directors participating in
this Plan (the "Participants");
WHEREAS, the Corporation has established this Plan to provide retirement
and death benefits, and benefits in the event of any other termination of
employment or service as an outside director, as provided herein to a select
group of management or highly compensated employees (the "Employees") and the
outside directors;
WHEREAS, each Participant desires to receive such benefits and to defer a
portion of his or her compensation;
WHEREAS, the Corporation has established a trust dated as of January 1,
1997 (the "Trust") to assist in providing the benefits under this Plan; and
WHEREAS, the Corporation desires to provide the terms and conditions upon
which the Corporation shall pay such additional compensation through the Trust
to the Participants;
NOW, THEREFORE, in consideration of these premises, the Corporation amends
and restates the Plan as follows:
1. Establishment and Purposes.
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a. Establishment. The Corporation established the Plan as of January 1,
1997, and amended the Plan as of February 1, 1997, December 1, 1997, January 1,
2002 and January 1, 2004.
b. Name. The Plan shall be known as the "Terex Deferred Compensation Plan."
c. Purpose. The purpose of the Plan is to defer the payment of a portion of
the compensation of the Participants, including the portion deferred by each
Participant in accordance with an annual Deferral Election, so that such amount
may be paid to the Participants (or their beneficiaries) upon retirement or
death or other termination of employment as specified herein.
2. Definitions.
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Except as otherwise provided herein, the following terms shall have the
definitions hereinafter indicated wherever used in this Plan with initial
capital letters:
a. Beneficiary: Any person, entity, or any combination thereof designated
by the Participant, on a Beneficiary Designation Form acceptable to the
Corporation, to receive benefits under this Plan in the event of the
Participant's death, or in the absence of any such designation, his or her
estate.
b. Beneficiary Designation: The designation by the Participant of his or
her Beneficiary or Beneficiaries, as amended from time to time, and in a form
acceptable to the Corporation.
c. Code: The Internal Revenue Code of 1986, as amended.
d. Compensation: All wages, salaries, bonuses, director fees and Restricted
Stock Awards to be paid to a Participant for services rendered to the
Corporation, other than stock options issued to a Participant pursuant to a
qualified stock option plan (not including any amounts deferred by the
Corporation under the provisions of this Plan). Compensation may also include
severance pay, pursuant to Section 2i of the Plan.
e. Deferral Election: The form or other method of deferral acceptable to
the Corporation that provides for the Participant to elect to defer a portion of
his or her Compensation or other amounts or items.
f. Deferred Compensation Account: Shall have the meaning set forth in
Section 4 of this Plan.
g. Earnings: The amount credited to each Participant's Deferred
Compensation Account as earnings, as provided in Section 4 hereof.
h. Effective Date of the Plan: January 1, 1997.
i. Employee: An employee of the Corporation who is selected by the
Corporation to participate in this Plan, and who elects to participate in this
Plan by executing and delivering to the Corporation a Deferral Election which is
satisfactory to the Corporation. At the discretion of the Corporation, an
employee may also include an individual who is receiving severance payments from
the Corporation. The ability of such an individual to make deferrals to the Plan
will cease when the individual no longer receives severance payments from the
Corporation.
j. Investment Designation: The provisions of the Deferral Election
providing for the investment designation by the Participant as described in
Section 4 of this Plan, as amended from time to time, and as acceptable to the
Corporation.
k. Normal Retirement Age: Fifty-five (55) years of age.
l. Plan: This Terex Deferred Compensation Plan.
m. Plan Year: January 1 through December 31.
n. Retirement: The termination of a Participant's employment with the
Corporation after attaining Normal Retirement Age.
o. Year of Participation. A Plan Year during which an Employee is employed
on a full-time basis with the Corporation or an outside director serves on the
Corporation's Board of Directors. An Employee who is employed on a full-time
basis for any portion of a Plan Year and an outside director who sits on the
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Corporation's Board of Directors for any portion of a Plan Year shall be
credited with a Year of Participation for that Plan Year.
3. Participant's Deferrals.
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As a condition to participating in this Plan, a Participant shall execute
and file with the Corporation, a Deferral Election, designating the portion of
his or her Compensation or other amount or items which shall be deferred
hereunder; provided, however, that the Participant shall not defer more than a
certain percentage of his or her regular salary as designated by the Corporation
from time to time (the initial maximum shall be twenty percent (20%) of his or
her regular salary), and further provided that no amount shall be deferred from
any amount which was payable to the Participant before the Participant executed
the Deferral Election. A Participant may defer up to one hundred percent (100%)
of his or her bonus, director fees or Restricted Stock Awards. All deferrals of
salary, director fees or bonus shall be in increments of one percent (1%) or, if
acceptable to the Corporation, a specific dollar amount (or the Participant can
elect to receive a specified dollar amount of his or her bonus and defer the
remainder). Furthermore, a Participant may defer any other amount or item which
the Corporation permits to be deferred as provided under a Deferral Election
executed by the Participant and acceptable to the Corporation. Unless otherwise
agreed by the Corporation and the Participant, all Deferral Elections shall
apply to Compensation or other amounts or items for one Plan Year, and a new
Deferral Election may be executed for each Plan Year. If an individual, such as
a new employee or new outside director of the Corporation, becomes a Participant
under this Plan after the beginning of a Plan Year, the Participant may execute
and file with the Corporation, prior to becoming a Participant in this Plan, a
Deferral Election, in a form acceptable to the Corporation, that will be
effective for the remainder of that Plan Year.
4. Deferred Compensation Account, Earnings, and Corporation Matching
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Contributions.
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a. Deferred Compensation Account. Any Compensation or other amounts or
items deferred by a Participant shall be credited to a deferred compensation
bookkeeping account maintained by the Plan recordkeeper for the Participant. The
Plan recordkeeper shall update the Participant's Deferred Compensation Account
(including Earnings) on a daily basis.
b. Earnings. Earnings with respect to each deferral shall be credited to
the Participant's Deferred Compensation Account as measured by the applicable
Investment Designation. The two available options for the Investment Designation
shall be (i) Terex stock, and (ii) a bond index (the "Bond Index"), selected by
the Corporation, which shall provide an interest rate which mirrors an
investment in the corporate bonds of companies rated Baa or higher. The
Corporation may change the options available and the applicable bond index from
time to time. With respect to a Bond Index designation, any interest rate
credited to the Participant's Deferred Compensation Account in any given month
shall be the interest rate for the penultimate month. With respect to a Terex
stock designation, the deemed purchase price for measuring Earnings hereunder
will be the closing price of Terex stock listed in The Wall Street Journal on
the day it is posted to the Participant's Deferred Compensation Account. All
designations of a particular Investment Designation must constitute at least ten
percent (10%) of the deferral. The Earnings credited to the Deferred
Compensation Account shall be an amount equal to the amount which would have
been earned if the Participant's Deferred Compensation Account had been applied
or invested in accordance with the Investment Designation. In the event of any
losses based on an Investment Designation, the Participant's Deferred
Compensation Account shall be reduced accordingly, and the Corporation shall
have no obligation or responsibility with respect to any such losses.
c. Corporation's Matching Contributions.
(1) In addition, the Corporation shall match twenty-five percent (25%)
of the Participant's deferrals for which the Participant's Investment
Designation is Terex stock (herein the "Terex Matching Contributions").
This is the only matching contribution the Corporation shall make.
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Notwithstanding any contrary provision contained herein, Terex Matching
Contributions shall not apply to Restricted Stock (as such term is defined
in any Terex Incentive Compensation Plan) deferred by a Participant in
accordance with the provisions of this Plan.
(2) Terex Matching Contributions will cease to be made after March 10,
2014.
d. Change of Control. In the event of a "Change of Control" as such term is
defined in Section 13(d) of the Trust, the Corporation shall make contributions
to the Trust in connection with such Change of Control so that the Trust will
have sufficient funds to pay all benefits earned or accrued as of such date and
all benefits reasonably expected to be earned or accrued thereafter as
calculated by the Corporation based on reasonable assumptions.
e. No Rights in Specific Assets. The Corporation, in its sole and absolute
discretion, may (or may not) acquire any item indicated in the Participant's
Investment Designation, and any investment product or other item so acquired for
the convenience of the Corporation shall be the sole and exclusive property of
the Corporation (or a trust established by the Corporation) with the Corporation
(or a trust established by the Corporation) named as owner and beneficiary
thereof. To the extent that a Participant or his or her Beneficiary acquires a
right to receive payments from the Corporation under the provisions hereof, such
right shall be no greater than the right of any unsecured general creditor of
the Corporation.
f. Change in Investment Designations. A Participant may not change his or
her Investment Designation with respect to any portion of the Participant's
Deferred Compensation Account.
5. Benefit Payments.
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a. Amount. At such time as a pre-retirement or accelerated distribution is
due, or upon a Participant's Retirement, death, or other termination of
employment or service as an outside director, the Corporation shall pay benefits
as follows:
(1) Retirement or Termination of Employment After Five Years of
Participation. If the Participant's employment or service as an outside
director terminates after he or she attains Normal Retirement Age or after
he or she has attained five Years of Participation, such Participant shall
receive payments:
(i) as designated in his or her Deferral Elections as applicable;
provided, however, that any changes shall be effective only if
received prior to the last day of the Plan Year in which the
employment terminates, or
(ii) if such Participant has failed to make any such designation
for any amount, with respect to such amount, such Participant shall
receive the amount of his or her Deferred Compensation Account
balance, payable in a lump sum in the Plan Year following his or her
Retirement.
The Participant may request to receive such payments in (i) a lump sum, based on
the value of the Participant's Deferred Compensation Account on the last
business day of the year in which the termination or retirement occurs, or (ii)
in five (5), ten (10) or fifteen (15) substantially equal annual payments,
provided that such payment terms shall only apply if the Corporation and
Participant enter into a bona fide agreement regarding such payment terms, and
further provided that if the Employee becomes a full-time employee for any other
entity or individual within a reasonable time after the termination of the
Employee's employment with the Corporation, the payments hereunder shall not
commence until the Employee is no longer a full-time employee for any entity or
individual. Any installment payment hereunder shall equal the quotient
determined by dividing the Participant's remaining Deferred Compensation Account
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balance at the time of payment by the number of remaining installments
(including the current installment), provided that in the event of an Investment
Designation of the Bond Index, the portion relating to the Bond Index
designation shall be paid assuming level remaining payments at the prevailing
year-end rates.
(2) Termination of Employment Before Attaining Normal Retirement Age
and Five Years of Participation. In the event that the Participant's
employment or service as an outside director with the Corporation
terminates before he or she attains Normal Retirement Age, and before he or
she has attained five Years of Participation, the Corporation shall pay, in
a lump sum to the Participant, the entire amount of his or her Deferred
Compensation Account in the Plan Year after the Participant's employment
terminates. The Corporation shall have no further liability hereunder to
the Participant or his or her Beneficiary, assigns or other successors
after making any lump sum payment under this Section 5a(2).
(3) Pre-Retirement. A Participant may elect to receive payment of all
or a portion of a deferral before the Participant retires. Except as
provided in Sections 5c and 5d, all deferrals must remain in the
Participant's Deferred Compensation Account for at least portions of three
Plan Years. The Participant may make the election to receive a
pre-retirement payment when the Participant completes the Deferral Election
for the given Plan Year. The pre-retirement payment may be paid in a lump
sum or in a four (4) year stream, which will be paid in the same manner as
an installment payment payable under Section 5a(1).
(4) Death. In the event of the Participant's death before he or she
has received all amounts under his or her Deferred Compensation Account,
upon the Participant's death, any benefits payable in the year of death
will remain payable in that year. The remaining balance in the
Participant's Deferred Compensation Account shall be paid to the
Participant's Beneficiary in the Plan Year after the Participant's death in
a lump sum, or in accordance with new written payment instructions
established by the Beneficiary, at the Beneficiary's option. If the
Beneficiary files new written payment instructions, the Beneficiary may
choose among any distribution schedule that was available to the
Participant at the time of the Participant's death. To be effective, any
distribution schedule established by the Beneficiary must be received by
the Trustee prior to the last business day of the year in which the
Participant dies. After the payment of the distribution(s), the Corporation
shall have no further obligations hereunder to the Participant or his or
her Beneficiary, assigns or other successors.
(5) Corporation's Lump Sum Payment Option. Notwithstanding any other
provision herein, in all cases whenever benefits are payable hereunder, the
Corporation, at its option, may elect to pay the entire remaining balance
of the Participant's Deferred Compensation Account at any time (whether or
not any installment or other payments have already been made), and upon
making such lump sum payment, the Corporation shall have no further
obligation to such Participant or his or her Beneficiary or assigns or
other successors hereunder.
b. Form of Distribution. Any portion of a Participant's Deferred
Compensation Account that has an Investment Designation of Terex stock will be
distributed in Terex shares, except for fractional shares, which will
distributed in cash. Any portion of a Participant's Deferred Compensation
Account that has an Investment Designation of the Bond Index shall be paid in
cash.
c. Hardship Withdrawals. A Participant may request a distribution hereunder
in response to an "unforeseeable emergency," defined herein as an unanticipated
emergency that is caused by an event beyond the control of the Participant and
that would result in severe financial hardship to the individual if early
withdrawal were not permitted. Any early withdrawal on account of hardship shall
be paid in the form described in Section 5b and limited to the amount necessary
to meet the emergency, and the amount otherwise payable hereunder shall be
reduced accordingly. The purchase of a primary residence or tuition payments by
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themselves would not qualify as an "unforeseeable emergency" and, therefore, no
hardship distribution would be made in such events. A request for a hardship
withdrawal must be reviewed and approved by the administrative committee
represented by Corporate Human Resources, Legal and Finance departments of the
Corporation, before a hardship distribution shall be made hereunder. A hardship
distribution shall be made as soon as practicable following the approval of the
distribution by the administrative committee.
d. Acceleration of Distribution. In the absence of an "unforeseeable
emergency," a Participant or Beneficiary may still accelerate a distribution.
Any acceleration of a distribution under this subsection will be paid in the
form described in Section 5b, shall result in a forfeiture of 10% of the amount
of the distribution, and such forfeiture shall default to the Corporation. The
Participant or Beneficiary will also forfeit any matching contribution which is
attributable to any deferral that, due to the acceleration of a distribution,
stays in the Plan for less than one full Plan Year. For these purposes,
deferrals will be treated as distributed on a "first in, first out" basis. In
addition, any Participant who receives an accelerated distribution shall be
prohibited from making further deferrals under the Plan until the annual
enrollment period which next follows the expiration of twelve months from the
date on which the Participant requested the accelerated distribution. An
accelerated distribution shall be made as soon as practicable following the date
on which the Corporation receives the request for the accelerated distribution.
e. Payment Only from Corporation Assets. Any payment of benefits to a
Participant or his or her Beneficiary shall be made from assets which shall
continue, for all purposes, to be a part of the general assets of the
Corporation; no person shall have or acquire any interest in such assets by
virtue of the provisions of this Plan. To the extent that a Participant or his
or her Beneficiary acquires a right to receive payments from the Corporation
under the provisions hereof, such right shall be no greater than the right of
any unsecured general creditor of the Corporation.
f. Beneficiaries. A Participant may designate his or her Beneficiary or
Beneficiaries to receive the amounts as provided herein after his or her death
in accordance with the Beneficiary Designation. In the absence of such a
designation, the Corporation shall pay any such amount to the Participant's
estate.
g. No Trust. Nothing contained in this Plan, and no action taken pursuant
to its provisions shall create, or be construed to create, a trust of any kind.
6. Determination of Benefits, Claims Procedure and Administration.
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a. Determinations. The Corporation shall make all determinations as to
rights to benefits under this Plan. Any decision by the Corporation denying a
claim for benefits under this Plan by a Participant or any other claimant shall
be stated in writing by the Corporation and delivered or mailed to the claimant.
Each such notice shall set forth the specific reasons for the denial, written to
the best of the Corporation's ability in a manner that may be understood without
legal or actuarial counsel. The Corporation shall afford a reasonable
opportunity to the claimant whose claim for benefits has been denied for a
review of the decision denying such claim.
b. Interpretation. Subject to the foregoing: (i) the Corporation shall have
full power and authority to interpret, construe and administer this Plan; and
(ii) the interpretation and construction of this Plan by the Corporation, and
any action taken hereunder, shall be binding and conclusive upon all parties in
interest.
c. Reports. The Corporation shall have the Plan recordkeeper provide the
Participant with a statement reflecting the amount of the Participant's Deferred
Compensation Account and a projection of benefits using the current
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earning(s) rates, on a quarterly basis.
d. No Liability. No employee, agent, officer, trustee or director of the
Corporation shall incur any liability for the breach of any responsibility,
obligation or duty in connection with any act done or omitted to be done in good
faith in the interpretation, construction, administration or management of the
Plan and shall be indemnified and held harmless by the Corporation from and
against any such liability, including all expenses reasonably incurred in their
defense if the Corporation fails to provide such defense.
7. Non-Assignability of Benefits.
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Neither any Participant nor any Beneficiary under this Plan shall have any
power or right to transfer, assign, anticipate, hypothecate or otherwise
encumber any part or all of the amounts payable hereunder. Such amounts shall
not be subject to seizure by any creditor of a Participant or any Beneficiary
hereunder, by a proceeding at law or in equity, nor transferable by operation of
law in the event of the bankruptcy or insolvency of any Participant or any
Beneficiary hereunder. Any such attempted assignment or transfer shall be void
and shall terminate the Participant's participation in this Plan; the
Corporation shall thereupon have no further liability hereunder with respect to
such Participant and his or her Beneficiary.
8. Amendment.
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This Plan may not be amended, altered, modified or terminated, except by a
written instrument signed by the Corporation, subject to any requirement for
stockholder approval imposed by applicable law or any rule of any stock exchange
or quotation system on which Terex common stock is listed and quoted; provided
that no such termination shall adversely affect a Participant's entitlement to
benefits attributable to amounts credited to his or her Deferred Compensation
Account prior to the termination of this Plan.
9. Impact on Other Benefits.
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Except as otherwise required by the Code or any other applicable law, this
Plan and the benefits provided herein are in addition to all other benefits
which may be provided by the Corporation to the Participants from time to time,
and shall not reduce, replace or otherwise cause any reduction, in any manner,
with regard to any of such other benefits.
10. Notices.
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Any notice, consent or demand required or permitted to be given under the
provisions of this Plan by the Corporation or any Participant or Beneficiary
shall be in writing, and shall be signed by the person or entity giving or
making the same. If such notice, consent or demand is mailed, it shall be sent
by United States certified mail, postage prepaid, addressed to the principal
office of the Corporation, or if to a Participant or Beneficiary to such
individual or entity's last known address as shown on the records of the
Corporation. The date of such mailing shall be deemed the date of notice,
consent or demand.
11. Tax Withholding.
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The Corporation shall have the right to deduct from all payments made under
this Plan any federal, state or local taxes required by law to be withheld with
respect to such payments.
12. Governing Law.
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This Plan shall be governed by and construed in accordance with the laws of
the State of Connecticut.
IN WITNESS WHEREOF, the Corporation has executed and adopted this Plan as
of the date first above written.
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