NEENAH FOUNDRY COMPANY
2003 MANAGEMENT ANNUAL INCENTIVE PLAN
1. Purpose.
This plan shall be known as the Neenah Foundry Company 2003
Management Annual Incentive Plan (the "Plan"). The purpose of the Plan shall be
to set forth those bonus and other incentive payments, if any, to which an
executive of Neenah Foundry Company (the "Company") or any its Subsidiaries will
be entitled pursuant to the terms of the Plan.
2. Definitions. For purposes of this Plan, except when the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below.
"ACP" means ACP Holding Company, a Delaware corporation.
"Annual Incentive Bonus" has the meaning given to such term in Section
4(c).
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as codified
in Title 11 of the United States Code, 11 U.S.C. Section 101, et seq., as
amended from time to time.
"Base Salary" means, with respect to any Plan Participant, "Base
Salary" as defined in such Plan Participant's Employment Agreement.
"Board of Directors" and "Board" mean the board of directors of the
Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board or such other
committee that consists solely of two or more individuals, each of whom is a
Non-Employee Director and an "outside director" within the meaning of Treasury
Regulation Section 1.162-27(e)(3).
"Company" has the meaning set forth in Section 1 hereof.
"Company Group" means ACP, the Company and their respective
Subsidiaries.
"EBITDA Target" has the meaning given to such term in Section 4(c).
"Effective Date" means the effective date of the Plan of
Reorganization.
"Emergence Bonus" has the meaning given to such term in Section 4(a).
"Employment Agreement" means the written agreement between any Plan
Participant and the Company or any of its Subsidiaries pursuant to which such
Plan Participant is entitled to benefits under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fiscal Year End" has the meaning given to such term in Section 4(c).
"Incentive Bonus" has the meaning given to such term in Section 4(b).
"Non-Employee Director" has the meaning given to such term in Rule
16b-3 under the Exchange Act and any successor thereto.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Plan" has the meaning set forth in Section 1 hereof.
"Plan Participant" means each of William Barrett, Gary LaChey, Joseph
DeRita, Frank Headington, Timothy Koller, William Martin, Joseph Varkoly, Steve
Shaffer, John Andrews and any other employee of the Company Group selected by
the Board or the Committee.
"Plan of Reorganization" means the Joint Prepackaged Plan of
Reorganization of ACP, NFC Castings, Inc., the Company and certain of its
Subsidiaries under Chapter 11 of the Bankruptcy Code, dated July 1, 2003,
including the Plan Supplement and other supplements, appendices and schedules to
the Plan, in each case, as amended or supplemented on or before the Effective
Date.
"Subsidiary" of any Person means a corporation or other entity of which
outstanding shares or ownership interests representing 50% or more of the
combined voting power of such corporation or other entity entitled to elect the
management thereof, or such lesser percentage as may be approved by the
Committee, are owned directly or indirectly by such Person.
"Target Bonus Amount" means, with respect to any Plan Participant's
Annual Incentive Bonus, the product of (i) Base Salary and (ii) Target Bonus
Percentage.
"Target Bonus Percentage" means, with respect to any Plan Participant,
"Target Bonus Percentage" as defined in such Plan Participant's Employment
Agreement.
3. Administration.
The Plan shall be administered by the Committee; provided,
that the Board may, in its discretion, at any time and from time to time,
resolve to administer the Plan, in which case the term "Committee" shall be
deemed to mean the Board for all purposes herein. Subject to the provisions of
the Plan, the Committee shall be authorized to: (i) select persons to
participate in the Plan in addition to those entitled to participate in the Plan
pursuant to Employment Agreements entered into at or prior to the Effective
Date; (ii) determine the form, substance, terms and conditions of each
additional grant made under the Plan; (iii) certify that the conditions and
restrictions applicable to any grant have been met; (iv) modify the terms of
grants made under the Plan; (v) make any adjustments necessary or desirable in
connection with grants made under the Plan to eligible participants located
outside the United States; (vi) adopt, amend, or rescind rules and regulations
for the administration of the Plan, including, but not limited to,
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correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Employment Agreement, in the manner and to
the extent it shall deem necessary or advisable, including so that amounts
payable under the Plan will be deductible under the Code and the operation of
the Plan will comply with Section 162 of the Code to the extent applicable and
other applicable law; and (vii) exercise such powers and perform such acts as
are deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan; provided, that in no event shall any amendment,
modification, adjustment, correction or supplement to the Plan pursuant to the
foregoing clauses (i) through (vii) adversely affect any Plan Participant
without such Plan Participant's consent. The validity, construction, and effect
of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with applicable federal and state laws and rules and
regulations promulgated pursuant thereto. No member of the Committee and no
officer of the Company shall be liable for any action taken or omitted to be
taken by such member, by any other member of the Committee or by any officer of
the Company in connection with the performance of duties under the Plan, except
for such person's own willful misconduct or as expressly provided by statute.
The expenses of administering the Plan shall be borne by the
Company.
4. Bonus Awards.
(a) Emergence Bonus. On or after the Effective Date, the
Company will pay to certain Plan Participants, in accordance with the terms of
the Plan, an emergence bonus ("Emergence Bonus").
(b) Incentive Bonus. Any Plan Participant or other
employee entitled to an incentive bonus for the fiscal year 2003 under the
Company's incentive compensation plan in effect immediately prior to the
Effective Date will be paid such bonus ("Incentive Bonus") in cash in the amount
set forth in such plan within ten (10) business days of the Board's approval of
the Company's audited financial statements.
(c) Annual Incentive Bonus. At the end of fiscal year
2004 and each fiscal year thereafter (the "Fiscal Year End"), each Plan
Participant and certain other employees of the Company Group will be entitled to
receive an annual performance award (an "Annual Incentive Bonus") based on
EBITDA targets, debt reduction targets and other criteria, in each case, as
established and weighted by the Committee (collectively, the "EBITDA Target").
Each Plan Participant's Annual Incentive Bonus will be calculated as follows:
(i) 50% of such Plan Participant's Target Bonus Amount if the Company Group
reaches 85% of the EBITDA Target; (ii) 100% of such Plan Participant's Target
Bonus Amount if the Company Group reaches 100% of the EBITDA Target; and (iii)
200% of such Plan Participant's Target Bonus Amount if the Company Group reaches
120% of the EBITDA Target.
(d) Withholding. The Company will withhold all amounts
required to be withheld under the Code and any state or local law from the
payment of any Emergence Bonus, Incentive Bonus or Annual Incentive Bonus.
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5. Amendment under the Plan.
The terms of any outstanding award, payment, grant or
incentive under the Plan may be amended from time to time by the Committee
solely to provide rights under the Plan that are more favorable to any Plan
Participant; provided, that if such amendment adversely affects the rights of
any Plan Participant, such amendment shall be deemed to affect such Plan
Participant only upon such Plan Participant's written consent.
6. Commencement Date; Termination Date.
The date of commencement of the Plan shall be the Effective
Date.
Each Plan Participant shall be paid the awards, payments,
grants and incentives to which such Plan Participant is entitled pursuant to the
Plan as of the Effective Date, and the Plan shall not be terminated unless and
until each Plan Participant receives such awards, payments, grants and
incentives. No termination of the Plan shall materially and adversely affect any
of the rights or obligations of any Plan Participant, without such Plan
Participant's written consent, under any grant of any incentives theretofore
granted under the Plan.
7. Severability.
Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Plan is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of the Plan.
8. Governing Law.
The Plan shall be governed by the corporate laws of the State
of Delaware, without giving effect to any choice of law provisions that might
otherwise refer construction or interpretation of the Plan to the substantive
law of another jurisdiction.
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