January 27, 2000
CM with price incentive and CIC Offset
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Mr.
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Columbus McKinnon Corporation
140 John James Audubon Parkway
Amherst, New York 14228
Dear :
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As you are aware, Columbus McKinnon Corporation ("CM") is examining
various restructuring alternatives in an effort to enhance shareholder value. In
this regard, one of the restructuring alternatives being examined is a sale of
the issued and outstanding stock of CM. You are important to the success of CM's
business and your active involvement during a sale and a transition period
subsequent to such sale is essential. Accordingly, it is in CM's best interests
to have an understanding with you regarding your continued employment.
Based on the above, CM will provide, and will require any party that
acquires CM to provide, you with the following rights and benefits:
1. Your salary and benefits, both contributory and non-contributory,
will be maintained at levels which are not less than the levels which are in
effect as of December 31, 1999, for a period of six (6) months following the
date on which a "Sale" (as hereinafter defined) occurs (such date being
hereinafter referred to as the "Closing Date"). For purposes of this letter, a
"Sale" will be deemed to occur upon: (a) the sale (including a transfer
occurring as a result of a tender offer, an exchange offer or the consummation
of a plan of merger or consolidation) of ninety percent (90%) or more of CM's
issued and outstanding stock or (b) the sale of all or substantially all of the
CM's assets with the buyer assuming all or substantially all of its liabilities,
to any person or group (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended).
2. In order to receive any of the payments which are provided for by
this letter and are contingent upon the occurrence of Sale, the Sale must
either: (a) occur on or before December 31, 2000 or (b) occur on or before March
31, 2001, provided that, as of December 31, 2000, negotiations regarding a
February 4, 2000
Page 2
possible Sale to an identified prospective purchaser with sufficient financial
resources are taking place.
3. If a Sale which satisfies either of the requirements of paragraph 2
above occurs, you will, subject to your compliance with the terms of this
letter, be entitled to receive an amount equal to
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(such amount being hereinafter referred to as the "Basic Stay Bonus").
4. In addition to the Basic Stay Bonus, if the price of CM's common
stock which is payable in connection with the Sale (hereinafter the "Purchase
Price") is more than $21.00 per share, an amount (hereinafter the "Additional
Stay Bonus") will be paid to you. The amount of the Additional Stay Bonus will
be equal to the sum of: (a) Twenty Five Thousand Dollars ($25,000) multiplied by
the number of whole Dollars, up to a maximum of three (3), by which the Purchase
Price exceeds $21.00 per share; plus (b) Fifty Thousand Dollars ($50,000)
multiplied by the number of whole Dollars by which the Purchase Price exceeds
$24.00 per share. If the Purchase Price is less than $21.00 per share, you will
not be entitled to payment of any Additional Stay Bonus.
5. Your active employment with CM, or, if applicable, your active
employment with the purchaser or any of its affiliates ("Purchaser") is herein
referred to as "Your Active Employment."
Your right to receive any payment described herein that becomes
payable to you on the Closing Date is contingent upon the continuation of Your
Active Employment through the Closing Date. Similarly, your right to receive any
payment described herein that becomes payable to you at the end of the six (6)
month period following the Closing Date ("Six-Month Anniversary") is contingent
upon the continuation of Your Active Employment through the Six-Month
Anniversary.
If, for any reason, Your Active Employment is terminated before the
Closing Date, you will not be entitled to receive any payment that would
otherwise become payable to you on the Closing Date. Similarly, if, for any
reason, Your Active Employment is terminated before the Six-Month Anniversary,
you will not be entitled to any payment that would otherwise become payable to
you on the Six-Month Anniversary.
February 4, 2000
Page 3
6. If a Sale which satisfies either of the requirements of paragraph 2
above occurs, and you have satisfied the requirements of paragraph 5, one-half
of the amount of the Basic Stay Bonus will become payable and will be paid to
you in one lump sum on the Closing Date and the remaining one-half of the Basic
Stay Bonus will become payable and will be paid to you in one lump sum on the
Six-Month Anniversary. In addition, the amount of any Additional Stay Bonus will
become payable and will be paid to you in one lump sum on the Closing Date.
7. If a Sale does not occur in a manner which satisfies either of the
requirements set forth in Paragraph 2 above, the Basic Stay Bonus and the
Additional Stay Bonus described above in this letter will not be payable.
8. The fact that CM has agreed, by the terms of this letter, to make
payments to you as provided for in this letter, is strictly confidential. As a
result, you are expressly prohibited from disclosing or revealing to any person
or entity, any information regarding the specific terms of this letter or the
existence of CM's agreement, as contained in this letter, to make payments to
you which are conditioned, in part, on the occurrence of a Sale and your
continued active employment with CM or a Purchaser. If it is determined that you
have violated the provisions of this paragraph 8, you will not be entitled to
receive any payment of the amounts described above in this letter.
9. As you know, on , CM entered into an agreement
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(hereinafter the "Change in Control Agreement") providing for the payment to you
of certain amounts in the event that your employment with CM is terminated under
certain specified conditions following a change in control of CM (as defined in
such Change in Control Agreement). It is CM's intent that you will not be
entitled to receive both the second half of the Basic Stay Bonus as provided for
by this letter and the full amount of the payments provided for by the Change in
Control Agreement. Accordingly, by your execution of this letter as provided for
at the end hereof, you will be deemed to expressly agree that the Change in
Control Agreement will be deemed and construed to be amended, by this letter
(and this letter will be deemed to constitute an amendment to the Change in
Control Agreement), to provide that, if and to the extent that you are paid the
second half of the Basic Stay Bonus provided for by this letter, the amount of
February 4, 2000
Page 4
any payments you may thereafter become entitled to receive under the terms of
the Change in Control Agreement will be reduced by an amount equal to the second
half of the Basic Stay Bonus provided for by this letter.
10. Your right to receive the Basic Stay Bonus and, if applicable, the
Additional Stay Bonus will only apply to one Sale. Therefore, you will not have
any right to receive payment of a second Basic Stay Bonus or a second Additional
Stay Bonus if, after the closing of the Sale, a sale of all or substantially all
the assets of CM or a sale of any portion of the issued and outstanding stock of
CM occurs.
Thank you for your cooperation and support in completing a sale of CM.
We will do all that is possible to enable a smooth and responsible transition.
Yours truly,
By:
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Agreed to and Acknowledged this day of , 2000.
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