PRIVILEGED AND CONFIDENTIAL
[Date]
[Executive]
[Position]
Columbus McKinnon Corporation
140 John James Audubon Parkway
Amherst, New York l4228-1197
Dear [Executive]:
Columbus McKinnon Corporation (the "Company") considers it
essential to the best interests of its stockholders to foster the continuous
employment of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control of the
Company may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including you, to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from the possibility of a change in control of the Company.
In order to induce you to remain in the employ of the Company
in your current executive position, the Company agrees that you shall receive
the severance benefits set forth in this letter agreement (the "Agreement") in
the event your employment in your current executive position with the Company is
terminated under the circumstances described below subsequent to a "change in
control of the Company" (as defined in Section 2).
1. TERM OF AGREEMENT. This agreement shall commence on [Date],
and shall continue in effect through [Date]; provided, however, that commencing
on [Date], and each [Day] thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than [Day]
of such year, the Company shall have given notice that it does not wish to
extend this Agreement (provided that no such notice may be given during the
pendency of a potential change in control of the Company, as defined in Section
2); and provided, further, that if a change in control of the Company, as
defined in Section 2, shall have occurred during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of not
less than thirty-six (36) months beyond the month in which such change in
control occurred. Notwithstanding anything provided herein to the contrary, the
term of this Agreement shall not extend beyond the end of the month in which you
attain "normal retirement age" under the provisions of the Columbus McKinnon
Corporation Monthly Retirement Benefit Plan (or any amendment, restatement or
successor thereto) or any other tax-qualified retirement plan of the Company or
any of its subsidiaries in which you are participating (any such plan being
referred to herein as the "Company Pension Plan").
2. CHANGE IN CONTROL, POTENTIAL CHANGE IN CONTROL.
(i) No benefits shall be payable hereunder unless there shall have been
a change in control of the Company, as set forth below. For purposes of this
Agreement, a "change in control of the Company" shall be deemed to have occurred
if
(a) any "Person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any Company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of either
(i) the then outstanding shares of common stock of the Company or (ii) the
combined voting power of the Company's then outstanding voting securities;
(b) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c), (d) or (e) of this
Section) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(c) the consummation of a reorganization, merger or
consolidation of the Company with any other company, other than (1) a
reorganization, merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such reorganization, merger or consolidation or (2) a
reorganization, merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as herein above
defined) beneficially owns, directly or indirectly, 20% or more of the combined
voting power of the Company's then outstanding voting securities;
(d) any Person or Persons acquire all or substantially all of
the assets of the Company, whether in a single transaction or series of
transactions; or
(e) the stockholders of the Company approve a plan of
dissolution or complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the Company's
assets.
(ii) For purposes of this Agreement, a "potential change in control of
the Company" shall be deemed to have occurred if:
(a) the Company enters in an agreement, the consummation of
which would result in the occurrence of a change in control of the Company;
(b) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a change in control of the Company;
(c) any person (other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a company
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
or a person who is then currently properly eligible to file and has properly
filed a Schedule 13G (or any successor filing) pursuant to the Exchange Act and
the rules and regulations thereunder, indicating beneficial ownership of
securities of the Company and stating that the securities were acquired in the
ordinary course of business and were not acquired with the purpose nor with the
effect of changing or influencing the control of the Company, for so long as
such statement is true and correct) who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 9.5% or more
of the combined voting power of the Company's then outstanding securities and,
without the written consent of the Company, increases within a one-year period
his beneficial ownership of such securities by 3 percentage points or more; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential change in control of the Company has
occurred.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. If any of the events described in Section 2 constituting a
change in control of the Company shall have occurred, you shall be entitled to
the benefits provided in Section 4(iii) upon termination of your employment
within thirty-six (36) months following such a change in control of the Company
unless such termination is (a) because of your death or Disability, (b) by the
Company for Cause, or (c) by you other than for Good Reason. In the event your
employment with the Company is terminated for any reason and subsequently a
change in control of the Company should have occurred, you shall not be entitled
to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Company for six (6) consecutive months, and within thirty
(30) days after written notice of termination is given you shall not have
returned to the full-time performance of your duties, your employment may be
terminated for "Disability."
(iii) CAUSE. Termination by the Company of your employment for "Cause"
shall mean termination (a) upon the commission by you of a willful serious act,
such as embezzlement, against the Company which is intended to enrich you at the
expense of the Company or upon your conviction of a felony involving moral
turpitude or (b) in the event of willful, gross neglect or willful, gross
misconduct resulting in either case in material harm to the Company. For
purposes of this Subsection, no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interest of the Company.
(iv) GOOD REASON. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a change in control
of the Company of any of the following circumstances unless such circumstances
are fully corrected prior to the Date of Termination (as defined in Section
3(vi)) specified in the Notice of Termination (as defined in Section 3(v)) given
in respect thereof:
(a) a reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be increased from time to time;
(b) the Company's requiring you to be based at a Company
office more than 50 miles from the Company's offices at which you are
principally employed immediately prior to the date of the change in control
except for required travel on the Company's business to an extent substantially
consistent with your present business travel obligations;
(c) the failure by the Company to pay to you any portion of
your current compensation within seven (7) days of the date such compensation is
due or any portion of your compensation under any deferred compensation program
of the Company within thirty (30) days of the date such compensation is due;
(d) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Subsection (v) hereof (and, if applicable, the requirements of Subsection (iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(e) the assignment to you of any duties or responsibilities
that are inconsistent with your position, duties, responsibilities or status
immediately preceding such change in control, or any other action by the Company
which results in a diminution in such position, duties, responsibilities or
status.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason hereunder.
(v) NOTICE OF TERMINATION. Any purported termination of your employment
by the Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6. "Notice of Termination"
shall mean a notice that shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(vi) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (a) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such 30-day period), and (b) if your
employment is terminated pursuant to Subsection (iii) or (iv) hereof or for any
other reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination for Cause shall not be less
than thirty (30) days from the date such Notice of Termination is given, and in
the case of a termination for Good Reason shall not be less than thirty (30) nor
more than sixty (60) days from the date such Notice of Termination is given);
provided, however, that if within fifteen (15) days after any Notice of
Termination is given, or, if the Notice of Termination is not properly given,
prior to the Date of Termination (as determined without regard to an extension
of such Date of Termination as described in this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties or by a binding arbitration award; and provided, further, that the
Date of Termination shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence. During the pendency of any dispute,
(i) the Company will continue to pay you your full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
base salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection and (ii) you will have no obligation to perform any duties as an
employee of the Company on or after the Date of Termination (as determined
without regard to an extension of such Date of Termination as described in the
preceding sentence). Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement, and shall not be offset against or
reduce any other amounts due under this Agreement and shall not be reduced by
any compensation earned by you as the result of employment by another employer.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
Following a change in control of the Company, you shall be entitled to the
following benefits during a period of disability, or upon termination of your
employment as the case may be, provided that such period of disability or
termination occurs during the term of this Agreement:
(i) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental illness,
you shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Company's disability plan or program or other similar plan during such
period, until this Agreement is terminated pursuant to Section 3(ii) hereof.
Thereafter, or in the event your employment shall be terminated by reason of
your death, your benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance with the
terms of such programs.
(ii) If your employment shall be terminated by the Company for Cause or
by you other than for Good Reason, the Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts to which you are entitled under
any compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.
(iii) If your employment by the Company should be terminated by the
Company other than for Cause or Disability or if you should terminate your
employment for Good Reason, you shall be entitled to the benefits provided
below:
(a) the Company shall pay to you your full base salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, plus all other amounts to which you are entitled under any
compensation plan of the Company, at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance pay to
you, at the time specified in Subsection (iv), a lump sum severance payment
(together with the payments provided in paragraphs (c), (d), (e) and (f) below,
the "Severance Payments") equal to THREE (3) TIMES the sum (such sum, the
"Compensation Level") of (x) the greater of your annual rate of base salary in
effect on the Date of Termination and your annual rate of base salary in effect
immediately prior to such change in control of the Company, plus (y) the greater
of (a) the annual target bonus (annualized in the case of any bonus paid with
respect to a partial year) under the Company's then current Management EVA(R)
Incentive Compensation Plan or any then current similar plan (the "Management
Incentive Plan") in effect on the Date of Termination or (b) the annual target
bonus (annualized in the case of any bonus paid with respect to a partial year)
under the Management Incentive Plan in effect immediately prior to such change
in control;
(c) the Company shall pay to you all reasonable legal fees and
expenses incurred by you as a result of such termination, including all such
fees and expenses, if any, as incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement; provided that you shall repay such amounts to the Company if it
is finally determined by a court of competent jurisdiction that such contest or
dispute was brought by you frivolously and in bad faith;
(d) for a period of thirty-six (36) months after such
termination, the Company shall (i) arrange to provide you with all benefits
under the Company's medical, prescription, dental, employee life and group life
plans and programs, which are substantially similar to those which you were
receiving immediately prior to the change in control or (ii) reimburse you for
your out-of-pocket costs for providing yourself with any medical, prescription,
dental, employee life and group life plans and programs which are substantially
similar to those which you were receiving immediately prior to the change in
control;
(e) at your option, you may either elect in writing (i) to
continue to participate in the Company Pension Plan (and be deemed to have
continued to be employed by the Company for a period of three (3) additional
years and deemed to have accumulated three (3) additional calendar years of
compensation (for purposes of determining your pension benefits under the
Company Pension Plan), in an amount equal to the Compensation Level determined
under Section 4(iii)(b) hereof), in which case you would be fully vested under
the Company Pension Plan as of the Date of Termination, but in no event shall
you be deemed to have continued to be employed by the Company after your normal
retirement age, or (ii) to receive from the Company a lump sum payment, in cash,
equal to the actuarial equivalent of the retirement pension (determined as a
straight life annuity commencing at age 65) which you would have accrued under
the terms of the Company Pension Plan (without regard to the limitations imposed
by section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the
"Code"), or any amendment to the Plan made subsequent to a change in control of
the Company and on or prior to the Date of Termination, which amendment
adversely affects in any manner the computation of retirement benefits
thereunder), determined as if you were fully vested thereunder and had continued
to be employed by the Company (after the Date of Termination) for three (3)
additional years and as if you had accumulated three (3) additional calendar
years of compensation (for purposes of determining your pension benefits
thereunder), each in an amount equal to the Compensation Level determined under
Section 4(iii)(b) hereof, but in no event shall you be deemed to have continued
to be employed by the Company after your normal retirement age. For purposes of
this Subsection, "actuarial equivalent" shall be determined using the same
methods and assumptions utilized under the Company Pension Plan immediately
prior to the change in control of the Company;
(f) the Company shall provide to you outplacement services
with an outplacement firm selected by you for a period of up to six months and
for an amount not to exceed $25,000; and
(g) notwithstanding anything to the contrary contained in any
stock option agreement, you shall be fully vested as of the date of the change
in control in any and all stock options held by you immediately prior to such
change in control; and
(iv) The payments provided for in Subsection (iii) shall be made not
later than the fifth day following the Date of Termination; provided, however,
that if the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments and shall pay
the remainder of such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to you payable on the fifth day after demand therefor by the
Company (together with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
(v) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(vi) Notwithstanding any provision of this Agreement to the contrary,
the aggregate present value of all "payments in the nature of compensation"
(within the meaning of Section 28OG of the Code) provided to you in connection
with a change in control of the Company or the termination of your employment
shall be one dollar less than the amount that is fully deductible by the Company
under Section 28OG of the Code and, to the extent necessary, payments and
benefits under this Agreement shall be reduced in order that this limitation not
be exceeded. It is the intention of this Subsection (vi) to avoid excise taxes
on you under Section 4999 of the Code or the disallowance of a deduction to the
Company pursuant to Section 28OG of the Code.
5. SUCCESSORS, BINDING AGREEMENT.
(i) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same amount and on the
same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a change in control of the Company, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
(iii) The Company expressly acknowledges and agrees that you shall have
a contractual right to the benefits provided hereunder, and the Company
expressly waives any ability, if possible, to deny liability for any breach of
its contractual commitment hereunder upon the grounds of lack of consideration,
accord and satisfaction or any other defense. In any dispute arising after a
change in control of the Company as to whether you are entitled to benefits
under this Agreement, there shall be a presumption that you are entitled to such
benefits and the burden of proving otherwise shall be on the Company.
(iv) All benefits to be paid hereunder shall be in addition to any
disability, workers' compensation, or other Company benefit plan distribution,
unpaid vacation or other unpaid benefits that you have at the Date of
Termination.
6. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
7. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. In the event of a change in control of the
Company during the term of this Agreement, the obligations of the Company under
Section 4 shall survive the expiration of the term of this Agreement consistent
with the periods referenced in Section 4.
8. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in the State of New York, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and during the term of the Agreement supersedes the provisions of all
prior change in control agreements entered into between you and the Company and
all other prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto with respect to the subject matter hereof.
12. APPLICABLE LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within such State.
If this letter sets forth our agreement on the subject matter
thereof, kindly sign and return to the Company the enclosed copy of this letter,
which will then constitute our agreement on this subject.
Sincerely,
COLUMBUS McKINNON CORPORATION
By:
Name: Timothy T. Tevens
Title: President and Chief
Executive Officer
Agreed as of the
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Executive