AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this ___ day of _________, 1998, by and between THE
GRADALL COMPANY, an Ohio corporation (the "Company"), and DAVID S. WILLIAMS
("Executive").
WITNESSETH THAT:
WHEREAS, the Executive has been employed by the Company as its Vice
President of Marketing and Sales pursuant to the terms of an employment
agreement by and between the Company and the Executive dated January 13, 1986,
as restated and amended by agreements dated July 17, 1989, February 5, 1993 and
October 13, 1995 (the "Prior Employment Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the
Prior Employment Agreement to provide for the continued employment of the
Executive upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive's services are of great value to the Company and it
is recognized that substantial inducement must be offered to the Executive in
order that the Company may retain his services.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties agree as follows:
SECTION 1. DUTIES. The Company hereby agrees to continue to employ the
Executive as Vice President of Marketing and Sales of the Company, and the
Executive hereby agrees to continue to serve the Company in that capacity in
accordance with the terms and conditions set forth herein:
(a) The Executive shall be vested with all powers and rights attendant
to the office of Vice President of Marketing and Sales, and shall have full
authority and responsibility, subject to the general direction, approval and
control of the Board of Directors of the Company, to formulate policies, carry
out his duties and administer the Company in all respects relative to the sales
and marketing of the Company's products.
(b) If elected or appointed by the Board of Directors, the Executive
shall serve as a director of the Company without additional compensation.
(c) During the term of this Agreement, the Executive shall devote all
of his business time, attention, energy and skill to the performance of the
duties and services described herein, and shall not engage directly or
indirectly in any other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage, except with the
written consent of the Company's Board of Directors, provided, that the
provisions of this Section 1(c) shall not restrict the Executive's investment of
his personal assets or the Executive's participation in any professional,
academic or civic activity.
SECTION 2. TERM. Subject to prior termination as set forth in Section 10
hereof, the term of the Executive's employment under this Agreement shall be for
a period of one year, beginning on the date hereof, which term shall be
automatically renewed for successive one year periods until terminated as set
forth in Section 10 hereof; provided, however, that upon the occurrence of a
Change in Control, as hereinafter defined, the term of this Agreement and the
Executive's employment hereunder shall continue for a period of three (3) years
beginning on the date of such Change in Control.
SECTION 3. COMPENSATION. The Company shall pay to the Executive as
compensation for his services hereunder a base salary of One Hundred Forty-seven
Thousand Dollars ($147,000.00) per year, payable in equal semi-monthly
installments, subject to withholding and other applicable taxes. The salary
provided herein shall be subject to adjustment based on annual reviews conducted
by the Company (as so adjusted from time to time, "Base Salary").
SECTION 4. INCENTIVE COMPENSATION. The Executive shall be entitled to
participate in any incentive compensation plans established by the Company from
time to time.
SECTION 5. EXPENSES. The Executive is authorized to incur reasonable
expenses in connection with the business of the Company and the performance of
his duties hereunder, including expenses for entertainment, travel and similar
items. The Company will pay or reimburse the Executive for all expenses upon
the presentation by the Executive of an itemized account of such expenditures
and any other documentation or substantiation of expenses which may be required
for compliance with applicable state and federal tax laws.
SECTION 6. VACATIONS. The Executive shall be entitled to four (4) weeks
of vacation each year, during which time his compensation shall be paid in full.
SECTION 7. AUTOMOBILE ALLOWANCE. During the term of the Executive's
employment hereunder, the Company shall provide the Executive with a monthly car
allowance in accordance with the Company's policy in effect at the date hereof
for all expenses incurred in connection with the maintenance of an automobile
for the Executive's business use including, but not limited to, acquisition
costs, fuel, maintenance and insurance. The Company shall pay to the Executive
such additional amount as may be necessary to reimburse the Executive for any
federal, state or local income taxes the Executive is required to pay as a
result of the Company's payments pursuant to this Section 7, including such tax
reimbursement payments.
SECTION 8. EXECUTIVE BENEFITS. The Executive shall be entitled to all
benefits offered by the Company to any of its executive or salaried employees
including, but not limited to, major medical health insurance, hospitalization
insurance, life insurance, travel and accident insurance, and disability
insurance, including, but not limited to, those benefits the Executive currently
receives from the Company.
SECTION 9. DEFERRAL OF COMPENSATION. The Executive shall be entitled to
participate in the Company's Supplemental Executive Retirement Plan and any
other deferred compensation program maintained by the Company.
SECTION 10. TERMINATION. The Executive's employment hereunder may be
terminated in accordance with the following terms and conditions:
(a) The Company may terminate the Executive's employment hereunder at
any time prior to a Change in Control (as defined below), without cause, upon
ninety (90) days written notice to Executive. However, in such event, the
Company shall pay or provide to the Executive
(i) a severance allowance of at least twelve (12) months Base
Salary (less all amounts required to be withheld and deducted), payable on a
monthly basis, starting on the last day of the first full month following
termination;
(ii) all amounts the Executive would have received under the Short
and Long Term Management Incentive Plans (less all amounts required to be
withheld and deducted) during the twelve (12) month period following the
effective date of such termination; and
(iii) benefits equivalent to those previously received by the
Executive including, but not limited to, benefits provided under Sections 7 and
8 of this Agreement, for the twelve (12) month period following the effective
date of such termination.
(b) The Company may terminate the Executive's employment hereunder upon
ninety (90) days written notice to the Executive, in the event that the
Executive has been unable to perform his duties by reason of illness or
incapacity, which inability continues for a consecutive twelve month period,
provided, that the Executive is receiving the full benefit amount payable under
the group disability insurance maintained by the Company.
(c) Notwithstanding anything herein to the contrary, the Company shall
have the right to terminate the Executive's employment hereunder, effective upon
written notice of such termination, and shall not have an obligation to pay any
amounts provided under Section 10(a) or 10(e) hereof upon the happening of any
of the following events:
(i) the failure by the Executive to observe the restrictive
covenants set forth in Sections 11, if applicable, and 12 hereof, as determined
by a court of competent jurisdiction;
(ii) the commission by the Executive of a material theft or
embezzlement of Company property;
(iii) the conviction of the Executive for a crime resulting in
injury to the business or property of the Company; or
(iv) the commission of any act by the Executive in the performance
of his duties hereunder adjudged by a court of competent jurisdiction to amount
to gross, willful or wanton negligence.
(d) The Executive may terminate his employment with the Company upon
ninety (90) days written notice to the Company. Upon the effective date of such
termination, the Company shall have no further obligation to pay any amounts
provided for in this Agreement, except as set forth in Sections 10(e) and 10(h)
hereof.
(e) In the event the Executive's employment with the Company (or any
successor company) is terminated within three (3) years following a Change in
Control and such termination is due to the Executive's dismissal (other than
pursuant to Sections 10(b) or 10(c)), or the Executive's resignation for Good
Reason, as hereinafter defined, the Company (or such successor company) shall:
(i) continue to pay the Executive for a period equal to the
remaining term of this Agreement as set forth in Section 2 (the "Continuation
Period") (A) his Base Salary, including any portion thereof the receipt of which
the Executive may previously have elected to defer, plus (B) for each month in
the Continuation Period, 1/12 of his incentive compensation awarded with respect
to services rendered during the calendar year preceding such termination
(including any portion thereof which the Executive elected to defer), which
incentive compensation shall in no event be less than forty percent (40%) of his
Base Salary for such year,
(ii) continue for the duration of the Continuation Period the
Executive's participation in the major medical, health, hospitalization, life,
travel and accident and disability insurance plans or programs provided to the
Executive prior to the Change in Control, or provide equivalent benefits, at no
cost to him,
(iii) provide a monthly car allowance during the Continuation
Period in an amount not less than the amount of such allowance provided during
the calendar year preceding such termination,
(iv) treat the Executive as if he had retired at the expiration of
the Continuation Period at age 60 for the purpose of determining benefits due
and payable to him under the Company's Employees' Retirement Plan and The
Gradall Company Benefit Restoration Plan,
(v) provide the Executive with outplacement services by a firm
selected by the Executive, at the expense of the Company, in an amount up to
fifteen percent (15%) of the Executive's Base Salary, and
(vi) provide the Executive with the benefits set forth in Section
15.
(f) The term "Change in Control" shall mean the occurrence of any of
the following events: (i) the Company or Gradall Industries, Inc. sells or
transfers all or substantially all its assets to another corporation or entity,
(ii) the Company or Gradall Industries, Inc. is merged or consolidated with
another corporation and as a result thereof less than a majority of the
outstanding voting securities of the surviving or resulting corporation are
owned in the aggregate by the holders of shares of the Company or Gradall
Industries, Inc., as the case may be, immediately prior to such merger or
consolidation, (iii) twenty-five percent (25%) or more of the outstanding voting
securities of Gradall Industries, Inc. become owned (whether directly,
indirectly, beneficially or of record) by any person or group (within the
meaning of Section 13(d) or Section 14(d) of the Securities Exchange Act of
1934), other than MLGA Fund II, L.P. or a pension, retirement, profit sharing,
employee stock ownership or other employee benefit plan of the Company or
Gradall Industries, Inc., and the percentage of voting securities so owned by
such person or group exceeds the percentage of voting securities then owned by
MLGA Fund II, L.P. or (iv) the individuals who, at the beginning of any period
of two consecutive years, constituted the directors of Gradall Industries, Inc.
cease for any reason to constitute a majority thereof (provided, however, that
for purposes of this clause (iv), each new director whose nomination for
election was approved by the vote of at least two-thirds of the directors still
in office who were directors at the beginning of any such period will be deemed
to have been a director of Gradall Industries, Inc. at the beginning of such
period. The term "Good Reason" shall mean (i) a material breach of this
Agreement by the Company or its successor, (ii) a reduction in the Executive's
responsibilities, authority, compensation or employee benefits, or (iii) the
relocation of the Executive's principal work place without his consent to a
location outside the New Philadelphia, Ohio, metropolitan area.
(g) Any termination of the Executive's employment by the Company
following the commencement of any discussions with a third party that ultimately
results in a Change in Control shall be deemed to be a termination of the
Executive's employment after a Change in Control.
(h) In the event of termination pursuant to Sections 10(a), 10(b),
10(c), 10(d) or 10(e) hereof, the Executive shall receive the entire balance of
any sums earned by him prior to termination and such other benefits which may be
due him including, but not limited to, a prorata portion of amounts earned by
the Executive under any incentive compensation plans maintained by the Company.
on, and shall not have a
(i) Upon termination of his employment, for any reason, the Executive
shall promptly surrender to the Company all property provided him by the Company
for use in relation to his employment, and, in addition, the Executive shall
surrender to the Company any and all documents, files, records or other material
and information of or pertaining to the Company or its business operations.
(j) The Company (or any successor company) shall pay or reimburse the
Executive for all costs and expenses including, without limitation, court costs
and reasonable attorneys' fees, incurred by Executive in connection with any
claim, action or proceeding brought to enforce or interpret any provision of
this Section 10 or challenging the validity or enforceability of any provision
thereof.
SECTION 11. NON-COMPETITION. During the period of his employment with the
Company and for a period of six months after any termination of his employment,
other than a termination following a Change in Control, the Executive covenants
and agrees that he shall not do any of the following:
(a) Own, manage, operate, join, control, be employed by, participate
in, or be connected in any manner with the ownership, management, operation, or
control of any business that is competitive with the types of businesses
conducted by the Company at that time within any areas in which the Company
intends to conduct business, as known to Executive by reason of Executive's
affiliation with the Company. Nothing herein shall prohibit Executive from
owning stock or other securities of a competitor, provided that Executive's
equity interest shall not exceed five percent (5%) of the total outstanding
stock of such competitor, and provided Executive, in fact, does not have the
power to control or direct the management or policies of such competitor and
does not serve as a director or officer thereof, and is not otherwise associated
with any competitor, except as consented to by the Company.
(b) Induce or influence any employee, independent contractor, agent,
customer or supplier of the Company to terminate or curtail his, her or its
employment or business relationship with the Company.
(c) Solicit or sell any product or service which is competitive with
those offered by the Company to any customer which did business with the Company
at any time during the term of Executive's employment with the Company.
SECTION 12. CONFIDENTIALITY. During the period of his employment by the
Company and for a period of six (6) months following its termination, for any
reason, the Executive covenants and agrees that he shall not use, disseminate,
or disclose, for his own benefit, or for the benefit of any person, firm,
business, or other entity, any confidential information pertaining to the
Company unless such information is first made public by the Company; the Company
authorizes, in writing, the use, dissemination, or disclosure of such
information; or as otherwise required by law. For purposes of this
subparagraph, confidential information is information which is not generally
known to the Company's industry, and relates, by way of example and not by way
of limitation, to the Company's manufacturing process, cost and pricing data,
supply sources, contracts, and customer lists.
SECTION 13. MITIGATION. The Executive shall not be obligated to seek
other employment following termination of employment hereunder; however, any
amounts owing to Executive under Sections 10(a) or 10(e) (other than subsection
(ii) thereof) of this Agreement shall be offset against all amounts earned by
the Executive from other employment (including self employment) beginning one
year after termination of employment hereunder. The Executive's entitlements
under Section 10(e)(ii) shall terminate immediately upon the Executive's
becoming entitled to coverage of a similar nature under benefit plans of a
subsequent employer, subject to the Executive's rights to continuation coverage
under the Company's plans at his expense under COBRA.
SECTION 14. GOLDEN PARACHUTE EXCISE TAX. (a) If any of the payments or
benefits received or to be received by the Executive in connection with a Change
in Control or the Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement) (such
payments or benefits, excluding the Gross-Up Payment defined below, being
hereinafter referred to as the "Total Payments") will be subject to the excise
tax imposed under Section 4999 (the "Excise Tax"), then the provisions of either
subclause (i) or (ii) of this section shall apply: (i) if the Total Payments are
less than 115% of the maximum amount of such payments that could be made without
imposition of Excise Tax (the "Safe Harbor Amount"), then the Total Payments
will be reduced to the Safe Harbor Amount; or (ii) if the Total Payments equal
or exceed 115% of the Safe Harbor Amount, the Company shall pay to the Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Total Payments and
any federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments.
(b) The calculations necessary to give effect to this section shall be
performed by the accounting firm which was immediately prior to the Change in
Control, the Company's independent auditor (the "Auditor"). For purposes of
determining whether any of the Total Payments will exceed the Safe Harbor Amount
and the amount of the Excise Tax, if any, (i) all of the Total Payments shall be
treated as "parachute payments" (within the meaning of section 280G(b)(2) of the
Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to the Executive and selected by the Auditor, such payments or
benefits (in whole or in part) do not constitute parachute payments, including
by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code) in excess of the Base Amount allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be determined by the Auditor
in accordance with the principles of sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income tax at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on the date of
termination of employment, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(c) In the event that subclause (i) of this Section 14(a) applies, the
Executive and the Company shall jointly agree on the allocation of any reduction
in the Total Payments.
(d) The provisions of this Section 14 shall be applied without giving
effect to any cap or limitation on benefits under the Company's Supplemental
Executive Retirement Plan that is intended to avoid Excise Tax, and the Company
hereby waives the application of any such provision to the Executive.
SECTION 15. SUPPLEMENTAL RETIREMENT BENEFITS. In the event that the
Executive's employment is terminated under circumstances entitling him to the
payments and benefits set forth in Section 10(e), the Executive shall be
entitled to the following additional benefits:
(a) Under the Company's Supplemental Executive Retirement Plan (i)
three years of additional service credit for vesting purposes; and (ii) three
additional years of Company contributions, each in an amount not less than the
Company contribution for the year prior to the year of termination of
employment.
(b) Under the Amended and Restated Deferred Compensation Agreement
between the Executive and the Company dated August 30, 1995, the Executive shall
be treated as if he had retired from the Company on or after age 60.
SECTION 16. NOTICES. Any notice required or desired to be given pursuant
to this Agreement shall be in writing and sent by certified mail to the parties
at the following addresses, or to such other addresses as either may designate
in writing to the other party:
To the Company: The Gradall Company
406 Mill Avenue S.W.
New Philadelphia, Ohio 44663
To Executive: David S. Williams
5601 Foxchase Avenue N.W.
Canton, Ohio 44718
SECTION 17. WAIVER. Failure to insist upon strict compliance with any of
the terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 18. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision. In the event that any part of a covenant contained herein is
determined by a court of law to be invalid, a judicially enforceable provision
shall be substituted in its place. Any covenant so modified shall be binding
upon the parties and shall have the same force and effect as if originally set
forth in this Agreement.
SECTION 19. MODIFICATION. This Agreement may be amended only in writing,
signed by both parties hereto.
SECTION 20. HEADINGS. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
thereof.
SECTION 21. ASSIGNMENT. The Executive acknowledges that the services to
be rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. However, the rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company including, but not limited to, any corporation which
may acquire all or substantially all of the Company's assets and business, or
which may be consolidated or merged with or into the Company.
SECTION 22. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Ohio.
SECTION 23. NOVATION. This Agreement terminates and supersedes the Prior
Employment Agreement.
SECTION 24. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the Company and the Executive with regard to
all matters herein. There are no other agreements, conditions or
representations, oral or written, express or implied, with regard thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
THE GRADALL COMPANY
By: /s/ Sangwoo Ahn
Sangwoo Ahn
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Chairman
/s/ David S. Williams
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David S. Williams