Exhibit 10.9
BUCYRUS INTERNATIONAL, INC.
1998 MANAGEMENT STOCK OPTION PLAN
(OCTOBER 2006 AMENDMENT AND RESTATEMENT)
This 1998 Management Stock Option Plan (the "Plan") was initially
adopted by the Board of Directors of Bucyrus International, Inc. (the "Company")
on March 5, 1998. The Plan, as amended and restated herein, is effective October
18, 2006.
ARTICLE I
PURPOSE OF PLAN
The Plan is adopted by the Board for certain management employees of
the Company and its Subsidiaries as a part of the compensation and incentive
arrangements for such employees. The Plan is intended to advance the best
interests of the Company by allowing such employees to acquire an ownership
interest in the Company, thereby motivating them to contribute to the success of
the Company and to remain in the employ of the Company and its Subsidiaries. The
availability of stock options under the Plan will also enhance the Company's
ability to attract and retain individuals of exceptional talent to contribute to
the sustained progress, growth and profitability of the Company.
ARTICLE II
DEFINITIONS
For purposes of the Plan, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person who,
either directly or through one or more intermediaries, Controls, is Controlled
by or is under common Control with, such first Person.
"Board" means the Board of Directors of the Company.
"Cause" means (a) with respect to any Participant with an employment
agreement that defines "Cause," the definition set forth in such employment
agreement and (b) with respect to any other Participant, (i) such Participant's
(1) willful failure to
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timely comply in all material respects with the lawful directives of the Board
(as set at a meeting of the Board in accordance with the Company's bylaws) or
such Participant's supervisory personnel (provided such directives are
consistent with such Participant's position with the Company) or (2) gross
negligence or willful misconduct in the performance of the material duties or
responsibilities of his or her position with the Company or any Subsidiary; (ii)
reasonable evidence to indicate that such Participant has committed (1) any
felony, (2) any other criminal act or act of material dishonesty, disloyalty, or
misconduct (other than minor traffic offenses and similar acts) or (3) any act
of moral turpitude that is materially injurious to the property, operations,
business or reputation of the Company or any Subsidiaries (as determined by the
Board in its reasonable good faith discretion); (iii) the use or imparting by
such Participant of any material confidential or proprietary information of the
Company or any Subsidiary in violation of any confidentiality or proprietary
agreement to which such Participant is a party; or (iv) such Participant's
willful failure to comply in any material respect with the terms of this Plan or
the Stockholders Agreement.
"CEO" means the President and Chief Executive Officer of the
Company.
"Closing Date" means September 26, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Commission" means the United States Securities and Exchange
Commission.
"Committee" means the Compensation Committee or such other committee
of the Board as the Board may designate to administer the Plan or, if for any
reason the Board has not designated such a committee, the Board. The Committee,
if other than the Board, shall be composed of two or more directors as appointed
from time to time by the Board. At any time when the Company is subject to the
reporting requirements of Section 13 or Section 15(d) of the Securities Exchange
Act, this Plan shall be administered by a committee consisting solely of two or
more directors who are "Non-Employee Directors" within the meaning of Rule l6b-3
under the Securities Exchange Act. In addition, at any time and to the extent
that compensation payable under this Plan is subject to Section 162(m) of the
Code, each director who is a member of such committee shall also be an "outside
director" within the meaning of Section 162(m) of the Code.
"Common Stock" means the Company's common stock, par value $0.01 per
share.
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"Company" means Bucyrus International, Inc., a Delaware corporation.
"Company Sale" means a transaction involving one or more independent
third parties pursuant to which such party or parties (i) acquire (whether by
merger, consolidation or transfer or issuance of capital stock) capital stock of
the Company (or any surviving or resulting corporation) possessing the voting
power to elect a majority of the board of directors of the Company (or such
surviving or resulting corporation) or (b) acquire all or substantially all of
the Company's assets determined on a consolidated basis.
"Control" (including, with correlative meaning, all conjugations
thereof) means with respect to any Person, the ability of another Person to
control or direct the actions or policies of such first Person, whether by
ownership of voting securities, by contract or otherwise.
"Disability" means (a) with respect to a Participant who is covered
by any long-term disability insurance provided by the Company or any of its
Subsidiaries, the occurrence of those events or the existence of those
conditions that constitute "permanent disability" under the terms of such
insurance policy, and (b) with respect to any Participant that is not covered by
any long-term disability insurance provided by the Company or any of its
Subsidiaries, illness, accident, injury, physical or mental incapacity or other
disability which has existed for at least six months and which has continuously
during such period prevented, and can reasonably be expected to continue to
prevent, such Participant from carrying out effectively his duties and
obligations to the Company and its Subsidiaries as determined in good faith by
the Board.
"Employee" means (a) any full-time employee of the Company or any of
its Subsidiaries or (b) any consultant or advisor of the Company or any of its
Subsidiaries.
"Exercise Price" means the purchase price of an Option Share upon
exercise of an Option.
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"Fair Market Value" as of any date means (a) with respect to
publicly traded Common Stock, the market trading price of such Common Stock, (b)
with respect to non-publicly traded Common Stock, the fair market value of such
Common Stock (expressed on a per-share basis) as of such date, as determined in
good faith by the Committee taking into consideration the enterprise multiples
paid by equity sponsors at the time of termination utilizing the trailing four
quarters EBITDA less net debt outstanding as of the then-immediately preceding
quarter end, plus such other factors as the Committee may deem appropriate, and
(c) with respect to any Option (or portion thereof), the excess of (i) the
product of the amount described in clause (a) or (b) above (as applicable)
multiplied by the number of Option Shares issuable upon exercise of the Option
(or portion thereof), over (ii) the aggregate Exercise Price of the Option (or
portion thereof).
"Management Agreement" means the Management Services Agreement,
dated as of September 24, 1997, among the Company, its Subsidiaries and American
Industrial Partners, a Delaware general partnership.
"Management Stockholder" means a management Stockholder under the
Stockholder Agreement.
"Option" means any option to purchase shares of Common Stock under
the Plan.
"Option Shares" means (a) any shares of Common Stock (or other
shares of capital stock of the Company) issued or issuable by the Company upon
exercise of any Option, and (b) any shares of the capital stock of the Company
issued or issuable in respect of any of the securities described in clause (a)
above, by way of stock dividend, stock split, merger, consolidation,
reorganization or other recapitalization.
"Participant" means any Employee who is selected to participate in
the Plan in accordance with Article III of the Plan.
"Performance Vesting Period" shall mean the period from January 1,
1998 through December 31, 2001, unless a different period is specified by the
Committee in the Option Certificate (as defined in Section 5.2 below) relating
to any Option.
"Person" means an individual, a partnership, a corporation, 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" means this 1998 Management Stock Option Plan
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(October 2006 Amendment and Restatement), as amended or supplemented from time
to time in accordance with its terms.
"Qualified Public Offering" means any primary or secondary public
offering of Common Stock pursuant to an effective registration statement under
the Securities Act, other than pursuant to a registration statement filed in
connection with a transaction of the type described in Rule 145 of the
Securities Act or for the purpose of issuing securities pursuant to an employee
benefit plan, having an aggregate offering value (before underwriters' discounts
and selling commissions) of at least $30 million.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Stockholders Agreement" means the Stockholders Agreement dated as
of March 17, 1998 among the Company and its stockholders.
"Subsidiary" means any corporation of which the Company owns,
directly or through one or more Subsidiaries, securities possessing the voting
power to elect a majority of the board of directors of such corporation.
"Transfer" means, with respect to any Option, the gift, sale,
assignment, transfer, pledge, hypothecation or other disposition (whether for or
without consideration and whether voluntary, involuntary or by operation of law)
of such Option or any interest therein.
ARTICLE III
ADMINISTRATION
The CEO shall be responsible for the routine administration of the
Plan, subject to the review and approval of the Committee. Subject to the
requirements and limitations of the Plan, the CEO shall have the authority to
recommend to the Committee those Employees who shall be Participants and the
number of Options to be granted to each Participant. Subject to the requirements
and the limitations of the Plan, the Committee shall have the sole and complete
responsibility and authority to: (a) approve the award of and grant Options
under this Plan; (b) determine the terms and conditions of Options granted under
this Plan; (c) interpret the Plan and adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan; (d) correct any
defect or omission or
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reconcile any inconsistency in the Plan or in any Option granted hereunder; and
(e) make all other determinations and take all other actions necessary or
advisable for the implementation and administration of the Plan. All authority
not expressly granted to the CEO hereunder shall remain vested in the Committee.
The Committee's determinations on matters within its authority shall be
conclusive and binding upon the Participants, the Company and all other Persons.
All expenses associated with the administration of the Plan shall be borne by
the Company.
ARTICLE IV
OPTION SHARES AVAILABLE FOR GRANT UNDER THE PLAN
4.1 Option Shares. The aggregate number of shares of Common Stock
with respect to which Options may be granted under the Plan shall not exceed
2,400,000 shares; provided, however, that such number of shares shall be subject
to adjustment in accordance with the provisions of Section 8.3 below.
4.2 Status of Option Shares. The shares of Common Stock for which
Options may be granted under the Plan may be either authorized and unissued
shares, treasury shares or a combination thereof, as the Committee shall
determine and shall be reserved by the Company for issuance as provided in the
Plan. To the extent any outstanding Options expire or are terminated prior to
exercise, the Option Shares in respect of which such Options were issued shall
remain available for reissuance to employees of the Company and its Subsidiaries
pursuant to this Plan or any other plan or agreement approved by the Board.
ARTICLE V
GRANT OF OPTIONS
5.1 Option Terms and Conditions. The terms and conditions of each
Option granted under this Plan shall be as determined by the Committee in
consultation with the CEO.
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5.2 Option Certificate. Each Option granted hereunder to a
Participant shall be evidenced by a certificate setting forth certain basic
terms of the Option. The certificate shall be substantially in the form attached
hereto as Annex l (or in such other form as the Committee may from time to time
adopt) (the "Option Certificate"), and shall be signed by the CEO or such other
officer of the Company as the Committee shall designate. For purposes of the
Plan, no Option shall be deemed to be outstanding until it has been granted to a
Participant by the Committee and an Option Certificate has been executed and
delivered by the Company, and an Option shall cease to be outstanding when it is
repurchased by the Company, terminates or is exercised pursuant to the Plan.
5.3 Joinder Agreement. As a condition to exercising any Options
hereunder, each Participant who is not a Management Stockholder shall be
required to execute a Joinder Agreement substantially in the form attached
hereto as Annex III (the "Joinder") and thereby become a party to the
Stockholders Agreement with respect to any Option Shares issued in connection
with such exercise.
ARTICLE VI
EXERCISE OF OPTIONS
6.1 Right to Exercise. Except as may otherwise be determined by the
Committee, Options may not be Transferred other than by will or the laws of
descent and distribution and, during the lifetime of the Participant, Options
may be exercised only by such Participant (or his legal guardian or legal
representative). Any Transfer or attempted Transfer of an Option contrary to
this Section 6.1 shall be void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Option as the owner of
such Option for any purpose. In the event of the death of a Participant,
exercise of Options granted hereunder shall be made only by the executor or
administrator of the estate of the deceased Participant or the Person or Persons
to whom the deceased Participant's rights under the Option shall pass by will or
the laws of descent and distribution.
6.2 Procedure for Exercise. Any Participant may exercise all or any
portion of any of such Participant's outstanding Options, to the extent such
Options have vested as provided in the Option Certificate, at any time and from
time to time prior to the expiration of such Options, by completing, signing and
delivering to the Company (to the attention of the Company's Secretary) the
Option Certificate together with a notice of exercise substantially in the form
attached hereto as Annex II (or in such other form as the Committee may from
time to time adopt and provide to the Participant) (the "Exercise
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Notice"), accompanied (in the case of a Participant who is not a Management
Stockholder) by a Joinder to the Stockholder Agreement in the form attached as
Annex III together with the related Option Certificate(s) and payment in full of
the Exercise Price. Payment of the Exercise Price shall be made in cash
(including check, bank draft or money order); provided, that a Participant may,
in lieu of paying the Exercise Price in cash, deliver an Exercise Notice with
respect to a specified number of Option Shares (the "Specified Option Shares")
and indicate in the Exercise Notice that such Participant intends to effect a
cashless exercise thereof and be entitled to receive in respect of the exercise
of the Option therefor, Option Shares with an aggregate Fair Market Value equal
to the excess of (i) the aggregate Fair Market Value of the Specified Option
Shares, over (ii) the aggregate Exercise Price that otherwise would be payable
hereunder in cash upon exercise of the Option for the Specified Option Shares.
Notwithstanding anything in this Section 6.2 to the contrary, in the event that
any Option Certificate granted to a Participant is lost, stolen or destroyed,
the Participant may, in lieu of delivering such Option Certificate at the time
of exercise, deliver an affidavit as to its loss, theft or destruction and any
indemnity that the Company may reasonably request. A Participant's right to
exercise the Option shall be subject to the satisfaction of all conditions set
forth in the Exercise Notice. If a Participant exercises any Options for less
than all of the Option Shares covered by the relevant Option Certificate, the
Company shall issue a new Option Certificate to such Participant in respect of
the portion of such Option remaining unexercised.
6.3 Securities Laws Restrictions on Transfer of Option Shares. Each
Participant exercising an Option will be required to represent to the Company in
the Exercise Notice that when such Participant exercises his or her Option such
Participant will be purchasing Option Shares for his or her own account for
investment and not on behalf of others or otherwise with a view toward
distributing them. Each Participant is advised that federal and state securities
laws govern and restrict each Participant's right to Transfer, or offer to
Transfer, any Option Shares unless such Participant's Transfer, or offer to
Transfer, is registered under the Securities Act and state securities laws, or
such Transfer, or offer to Transfer, is exempt from registration or
qualification thereunder. Each Participant is further advised that the
Stockholders Agreement, to which each Participant will become a party upon
exercise of such Participant's Options, imposes additional restrictions on the
transfer of Option Shares, and that the stock certificates for any Option Shares
issued in connection with such exercise will bear such legends as the Company
deems necessary or desirable in connection with the Securities Act or other
rules, regulations or laws.
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6.4 Withholding of Taxes. The Company shall be entitled, if
necessary or desirable, to withhold from any amounts due and payable by the
Company to such Participant (or secure payment from such Participant in lieu of
withholding) the amount of any withholding or other tax due from the Company
with respect to any Option Shares issuable under the Plan, and the Company may
defer such issuance unless indemnified to its satisfaction.
6.5 Listing, Registration and Compliance with Laws and Regulations.
Options granted under the Plan shall be subject to the requirement that if at
any time the Committee shall make a good faith determination that the listing,
registration or qualification of Option Shares upon any securities exchange or
under any state or federal securities or other law or regulation, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition to or in connection with the granting of the Options or the issuance
or purchase of Option Shares thereunder, no Options may be exercised, in whole
or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
reasonably acceptable to the Committee. The Company shall in good faith, and to
the extent consistent with its reasonable business judgment, exercise all
reasonable efforts to obtain any such listing, registration, qualification or
approval. The holders of such Options shall supply the Company with such
certificates, representations and information as the Company shall request and
shall otherwise cooperate with the Company in obtaining such listing,
registration, qualification, consent or approval. Any period of time during
which an Option may not be exercised by reason of the first sentence of this
Section 6.5 is referred to herein as an "Option Exercise Suspension Period." If
the expiration date of the Option as set forth in the related Option Certificate
shall fall within an applicable Option Exercise Suspension Period, the term of
the Option shall automatically be extended until the date that is 45 days
following the end of the Option Exercise Suspension Period. The Company shall
provide affected Optionees with timely notice of the commencement and
termination of any Option Exercise Suspension Period. Except as may otherwise be
provided in the Stockholders Agreement, the Company shall be under no obligation
to register any Option Shares.
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ARTICLE VII
TERMINATION AND REPURCHASE OF OPTIONS
7.1 Expiration Date of Options. Except as may otherwise be provided
by the Committee, in no event shall any part of any Option be exercisable after
5:00 p.m. Central Standard Time on the tenth anniversary of the date of grant of
the option.
7.2 Termination for Cause. Upon the termination of a Participant's
employment with the Company or any Subsidiary for Cause, any Options held by the
Participant, regardless of the extent vested or unvested, shall immediately
expire and be forfeited in its entirety to the extent not exercised prior to the
date of such termination.
7.3 Termination by the Company without Cause. Upon a Participant's
termination of employment by the Company or any Subsidiary without Cause, (a)
except as may otherwise be provided in any applicable employment agreement
between the Company and the Participant (a "Participant Employment Agreement"),
the unvested portion of any Options held by the Participant shall immediately
expire, (b) if such termination occurs prior to a Qualified Public Offering, the
Company shall repurchase the unexercised vested portion of any such Options
(including any Options that vest pursuant to a Participant Employment Agreement)
at a price equal to the Fair Market Value thereof, and (c) if such termination
occurs after a Qualified Public Offering, except as may otherwise be provided in
a Participant Employment Agreement, the unexercised vested portion of any such
Options shall remain exercisable for a period of 90 days following the date of
such termination of employment, whereupon such Options shall terminate in full.
7.4 Voluntary Termination by the Participant; Death or Disability.
Upon a Participant's voluntary termination of employment with the Company or any
Subsidiary or upon termination of such employment by reason of the Participant's
death or Disability, (a) the unvested portion of any Options held by the
Participant shall immediately expire, (b) if such termination occurs prior to a
Qualified Public Offering, the Company shall repurchase the unexercised vested
portion of any such Options at a price equal to the lower of (i) the Fair Market
Value thereof or (ii) the excess of (x) the Exercise Price of such Options as
increased at the rate of 6% per year from the date of grant through the date of
termination of employment over (y) the Exercise Price of the Options, and (c) if
such termination occurs after a Qualified Public Offering, except as may
otherwise be provided in a Participant Employment Agreement, the unexercised
vested portion of any such Options shall remain exercisable for a period of 90
days following the date of such termination of
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employment, whereupon such Options shall terminate in full. Notwithstanding the
foregoing, the Committee shall have the discretion to permit vested Options held
by retirees to remain outstanding following the date of retirement for a period
specified by the Committee.
7.5 Payment of Repurchase Price. The aggregate purchase price of the
vested portion of any Options to be repurchased by the Company pursuant to this
Article VII shall be paid, either (i) in cash by delivery of a check or wire
transfer of funds, or (ii) prior to the first Company Sale following the Closing
Date, at the sole discretion of the Company, by delivery of a subordinated note
of the Company with interest thereon accruing at the rate of eight percent (8%)
per annum, with all accrued interest and principal payable two years from the
date of issuance (the "Subordinated Note"); provided, however, in the event that
during the term of the Subordinated Note the Participant accepts employment with
Harnischfeger Corp., the term of the Subordinated Note shall be extended for an
additional two years following expiration of the original term. The Subordinated
Note shall be expressly subordinated to all other indebtedness for borrowed
money of the Company. Notwithstanding anything to the contrary herein, the
Company shall not be obligated to repurchase the vested portion of any Options
pursuant to this Article VII to the extent (a) the Company is prohibited from
purchasing such shares by any agreements for borrowed money (each, a "Debt
Instrument") entered into by the Company or any of its Subsidiaries or by
applicable law; (b) a default has occurred under any Debt Instrument and is
continuing; (c) the repurchase of such vested Options would, in the opinion of
the Board, result in the occurrence of an event of default under any Debt
Instrument or create a condition which would, with notice or lapse of time or
both, result in such an event of default; or (d) the purchase of such vested
Options would, in the reasonable opinion of the Board, materially impair the
Company's ability to meet its obligations under any Debt Instrument in
connection with its business and operations. The Company shall provide affected
Optionees with timely notice of the existence and lapse of any of the conditions
described in the foregoing clauses (a)-(d).
ARTICLE VIII
MISCELLANEOUS
8.1 Rights of Participants. Nothing in this Plan shall interfere
with or limit in any way any right of the Company or any of its Subsidiaries to
terminate any Participant's employment at any time (with or without Cause), nor
confer upon any Participant any right to continued employment by the Company or
any of its Subsidiaries for any period of time or to continue
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such employee's present (or any other) rate of compensation. Transfer of an
Employee from the Company to a Subsidiary, from a Subsidiary to the Company and
from one Subsidiary to another shall not be considered a termination of such
Employee's employment for purposes of this Plan. Where applicable, references in
this Plan to "termination of employment" or similar phrases shall be deemed to
include references to termination of service as a consultant or advisor. No
Employee shall have a right to be selected as a Participant or, having been so
selected, to be selected again as a Participant.
8.2 Amendment, Suspension and Termination of Plan. The Committee may
not suspend, terminate or materially amend the Plan or any portion thereof at
any time without stockholder approval to the extent such approval is required by
law, agreement or the rules of any exchange upon which the Common Stock is
listed. Notwithstanding the foregoing, no suspension, termination or amendment
of or to the Plan may adversely affect the rights of any holder of Options with
respect to Options issued hereunder prior to the date of such suspension,
termination or amendment without the consent of such holder.
8.3 Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, share combination
or other change affecting the shares of Common Stock, the Committee shall make
such adjustments in the number and type of shares authorized by the Plan, the
number and type of shares covered by outstanding Options and the Exercise Prices
specified therein and any other adjustments to the Option as the Committee,
reasonably and in good faith, determines to be appropriate and equitable in
order to prevent the dilution or enlargement of the rights granted hereunder or
under any outstanding Options.
8.4 Construction of Plan. The validity, construction,
interpretation, administration and effect of the Plan shall be determined in
accordance with the local law, and not the law of conflicts, of the State of
Delaware.
8.5 Indemnification. The Company will, and will cause each of its
Subsidiaries to, indemnify the CEO and the members of the Committee against all
costs and expenses reasonably incurred by them in connection with any action,
suit or proceeding to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan or any
Option granted thereunder or any Option Shares issued pursuant to the exercise
of an Option, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding; provided, however, that any such Person shall be entitled to
the indemnification rights set forth in this
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Section 8.5 only if such Person has acted in good faith and in a manner that
such Person reasonably believed to be in or not opposed to the best interests of
the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such conduct was unlawful, and provided further
that upon the institution of any such action, suit or proceeding such Person
shall give the Company written notice thereof and an opportunity, at its own
expense, to handle and defend the same before such Person undertakes to handle
and defend it on his or her own behalf.
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Annex I
THIS OPTION AND THE OPTION SHARES ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE. THIS OPTION IS ISSUED PURSUANT TO THE BUCYRUS
INTERNATIONAL, INC. 1998 MANAGEMENT STOCK OPTION PLAN ADOPTED AS OF MARCH 5,
1998 BY THE BOARD OF DIRECTORS OF THE ISSUER AND AMENDED AND RESTATED AS OF
OCTOBER 18, 2006 (THE "PLAN") AND THIS OPTION IS SUBJECT TO THE TERMS SET FORTH
IN THE PLAN.
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OPTION TO PURCHASE [______] SHARES OF
COMMON STOCK OF
BUCYRUS INTERNATIONAL, INC.
OPTION NO. [___]
DATE OF GRANT: MARCH 17, 1998
VOID AFTER MARCH 17, 2008
- --------------------------------------------------------------------------------
This certifies that [____________] is entitled, upon the due exercise
hereof, to purchase up to [_____] shares of Common Stock, par value $0.01 per
share (the "Option Shares") of Bucyrus International, Inc., a Delaware
corporation (the "Company") at a price (the "Exercise Price") of $100 per Option
Share. This option (this "Option") is issued pursuant to the Bucyrus
International, Inc. 1998 Management Stock Option Plan adopted as of March 5,
1998 by the Company's Board of Directors and amended and restated as of October
18, 2006 (the "Plan") and is subject in its entirety to the terms and conditions
of the Plan, as amended from time to time, all of which are hereby incorporated
in the terms of this Option. Capitalized terms which are used but not defined
herein shall have the respective meanings ascribed to them in the Plan.
The Option shall vest and become exercisable as provided in Schedule 1
attached hereto.
The Participant may exercise all or any portion of a vested
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Option by executing and delivering to the Company an Exercise Notice and a
Joinder to Stockholders Agreement (copies of which may be obtained from the
Company) together with full payment of the aggregate Exercise Price for all
Option Shares being so purchased, such payment to be made (if payable in cash)
by cash, check, bank draft or money order made payable to "Bucyrus
International, Inc." Except as otherwise expressly provided by the Plan, this
Option shall be deemed to have been exercised and the Option Shares issuable
upon such exercise shall be deemed to have been issued as of the close of
business on the date upon which all of the foregoing items are received by the
Company.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, share combination or similar
change affecting the Common Stock of the Company, the number and, if applicable,
the type of Option Shares issuable upon exercise of this Option and the Exercise
Price therefor shall be adjusted as provided in the Plan.
THIS OPTION MAY NOT BE TRANSFERRED EXCEPT TO THE LIMITED EXTENT PROVIDED
IN SECTION 6.1 OF THE PLAN.
Prior to the exercise of this Option as permitted by the Plan, the
Participant shall not, with respect to the Option Shares issuable upon the due
exercise hereof, be entitled to any of the rights of a stockholder of the
Company including, without limitation, the right as a stockholder to (i) vote on
or consent to any proposed action of the Company, (ii) receive dividends or
other distributions made to stockholders, (iii) receive notice of or attend any
meetings of stockholders of the Company, or (iv) receive notice of any other
proceedings of the Company.
IN WITNESS WHEREOF, the Company has executed this Option as of the date
first above written.
BUCYRUS INTERNATIONAL, INC.
[SEAL] By:
------------------------------------
Its:
------------------------------------
Attest:
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Schedule 1
OPTION VESTING
The Option shall vest as set forth below. Capitalized terms have the
meanings assigned to such terms either in the Plan or in Section 7 below.
1. Performance-Based EBITDA Targets. The Option shall vest based on
the Company's actual EBITDA performance during each of the Company's 1998
through 2001 fiscal years (each, a "Plan Year" and, in the aggregate, the
"Performance Vesting Period") as compared with the EBITDA Target for such Plan
Year. The EBITDA Targets for each Plan Year are as follows:
Plan Year EBITDA Target
1/1/98 - 12/31/98 $40,209,000
1/1/99 - 12/31/99 50,399,000
1/1/00 - 12/31/00 *
1/1/01 - 12/31/01 *
* To be determined by the Company in consultation with the Chief Executive
Officer based on the Company's business plan.
The actual percentage achievement of the EBITDA Target for a Plan Year is
referred to as the "Performance Level" for that Plan Year. The Performance Level
for each Plan Year shall be determined by the Committee within a reasonable
period of time after the Company's audited financial statements for such Plan
Year become available.
2. Normal Option Vesting. The Option is targeted to vest at the rate
of 25% of the total Option Shares in each Plan Year (the "Base Option Vesting
Amount"). No portion of the Base Option Vesting Amount for any Plan Year will
vest unless the Performance Level for such Plan Year is greater than 90% of the
EBITDA Target. The entire Base Option Vesting Amount for any Plan Year will vest
effective as of the last day of such Plan Year if the Performance Level for such
Plan Year is equal to or greater than 100%. If the Performance Level for any
Plan Year is between 90% and 100%, the Base Option Vesting Amount will vest pro
rata effective as of the last day of such Plan Year as follows:
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Performance Level in Plan Year % of Total Option Shares
Vesting in Plan Year
90% or below 0%
91% 2.5%
92% 5.0%
93% 7.5%
94% 10.0%
95% 12.5%
96% 15.0%
97% 17.5%
98% 20.0%
99% 22.5%
100% or above 25.0%
If the Performance Level for a Plan Year falls between two whole
number percents, the Percentage of Total Option Shares Vesting in such Plan Year
shall be adjusted pro rata. The number of Option Shares vesting in any Plan Year
will be rounded to the nearest whole share.
3. Performance Level in Excess of 100% in a Plan Year. If the
Performance Level in any Plan Year exceeds 100%, the amount of actual EBITDA for
such Plan Year in excess of the EBITDA Target for such Plan Year (the "EBITDA
Surplus") will be applied first to "make-up" any portion of the Base Option
Vesting Amount that failed to vest in any prior Plan Year by reason of a
Performance Level less than 100%, and second to "surplus" accelerated vesting of
up to one-quarter of the Option Shares that would otherwise have been eligible
for vesting as part of the Base Option Vesting Amount for the 2001 Plan Year,
each as described below. For purposes of this Section 3, the term "EBITDA
Deficit" shall mean the amount by which, in any Plan Year, the Company's actual
EBITDA for such Plan Year falls short of the EBITDA Target for such Plan Year.
(a) Make-Up Vesting. If there is an EBITDA Surplus for any
Plan Year, the amount of such EBITDA Surplus will first be applied to offset the
amount of any EBITDA Deficit for the immediately preceding Plan Year, whereupon
(i) the Performance Level for such preceding Plan Year shall be recalculated,
(ii) the Optionee shall be deemed to vest, effective as of the last day of the
Plan Year as to which such surplus was achieved, in the appropriate additional
number of Option Shares for such preceding Plan Year in accordance with Section
2 above, and (iii) such EBITDA Surplus shall be reduced by the amount of such
offset. Any remaining EBITDA Surplus shall then be applied sequentially to any
EBITDA Deficit for any earlier Plan Years, until the amount of such EBITDA
Surplus has been reduced to zero. In no event shall any EBITDA Surplus (i) be
used to achieve a Performance Level for any prior Plan Year in excess of 100% or
(ii) be carried over to reduce any EBITDA Deficit in any subsequent Plan Year.
(b) Surplus Vesting. If, after the application of Section 3(a)
above, any EBITDA Surplus achieved as to the
17
1998, 1999 or 2000 Plan Years remains, the "Surplus Vesting Percentage" shall be
calculated by dividing the amount of any such remaining EBITDA Surplus by the
EBITDA Target for such Plan Year, whereupon Option Shares that would otherwise
have been eligible for vesting as part of the Base Option Vesting Amount for the
2001 Plan Year shall vest, effective as of the last day of the Plan Year as to
which such EBITDA surplus was achieved, according to the following schedule:
Surplus Vesting Percentage % of Total Option Shares Subject to
Surplus Vesting
1% 0.625%
2% 1.250%
3% 1.875%
4% 2.500%
5% 3.125%
6% 3.750%
7% 4.375%
8% 5.000%
9% 5.625%
10% or more 6.250%
If the Surplus Vesting Percentage for a Plan Year falls between two whole number
percents, the Percentage of Total Option Shares Subject to Surplus Vesting shall
be adjusted pro rata. The number of Option Shares vesting in any Plan Year will
be rounded to the nearest whole share. The Base Option Vesting Amount for the
2001 Plan Year shall be reduced by the amount of any Option Shares subject to
surplus vesting in any prior Plan Year, and for purposes of calculating the
number of Option Shares vesting based on performance during the 2001 Plan Year,
the vesting table set forth in Section 2 shall be adjusted proportionately, such
that the full number of Option Shares remaining in the Base Option Vesting
Amount for the 2001 Plan Year will vest only if the Performance Level for the
2001 Plan Year is 100% or more. In no event shall any EBITDA Surplus for any
Plan Year be carried over to any subsequent Plan Year.
4. Full Vesting on Company Sale; Termination of Option;.
Notwithstanding the foregoing, if a Company Sale is consummated prior to the end
of the 2001 Plan Year, 100% of the Option Shares shall automatically vest
immediately prior to consummation of such Company Sale. In connection with a
Company Sale, the Company may, in its discretion, either (i) upon not less than
30 days notice prior to consummation of such Company Sale (or such lesser notice
period as shall otherwise be reasonable under the circumstances), permit the
Participant to exercise all or part of the Option in advance of such Company
Sale or (ii) provide for the deemed exercise of all or part of the Option and
payment in cash or other property therefor. In either such event, unless
otherwise determined by the Company in
18
its discretion, any Option or part thereof not so exercised or deemed exercised
in connection with such Company Sale shall expire upon the consummation of such
Company Sale.
5. Nine Year Cliff Vesting. Notwithstanding the foregoing, but
subject to Section 6 below, any Option Shares that fail to vest by reason of the
vesting provisions of Sections 1 through 4 above shall nonetheless vest on the
ninth anniversary of the date of grant of the Option.
6. Termination of Employment. Notwithstanding anything to the
contrary herein or in the Plan, except as may otherwise be provided in any
applicable employment agreement between the Company and the Participant, all
Options held by a Participant shall cease to vest as of the date such
Participant's employment with the Company or any Subsidiary terminates for any
reason and under any circumstances.
7. Definitions. For purposes of this Schedule 1, the terms set forth
below shall be defined as follows:
"EBITDA" means, with reference to any period, Net Income for such
period adjusted (a) by adding thereto the amount of all (i) debt interest
expense to the extent included in determining Net Income for such period, (ii)
depreciation and amortization expenses and non-cash charges, including, without
limitation, (A) the non-cash portion of any expenses incurred during such period
pursuant to Financial Accounting Standards Board Statement No. 106, (B) purchase
accounting adjustments that occur as a result of the application of Accounting
Principles Board Opinion No. 16 and (C) non-cash charges for compensation costs
recognized pursuant to Accounting Principles Board Opinion No. 25 (as permitted
under Financial Accounting Standards Board Statement No. 123) in connection with
Options granted to employees of the Company and its Subsidiaries to the extent
included in determining Net Income for such period, (iii) all income taxes to
the extent included in determining Net Income, and (iv) the management fee
payable under the Management Agreement and all directors' fees, in each case, to
the extent included in determining Net Income for such period, and (b) by
subtracting therefrom (i) all interest income to the extent included in
determining Net Income for such period, and (ii) all tax credits to the extent
included in determining Net Income for such period.
The Committee will make equitable adjustments to the EBITDA Targets from time to
time to reflect (i) acquisitions and dispositions made by the Company and its
subsidiaries during the Performance Vesting Period and (ii) the establishment of
accounting reserves prior to January l, 1998 and, in each case, the anticipated
effect on the EBITDA Targets resulting therefrom.
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"Net Income" means, with reference to any period, the net income (or
deficit) of the Company and its Subsidiaries for such period, after deducting
all operating expenses, provisions for taxes, reserves and all other proper
deductions, all determined in accordance with generally accepted accounting
principles applied on a consolidated basis and on a basis consistent with prior
periods after eliminating all intercompany transactions and after deducting
portions of income properly attributable to minority interests, if any, in the
stock and surplus of Subsidiaries; provided, however, that there shall be
excluded (a) any aggregate net gain or net loss during such period arising from
the sale, exchange or other disposition of capital assets, (b) any net income or
gain from the collection of the proceeds of insurance policies (other than
proceeds of business interruption insurance for lost income to the extent such
loss reduced Net Income for such period and proceeds of other insurance in
respect of claims or losses to the extent such claims or losses reduced Net
Income for such period), (c) any gain or loss arising from the acquisition of
any securities, or the extinguishment, under generally accepted accounting
principles, of any indebtedness of the Company or any of its Subsidiaries, or
(d) any net income or gain or net loss during such period from any change in
accounting principles originally used as a basis for the computation of EBITDA
or from any extraordinary items.
20
Annex II
EXERCISE NOTICE
This Exercise Notice (this "Notice") is given by the undersigned
participant ("Participant") to Bucyrus International, Inc., a Delaware
corporation (the "Company") in connection with the Participant's exercise of an
Option granted pursuant to the Company's 1998 Management Stock Option Plan,
adopted as of March 5, 1998 and amended and restated as of October 18, 2006 (the
"Plan") to purchase Option Shares (as defined in the Plan). Capitalized terms
used but not defined herein shall have the respective meanings ascribed to them
in the Plan.
1. Purchase and Sale of Option Shares.
(a) Upon delivery to the Company of this Notice and the Option
Certificate to which it relates, the Company will sell and issue to Participant
the Option Shares that Participant elects to purchase hereunder. Participant
will deliver to the Company herewith the aggregate Exercise Price for the Option
Shares purchased hereunder (if payable in cash) by check, bank draft or money
order made payable to "Bucyrus International, Inc."
(b) In connection with the purchase and sale of the Option Shares
hereunder, Participant represents and warrants to the Company that:
(i) The Option Shares to be acquired by Participant pursuant to
Participant's exercise of the Option will be acquired for Participant's own
account and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities laws, and
the Option Shares will not be disposed of in contravention of the Securities Act
or any applicable state securities laws;
(ii) Participant is sophisticated in financial matters and is able
to evaluate the risks and benefits of the investment in the Option Shares;
(iii) Participant is able to bear the economic risk of his or her
investment in the Option Shares for an indefinite period of time because the
Option Shares have not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available;
(iv) Participant has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the Option Shares and has had
full access to such other information concerning the Company as he or she has
requested; and
21
(v) Participant is a resident and domiciliary of the state or other
jurisdiction hereinafter set forth opposite such Participant's signature and
Participant has no present intention of becoming a resident of any other state
or jurisdiction. If Participant is a resident and domiciliary of a state that
requires the Company to ascertain certain other information regarding the
Participant, the Company may attach a page to this Notice containing additional
representations to be made by Participant in connection with such Participant's
investment in Option Shares, and by signing this Notice, Participant shall be
deemed to have made such additional representations to the Company.
(c) Participant further acknowledges and agrees that:
(i) neither the issuance of the Option Shares to Participant nor any
provision contained herein shall entitle Participant to remain in the employment
of the Company and its Subsidiaries or affect any right of the Company to
terminate Participant's employment at any time for any reason;
(ii) the Company shall have no duty or obligation to disclose to
Participant and Participant shall have no right to be advised of, any material
information regarding the Company and its Subsidiaries in connection with the
repurchase of Option Shares upon the termination of Participant's employment
with the Company and its Subsidiaries or as otherwise provided hereunder; and
(iii) the Company shall be entitled to withhold from participant
from any amounts due and payable by the Company to Participant (or secure
payment from Participant in lieu of withholding) the amount of any withholding
or other tax due from the Company with respect to the Option Shares and the
Company may defer issuance of the Option Shares until indemnified to its
satisfaction.
(d) The Company and Participant acknowledge and agree that the
Option Shares issued hereunder are issued as a part of the compensation and
incentive arrangements between the Company and Participant.
2. Restriction on Option Shares. Participant acknowledges that the
Option Shares being purchased hereunder are being issued pursuant to the Plan,
the terms and conditions of which are incorporated herein as if set forth fully
herein, and that such Option Shares are subject to certain restrictions on
transfer, rights of repurchase and other provisions set forth in the Plan and
the Stockholders Agreement. Purchaser acknowledges that the certificates
evidencing such Option Shares shall be
22
imprinted with a legend providing notice of such restrictions substantially in
the form set forth in the Stockholders Agreement.
* * * * *
23
IN WITNESS WHEREOF, the Participant has executed this Notice as of the
date written below.
No. of Shares of Common Stock: _________________
Aggregate Exercise Price Therefor: _________________
Cashless Exercise: Yes ____ No ____
- -------------------------------- ---------------------------
Signature of Participant Date
- -------------------------------- ---------------------------
Print Participant's Name Participant's Social Security
No.
Participant's Residence Address: Mailing Address, if different
from Residence Address:
- -------------------------------- -------------------------------
Street Street
- -------------------------------- -------------------------------
City State Zip Code City State Zip Code
Acknowledged Receipt of Notice as of _________________________.
BUCYRUS INTERNATIONAL, INC.
By:
-------------------------------
Its:
------------------------------
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Annex III
FORM OF JOINDER TO THE
STOCKHOLDERS AGREEMENT
This Joinder (this "Agreement") is made as of the date written below by
the undersigned (the "Joining Party") in favor of and for the benefit of Bucyrus
International, Inc. and the other parties to the Stockholders Agreement, dated
as of March 17, 1998 (the "Stockholders Agreement"). Capitalized terms used but
not defined herein shall have the meanings given such terms in the Stockholders
Agreement.
The Joining Party hereby acknowledges, agrees and confirms that, by his or
her execution of this Joinder, the Joining Party will be deemed to be a party to
the Stockholders Agreement and shall have all of the rights and obligations of a
Management Stockholder thereunder as if he or she had executed the Stockholders
Agreement. The Joining Party hereby ratifies, as of the date hereof, and agrees
to be bound by, all of the terms, provisions and conditions contained in the
Stockholders Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder as of the
date written below.
Date: ___________________ __________________________________
Name:
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