SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
[X] THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2002
OR
TRANSITION REPORT UNDER SECTION 13 0R 15 (d) OF
[ ] THE SECURITIES EXCHANGE ACT OF 1934
Delaware 52-1375208
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(State of Incorporation) (IRS Employer
Identification Number)
1000 Sagamore Parkway South,
Lafayette, Indiana 47905
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(Address of Principal (Zip Code)
Executive Offices)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days.
The number of shares of common stock outstanding at August 6, 2002 was 23,040,311.
WABASH NATIONAL CORPORATION
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June 30, December 31,
2002 2001
--------- -----------
(Unaudited) (Note 1)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 9,127 $ 11,135
Accounts receivable, net 96,722 58,358
Current portion of finance contracts 11,811 10,646
Inventories 142,404 191,094
Refundable income taxes 1,077 25,673
Prepaid expenses and other 24,817 17,231
--------- ---------
Total current assets 285,958 314,137
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, net 152,037 170,330
EQUIPMENT LEASED TO OTHERS, net 102,546 109,265
FINANCE CONTRACTS, net of current portion 31,407 40,187
INTANGIBLE ASSETS, net 41,892 43,777
OTHER ASSETS 22,827 14,808
--------- ---------
$ 636,667 $ 692,504
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 44,913 $ 60,682
Current maturities of capital lease obligations 22,136 21,559
Accounts payable 76,327 51,351
Accrued liabilities 71,571 69,246
--------- ---------
Total current liabilities 214,947 202,838
--------- ---------
LONG-TERM DEBT, net of current maturities 253,637 274,021
LONG-TERM CAPITAL LEASE OBLIGATIONS, net of current maturities 47,921 55,755
OTHER NONCURRENT LIABILITIES AND CONTINGENCIES 25,982 28,905
STOCKHOLDERS' EQUITY:
Preferred stock, 482,041 shares issued and outstanding with
an aggregate liquidation value of $30,600 5 5
Common stock, $0.01 par value, 23,037,821 and 23,013,847 shares
issued and outstanding, respectively 230 230
Additional paid-in capital 236,984 236,804
Retained deficit (141,621) (104,469)
Accumulated other comprehensive loss (139) (306)
Treasury stock at cost, 59,600 common shares (1,279) (1,279)
--------- ---------
Total stockholders' equity 94,180 130,985
--------- ---------
$ 636,667 $ 692,504
========= =========
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See Notes to Condensed Consolidated Financial Statements.
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
2002 2001 2002 2001
--------- --------- --------- ---------
(Unaudited) (Unaudited)
NET SALES $ 210,251 $ 212,172 $ 372,203 $ 454,801
COST OF SALES 204,024 212,198 365,937 456,570
--------- --------- --------- ---------
Gross profit (loss) 6,227 (26) 6,266 (1,769)
GENERAL AND ADMINISTRATIVE EXPENSES 14,807 15,521 28,898 25,531
SELLING EXPENSES 6,030 6,560 11,779 12,718
--------- --------- --------- ---------
Loss from operations (14,610) (22,107) (34,411) (40,018)
OTHER INCOME (EXPENSE):
Interest expense (7,816) (5,360) (13,489) (11,160)
Trade receivables facility costs (1,902) (449) (3,633) (1,426)
Foreign exchange gains and losses, net 2,211 128 1,958 (690)
Equity in losses of unconsolidated affiliate -- (1,844) -- (4,333)
Other, net 440 715 1,362 556
--------- --------- --------- ---------
Loss before income taxes (21,677) (28,917) (48,213) (57,071)
BENEFIT FROM INCOME TAXES -- (10,800) (11,947) (21,224)
--------- --------- --------- ---------
Net loss (21,677) (18,117) (36,266) (35,847)
PREFERRED STOCK DIVIDENDS 443 476 886 952
--------- --------- --------- ---------
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS $ (22,120) $ (18,593) $ (37,152) $ (36,799)
========= ========= ========= =========
LOSS PER SHARE:
Basic $ (0.96) $ (0.81) $ (1.61) $ (1.60)
Diluted $ (0.96) $ (0.81) $ (1.61) $ (1.60)
========= ========= ========= =========
Cash dividends per share $ -- $ 0.04 $ $ 0.08
========= ========= ========= =========
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See Notes to Condensed Consolidated Financial Statements.
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six Months
Ended June 30,
-------------------------
2002 2001
-------- --------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (36,266) $ (35,847)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 15,017 16,420
Gain on sale of assets (137) (69)
Provision for losses on accounts receivable and finance contracts 7,129 7,795
Deferred income taxes -- (3,128)
Equity in losses of unconsolidated affiliate -- 4,333
Cash used for restructuring activities (699) (5,156)
Trailer valuation charges 6,101 15,000
Loss contingencies 6,000 --
Change in operating assets and liabilities:
Accounts receivable (41,786) 10,366
Inventories 48,809 12,509
Refundable income taxes 24,596 (10,678)
Prepaid expenses and other 4,731 351
Accounts payable and accrued liabilities 25,429 (16,403)
Other, net (4,178) (6,221)
------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 54,746 (10,728)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,860) (4,300)
Net additions to equipment leased to others (8,497) (35,073)
Net additions to finance contracts (7,786) (9,628)
Acquisitions, net of cash acquired -- (6,336)
Investment in unconsolidated affiliate -- (2,550)
Proceeds from sale of leased equipment and finance contracts 3,556 29,054
Principal payments received on finance contracts 5,850 5,218
Proceeds from the sale of property, plant and equipment 34 124
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Net cash provided by (used in) investing activities (8,703) (23,491)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Issuance of bank term loan 80,402 --
Revolving bank line of credit 24,048 249,598
Sale of common stock 180 69
Payments:
Revolving bank line of credit (113,741) (182,202)
Long-term debt and capital lease obligations (38,497) (11,348)
Common stock dividends -- (1,840)
Preferred stock dividends (443) (952)
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Net cash provided by (used in) financing activities (48,051) 53,325
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,008) 19,106
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,135 4,194
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,127 $ 23,300
======================================================================================================
Supplemental disclosures of cash flow information:
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Cash paid during the period for:
Interest $ 12,845 $ 10,487
Income taxes paid (refunded), net (24,455) 562
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See Notes to Condensed Consolidated Financial Statements.
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL
The condensed consolidated financial statements included herein have been prepared by Wabash National Corporation and its subsidiaries (the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's 2001 Annual Report on Form 10-K/A.
In the opinion of the registrant, the accompanying condensed consolidated financial statements contain all material adjustments, necessary to present fairly the consolidated financial position of the Company at June 30, 2002 and December 31, 2001 and its results of operations for the three and six months ended June 30, 2002 and 2001 and cash flows for the six months ended June 30, 2002 and 2001.
Certain items previously reported in specific condensed consolidated financial statement captions have been reclassified to conform to the 2002 presentation.
NOTE 2. COMPREHENSIVE LOSS
The Company's comprehensive loss includes net loss and foreign currency translation adjustments. The Company's net loss and total comprehensive loss were $21.7 million and $21.5 million, respectively for the three months ended June 30, 2002 and $18.1 million and $17.3 million, respectively for the same period in the prior year. The Company's net loss and total comprehensive loss were $36.3 million and $36.1 million, respectively for the six months ended June 30, 2002 and $35.8 million and $36.0 million, respectively for the same period in the prior year.
NOTE 3. INVENTORIES
Inventories consisted of the following (in thousands):
June 30, December 31,
2002 2001
----------- -----------
(Unaudited)
Raw material and components $ 31,202 $ 38,235
Work in process 15,202 10,229
Finished goods 40,578 58,984
After-market parts 20,219 22,726
Used trailers 35,203 60,920
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$ 142,404 $ 191,094
========= =========
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NOTE 4. NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Accounting Standards (SFAS) No. 142. Goodwill and Other Intangible Assets, as of January 1, 2002. This new standard changes the accounting for goodwill from an amortization method to an impairment-only approach, and introduces a new model for determining impairment charges. SFAS No. 142 requires completion of the initial step of a transitional impairment test within six months of the adoption of this standard and, if applicable, completion of the final step of the adoption by December 31, 2002. Goodwill amortization expense was $0.0 million and $0.3 million for the three months ended June 30, 2002 and 2001, respectively, and $0.0 million and $0.6 million for the six months ended June 30, 2002 and 2001, respectively. The Company has completed the initial transition impairment test. The results of this test indicate that the Company had no impairment of its goodwill as of the date of adoption. The Company will perform annual impairment tests, as required under SFAS No. 142, and review its goodwill for impairment when circumstances indicate that the fair value has declined significantly.
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, Accounting for Asset Retirement Obligations with an effective date of June 15, 2002 which becomes effective for the Company on January 1, 2003. This standard requires obligations associated with retirement of long-lived assets to be capitalized as part of the carrying value of the related asset. The Company does not believe the adoption of SFAS No. 143 will have a material effect on its financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This standard supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. This standard retains the previously existing accounting requirements related to the recognition and measurement requirements of the impairment of long-lived assets to be held for use, while expanding the measurement requirements of long-lived assets to be disposed of by sale to include discontinued operations. The provisions of SFAS No. 144 could require the Company to reclassify assets held for sale if the sale is not completed prior to December 31, 2002. It also expands on the previously existing reporting requirements for discontinued operations to include a component of an entity that either has been disposed of or is classified as held for sale. The Company adopted the accounting provisions of this standard on January 1, 2002. The effect of adopting the accounting provisions of this standard was not material to the Company's financial statements. Consistent with the provisions of this new standard, financial statements for prior years have not been restated.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections (SFAS No. 145). This standard is required to be adopted by the Company on January 1, 2003, but may be adopted early. SFAS No. 145 modifies the classification criteria for extraordinary items related to the extinguishment of debt. Effective April 1, 2002, the Company decided to early adopt the provisions of SFAS No. 145. Under the new standard, $1.2 million in expenses associated with the Company's debt restructuring in April 2002, which under prior standards would have been recorded as an extraordinary item, were recorded in other, net on the Consolidated Statements of Operations.
In June 2002, the FASB issued SFAS No. 146 Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 generally requires companies to recognize costs associated with exit activities when they are incurred rather than at the date of a commitment to an exit or disposal plan and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company is currently evaluating the effects, if any, that this standard will have on its results of operations or financial position.
NOTE 5. RESTRUCTURING AND OTHER RELATED CHARGES
a. 2001 RESTRUCTURING PLAN
During the third quarter of 2001, the Company recorded restructuring and other related charges totaling $40.5 million primarily related to the rationalization of the Company's manufacturing capacity resulting in the closure of the Company's platform trailer manufacturing facility in Huntsville, Tennessee, and its dry van facility in Fort Madison, Iowa. In addition, the Company closed a parts distribution facility in Montebello, California. Details of the restructuring charges and reserve for the 2001 Restructuring Plan are as follows (in thousands):
Utilized
Original ----------------------- Balance
Provision 2001 2002 6/30/02
--------- -------- -------- --------
Restructuring costs:
Impairment of long-term assets $ 33,842 $(33,842) $ -- $ --
Plant closure costs 1,763 (1,463) (230) 70
Severance benefits 912 (912) -- --
Other 305 (105) (200) --
-------- -------- -------- --------
$ 36,822 $(36,322) $ (430) $ 70
======== ======== ======== ========
Inventory write-down $ 3,714 $ (3,714) $ -- $ --
-------- -------- -------- --------
Total restructuring & other related $ 40,536 $(40,036) $ (430) $ 70
======== ======== ======== ========
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b. 2000 RESTRUCTURING PLAN
In December 2000, the Company recorded restructuring and other related charges totaling $46.6 million primarily related to the Company's exit from manufacturing products for export outside the North American market, international leasing and financing activities and the consolidation of certain domestic operations. During the fourth quarter of 2001, the Company recorded an additional restructuring charge of $1.4 million related to its divestiture of ETZ. Details of the restructuring charges and reserve for the 2000 Restructuring Plan are as follows (in thousands):
Utilized
Original Additional ------------------------ Balance
Provision Provision 2000-2001 2002 6/30/02
--------- --------- --------- -------- --------
Restructuring of majority-owned
operations:
Impairment of long-term assets $ 20,819 $ -- $(20,819) $ -- $ --
Loss related to equipment guarantees 8,592 -- (3,394) -- 5,198
Write-down of other assets & other charges 6,927 -- (5,568) (269) 1,090
-------- -------- -------- -------- --------
$ 36,338 $ -- $(29,781) $ (269) $ 6,288
-------- -------- -------- -------- --------
Restructuring of minority interest
operations:
Impairment of long-term assets $ 5,832 $ -- $ (5,832) $ -- $ --
Financial Guarantees $ -- $ 1,381 $ -- $ -- $ 1,381
Inventory write-down and other $ 4,480 $ -- $ (4,480) $ -- $ --
-------- -------- -------- -------- --------
Total restructuring and other related charges $ 46,650 $ 1,381 $(40,093) $ (269) $ 7,669
======== ======== ======== ======== ========
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NOTE 6. SEGMENTS
Under the provisions of SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, the Company has two reportable segments:
manufacturing and retail and distribution. The manufacturing segment produces
and sells new trailers to the retail and distribution segment or to customers
who purchase trailers direct or through independent dealers. The retail and
distribution segment includes the sale, leasing and financing of new and used
trailers, as well as the sale of after-market parts and service through its
retail branch network. In addition, the retail and distribution segment includes
the sale of after-market parts through Wabash National Parts.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies except that the Company evaluates segment performance based on income from operations. The Company has not allocated certain corporate related charges such as administrative costs, interest expense and income taxes from the manufacturing segment to the Company's other reportable segment. The Company accounts for intersegment sales and transfers at cost plus a specified mark-up. Reportable segment information is as follows (in thousands):
THREE MONTHS ENDED Retail and Combined Consolidated
JUNE 30, 2002 Manufacturing Distribution Segments Eliminations Totals
------------- ------------- ------------ ----------- ------------ -----------
(unaudited)
Revenues
External customers $ 121,695 $ 88,556 $ 210,251 $ -- $ 210,251
Intersegment sales 9,153 708 9,861 (9,861) --
----------- ----------- ----------- ----------- -----------
Total Revenues $ 130,848 $ 89,264 $ 220,112 $ (9,861) $ 210,251
=========== =========== =========== =========== ===========
Loss from Operations $ (1,701) $ (13,038) $ (14,739) $ 129 $ (14,610)
Total Assets $ 687,401 $ 423,999 $ 1,111,400 $ (474,733) $ 636,667
THREE MONTHS ENDED
JUNE 30, 2001
-------------
(Unaudited)
Revenues
External customers $ 127,424 $ 84,748 $ 212,172 $ -- $ 212,172
Intersegment sales 21,849 353 22,202 (22,202) --
----------- ----------- ----------- ----------- -----------
Total Revenues $ 149,273 $ 85,101 $ 234,374 $ (22,202) $ 212,172
=========== =========== =========== =========== ===========
Loss from Operations $ (18,883) $ (2,764) $ (21,647) $ (460) $ (22,107)
Total Assets $ 866,950 $ 451,877 $ 1,318,827 $ (493,159) $ 825,668
SIX MONTHS ENDED
JUNE 30, 2002
-------------
(Unaudited)
Revenues
External customers $ 199,354 $ 172,849 $ 372,203 $ -- $ 372,203
Intersegment sales 13,895 2,768 16,663 (16,663) --
----------- ----------- ----------- ----------- -----------
Total Revenues $ 213,249 $ 175,617 $ 388,866 $ (16,663) $ 372,203
=========== =========== =========== =========== ===========
Loss from Operations $ (18,196) $ (16,786) $ (34,982) $ 571 $ (34,411)
Total Assets $ 687,401 $ 423,999 $ 1,111,400 $ (474,733) $ 636,667
SIX MONTHS ENDED
JUNE 30, 2001
-------------
(Unaudited)
Revenues
External customers $ 285,413 $ 169,388 $ 454,801 $ -- $ 454,801
Intersegment sales 35,908 607 36,515 (36,515) --
----------- ----------- ----------- ----------- -----------
Total Revenues $ 321,321 $ 169,995 $ 491,316 $ (36,515) $ 454,801
=========== =========== =========== =========== ===========
Loss from Operations $ (35,639) $ (4,028) $ (39,667) $ (351) $ (40,018)
Total Assets $ 866,950 $ 451,877 $ 1,318,827 $ (493,159) $ 825,668
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NOTE 7. LOSS PER SHARE
Loss per share is computed in accordance with SFAS No. 128, Earnings per Share. Neither stock options or convertible preferred stock were included in the computation of diluted losses per share in the current or prior year as these inclusions would have resulted in an antidilutive effect. A reconciliation of the numerators and denominators of the basic and diluted EPS computations, as required by SFAS No. 128, is presented below (in thousands except per share amounts):
Net Loss Weighted
Available Average Loss
(Unaudited) To Common Shares Per Share
------------------------------------------------------------------------------
Three Months Ended June 30, 2002
Basic $(22,120) 23,034 $(0.96)
Diluted $(22,120) 23,034 $(0.96)
==============================================================================
Three Months Ended June 30, 2001
Basic $(18,593) 23,004 $(0.81)
Diluted $(18,593) 23,004 $(0.81)
==============================================================================
Six Months Ended June 30, 2002
Basic $(37,152) 23,026 $(1.61)
Diluted $(37,152) 23,026 $(1.61)
==============================================================================
Six Months Ended June 30, 2001
Basic $(36,799) 23,003 $(1.60)
Diluted $(36,799) 23,003 $(1.60)
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NOTE 8. CONTINGENCIES
a. LITIGATION
Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company arising in the ordinary course of business, including those pertaining to product liability, labor and health related matters, successor liability, environmental and possible tax assessments. While the amounts claimed could be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties that exist. Therefore, it is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on facts currently available, management believes that the disposition of matters that are pending or asserted will not have a material adverse effect on the Company's financial position, liquidity or its annual results of operations.
Brazil Joint Venture
In March 2001, Bernard Krone Industria e Comercio de Maquinas Agricolas Ltda. ("BK") filed suit against the Company in the Fourth Civil Court of Curitiba in the State of Parana, Brazil. This action seeks recovery of damages plus pain and suffering. Because of the bankruptcy of BK, this proceeding is now pending before the Second Civil Court of Bankruptcies and Creditors Reorganization of Curitiba, State of Parana (No.232/99).
This case grows out of a joint venture agreement between BK and the Company, which was generally intended to permit BK and the Company to market the RoadRailer(R) trailer in Brazil and other areas of South America. When BK was placed into the Brazilian equivalent of bankruptcy late in 2000, the joint venture was dissolved. BK subsequently filed its lawsuit against the Company alleging that it was forced to terminate business with other companies because of the exclusivity and non-compete clauses purportedly found in the joint venture agreement. The lawsuit further alleges that Wabash did not properly disclose technology to BK and that Wabash purportedly failed to comply with its contractual obligations in terminating the joint venture agreement. In its complaint, BK asserts that it has been damaged by these alleged wrongs by the Company in the approximate amount of $8.4 million (U.S.).
The Company answered the complaint in May 2001, denying any wrongdoing and pointing out that, contrary to the allegation found in the complaint, a merger of the Company and BK, or the acquisition of BK by the Company, was never the purpose or intent of the joint venture agreement between the parties; the only purpose was the business and marketing arrangement as set out in the agreement.
The Company believes that the claims asserted against it by BK are without merit and intends to defend itself vigorously against those claims. The Company believes that the resolution of this lawsuit will not have a material adverse effect on its financial position or future results of operations; however, at this early stage of the proceeding, no assurance can be given as to the ultimate outcome of the case.
E-Coat System
On September 17, 2001 the Company commenced an action against PPG Industries, Inc. ("PPG") in the United States District Court, Northern District of Indiana, Hammond Division at Lafayette, Indiana, Civil Action No. 4:01 CV 55. In the lawsuit, the Company alleged that it has sustained substantial damages stemming from the failure of the PPG electrocoating system (the "E-coat system") and related products that PPG provided for the Company's Huntsville, Tennessee plant. The Company alleges that PPG is responsible for defects in the design of the E-coat system and defects in PPG products that have resulted in malfunctions of the E-coat system and poor quality coatings on numerous trailers.
PPG filed a Counterclaim in that action on or about November 8, 2001, seeking damages in excess of approximately $1.35 million based upon certain provisions of the November 3, 1998 Investment Agreement between it and the Company. The Company filed a Reply to the Counterclaim denying liability for the claims asserted. The Company has subsequently amended its complaint to include two additional defendants, U.S. Filter and Wheelabrator Abrasives Inc., who designed or manufactured aspects of the E-coat system.
The Company believes that the claims asserted against it by PPG in the counterclaim are without merit and intends to defend itself vigorously against those claims. It also believes that the claims asserted in its complaint are valid and meritorious and it intends to prosecute those claims. The Company believes that the resolution of this lawsuit will not have a material adverse effect on its financial position or future results of operations; however, at this early stage of the proceeding, no assurance can be given as to the ultimate outcome of the case.
Environmental
In the second quarter of 2000, the Company received a grand jury subpoena requesting certain documents relating to the discharge of wastewaters into the environment at a Wabash facility in Huntsville, Tennessee. The subpoena sought the production of documents and related records concerning the design of the facility's discharge system and the particular discharge in question. On May 16, 2001, the Company received a second grand jury subpoena that sought the production of additional documents relating to the discharge in question. The Company is fully cooperating with federal officials with respect to their investigation into the matter. At this time, the Company is unable to predict the outcome of the federal grand jury inquiry into this matter, but does not believe it will result in a material adverse effect on its financial position or future results of operations; however, at this early stage of the proceedings, no assurance can be given as to the ultimate outcome of the case.
On April 17, 2000, the Company received a Notice of Violation/Request for Incident Report from the Tennessee Department of Environmental Conservation (TDEC) with respect to the same matter. On September 6, 2000, the Company received an Order and Assessment from TDEC directing the Company to pay a fine of $100,000 for violations of Tennessee environmental requirements as a result of the discharge. The Company filed an appeal of the Order and Assessment on October 10, 2000. The Company and TDEC have negotiated a settlement agreement to resolve this matter, under which the Company would pay $100,000, which was recorded in 2001. The proposed settlement requires the approval of the Tennessee Solid Waste Board, which is scheduled to vote on the settlement on August 27, 2002.
b. ENVIRONMENTAL
The Company assesses its environmental liabilities on an on-going basis by evaluating currently available facts, existing technology, presently enacted laws and regulations as well as experience in past treatment and remediation efforts. Based on these evaluations, the Company estimates a lower and upper range for the treatment and remediation efforts and recognizes a liability for such probable costs based on the information available at the time. As of June 30, 2002 and 2001, the estimated potential exposure for such costs ranges from approximately $0.5 million to approximately $1.7 million, for which the Company has a reserve of approximately $0.9 million. These reserves were primarily recorded for exposures associated with the costs of environmental remediation projects to address soil and ground water contamination.
c. USED TRAILER RESTORATION PROGRAM
During 1999, the Company reached a settlement with the IRS related to federal excise tax on certain used trailers restored by the Company during 1996 and 1997. The Company has continued the restoration program with the same customer since 1997. The customer has indemnified the Company for any potential excise tax assessed by the IRS for years subsequent to 1997. As a result, the Company has recorded a liability and a corresponding receivable of approximately $8.3 million in the accompanying Consolidated Balance Sheets at June 30, 2002 and December 31, 2001, respectively. During 2001, the IRS completed its federal excise tax audit of 1999 and 1998 resulting in an assessment of approximately $5.4 million. The Company believes it is fully indemnified for this liability and that the related receivable is fully collectible.
NOTE 9. EQUIPMENT OFF BALANCE SHEET AND RELATED CUSTOMER CREDIT RISK
In certain situations, the Company sold equipment leased to others to independent financial institutions and simultaneously leased the equipment back under operating leases. All of this equipment has been subleased to customers under long-term arrangements, typically five years. As of June 30, 2002, the unamortized lease value of equipment financed under these arrangements was approximately $21.8 million. In connection with these agreements, the Company has end of term purchase options and residual guarantees of $10.8 million and $4.3 million, respectively.
The Company has loss exposures related to these arrangements to the extent customers do not perform under their sublease arrangements or the fair value of the equipment is less than the Company's residual guarantee at the end of the lease term. The Company recognizes a loss when the Company's operating lease payments exceed the anticipated rents from the sublease arrangements with customers. Additionally, to the extent that the residual value exceeds the Company's estimate of fair value at the end of the lease terms, the Company recognizes a loss for this difference over the remaining term of the lease.
Due to economic and industry conditions, certain of the Company's customers are experiencing financial difficulties which have resulted in delinquencies in lease payments due to the Company.
The Company subleased equipment to a customer that became severely delinquent in its payments to the Company and, in August 2002, the customer filed for bankruptcy protection. The Company terminated its sublease agreement with this customer in July and began the process of repossessing the equipment. Accordingly, the Company recorded a charge of $6.0 million in the second quarter of 2002 related to this customer. As of June 30, 2002, the unamortized lease value of this arrangement was approximately $16.4 million for which the Company has recorded a total loss contingency of $10.4 million. While management believes that the loss contingency recorded adequately reflects the expected loss related to this customer, there can be no assurance that additional charges may not need to be taken in the future as circumstances dictate.
The Company also subleased certain highly specialized RoadRailer equipment to Amtrak, who is experiencing financial difficulties. Due to the highly specialized nature of the equipment, the recovery value of the equipment is considered to be minimal. The unamortized lease value of this arrangement is approximately $5.4 million as of June 30, 2002. The Company also had finance contracts related to this customer recorded on its June 30, 2002 balance sheet of approximately $11.1 million. As of June 30, 2002, the customer was current in its obligations to the Company. As a result, the Company has not recorded any provision for a loss, if any, on this equipment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report, including documents incorporated herein by reference, contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. The words "believe," "expect," "anticipate," and "project" and similar expressions identify forward-looking statements, which speak only as of the date the statement is made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, information regarding revenues, income or loss, capital expenditures, acquisitions, number of retail branch openings, plans for future operations, financing needs or plans, the impact of inflation and plans relating to services of the Company, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Statements in this report, including those set forth in "The Company" and "Risk Factors," and in "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations", describe factors, among others, that could contribute to or cause such differences.
Although we believe that our expectations that are expressed in these forward-looking statements are reasonable, we cannot promise that our expectations will turn out to be correct. Our actual results could be materially different from and worse than our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations include the factors that are disclosed elsewhere herein and in Item 4A in the Company's Form 10-K/A as filed with the Securities and Exchange Commission on April 18, 2002.
CRITICAL ACCOUNTING POLICIES
A summary of the Company's critical accounting policies is as follows:
a. USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that directly affect the amounts reported in its consolidated financial statements and accompanying notes. Actual results could differ from these estimates.
b. REVENUE RECOGNITION
The Company recognizes revenue from the sale of trailers and after-market parts when risk of ownership is transferred to the customer. Revenue is generally recognized upon shipment. Customers that have requested to pick up their trailers are invoiced prior to taking physical possession when the customer has made a fixed commitment to purchase the trailers, the trailers have been completed and are available for pickup or delivery, the customer has requested in writing that the Company hold the trailers until the customer determines the most economical means of taking possession and the customer takes possession of the trailers within a specified time period. In such cases, the trailers, which have been produced to the customer specifications, are invoiced under the Company's normal billing and credit terms.
The Company recognizes revenue from direct finance leases based upon a constant rate of return while revenue from operating leases is recognized on a straight-line basis in an amount equal to the invoiced rentals.
c. USED TRAILER TRADE COMMITMENTS
The Company has commitments with customers to accept used trailers on trade for new trailer purchases. The Company's policy is to recognize losses related to these commitments, if any, at the time the new trailer revenue is recognized.
d. ACCOUNTS RECEIVABLE
Accounts receivable includes trade receivables and amounts due under finance contracts. Provisions to the allowance for doubtful accounts are charged to general and administrative expenses on the Consolidated Statements of Operations.
e. INVENTORIES
Inventories are primarily stated at the lower of cost, determined on the first-in, first-out (FIFO) method, or market. The cost of manufactured inventory includes raw material, labor and overhead.
f. LONG-LIVED ASSETS
Long-lived assets are reviewed for impairment in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, whenever facts and circumstances indicate that the carrying amount may not be recoverable. Specifically, this process involves comparing an asset's carrying value to the estimated undiscounted future cash flows the asset is expected to generate over its remaining life. If this process were to result in the conclusion that the carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations.
g. ACCRUED LIABILITIES
Accrued liabilities primarily represent accrued payroll related items, restructuring reserves, warranty reserves, loss contingencies related to used trailer residual commitments, loss lease contingencies and self insurance reserves related to group insurance and workers compensation. Changes in the estimates of these reserves are charged or credited to income in the period determined.
The Company is self-insured up to specified limits for medical and workers' compensation coverage. The self-insurance reserves have been recorded to reflect the undiscounted estimated liabilities, including claims incurred but not reported.
The Company recognizes a loss contingency for used trailer residual commitments for the difference between the equipment's purchase price and its fair market value, when it becomes probable that the purchase price at the guarantee date will exceed the equipment's fair market value at that date. A loss lease contingency is recognized when the Company's operating lease payments exceed the anticipated rents from the sublease arrangement with customers.
The Company's warranty policy generally provides coverage for components of the trailer the Company produces or assembles. Typically, the coverage period is one year for container chassis and specialty trailers and five years for dry freight, refrigerated and flat bed trailers. The Company's policy is to accrue the estimated cost of warranty coverage at the time of the sale.
RESULTS OF OPERATIONS
The Company has two reportable segments: manufacturing and retail and distribution. The manufacturing segment produces and sells new trailers to the retail and distribution segment or to customers who purchase trailers direct or through independent dealers. The retail and distribution segment includes the sale, leasing and financing of new and used trailers, as well as the sale of after-market parts and service through its retail branch network. In addition, the retail and distribution segment includes the sale of after-market parts through Wabash National Parts.
THREE MONTHS ENDED JUNE 30, 2002
NET SALES
Consolidated net sales for the three months ended June 30, 2002 decreased by 0.9% (or $1.9 million) compared to the same period in 2001. This decrease was primarily a result of lower new trailer sales, almost offset by an increase in used trailer sales, as the Company continued to reduce its used trailer inventory through the second quarter. New trailer sales in the three months ended June 30, 2002 continued to be adversely affected by the unfavorable economic conditions in the U.S. economy and weak demand. The Company believes that trailer order rates are being negatively affected by customers shifting capital expenditures into Class 8 tractor orders due to new Federal emission standards for engines that become effective October 1, 2002.
The manufacturing segment's external net sales decreased by 4.5% (or $5.7 million) for the three months ended June 30, 2002 compared to the same period in 2001. New trailer units sold in the second quarter of 2002 increased 9.3% to 8,200 units compared to approximately 7,500 units sold during the second quarter of 2001. However, the average new trailer selling price during the second quarter of 2002 declined by approximately 12.9% versus the same period in 2001, from approximately $17,000 in 2001 to approximately $14,800 in 2002. The decline in average new trailer selling price was primarily a result of approximately 2,200 units of lower revenue dollar container units being sold during the period.
At June 30, 2002, the Company's backlog of orders was approximately $197.6 million, approximately 65% of which is related to the DuraPlate trailer. The Company's criteria for determining backlog reflects: (1) only orders that have been confirmed by the customer in writing, and (2) orders that will be included in the Company's production schedule during the next 18 months.
The retail and distribution segment's external net sales increased by 4.5% (or $3.8 million) for the three months ended June 30, 2002 compared to the same period in 2001. This increase was driven primarily by an $8.9 million increase in used trailer revenues, as the Company continued to reduce its used trailer inventory through the second quarter, offset by a decrease in after-market parts and new trailer revenues of $2.5 million and $2.4 million, respectively. New trailer units sold in the second quarter of 2002 were approximately 900 units compared to approximately 1,200 units in the second quarter of 2001.
GROSS PROFIT (LOSS)
Gross profit (loss) as a percentage of net sales totaled 3.0% for the three months ended June 30, 2002 compared to 0.0% for the same period in 2001. This improvement was primarily attributable to the following factors:
- Lower manufacturing costs per unit primarily driven by product mix, as discussed previously in net sales;
- Negative gross profit of $2.7 million in 2001 from the Huntsville, Tennessee and Fort Madison, Iowa manufacturing plants, which closed at the end of 2001; and
- Decrease in inventory valuation charges on new and used trailers from $5.9 million during the second quarter of 2001 to $4.0 million during the second quarter of 2002; offset by
- A write-down of $6.0 million in 2002 for loss lease contingencies related to the Company's financing business.
OTHER INCOME (EXPENSE)
Interest expense for the three months ended June 30, 2002 was $7.8 million as compared to $5.4 million during the same period in 2001. This increase was primarily driven by higher interest rates for the Company's bank term loan and senior notes, which were restructured in April 2002, combined with interest expense associated with capital leases recorded by the Company in December 2001.
Trade receivables facility costs related to the Company's trade receivables facility were $1.9 million in the three months ended June 30, 2002 compared to $0.4 million during the same period in 2001. This increase is primarily attributable to costs incurred in connection with the Company's restructuring of this facility.
Foreign exchange gains and losses, net were net gains of $2.2 million for the three months ended June 30, 2002, as compared to $0.1 million for the same period in 2001. The increased gains in 2002 reflect a strengthening of the Canadian Dollar, as it relates to operating activities of the Company's Canadian retail branches.
Equity in losses of unconsolidated affiliate for the three months ended June 30, 2002 was $0 compared to a loss of $1.8 million during the same period in 2001. This change is the result of the Company's divestiture of its German subsidiary on January 11, 2002.
TAXES
The Company recorded no benefit from income taxes for the three months ended June 30, 2002, as compared to income tax benefit of $10.8 million for the same period in 2001. The Company generated significant tax net operating losses (NOL) in 2001 in excess of those which could be utilized through carryback claims and, after analyzing the future realizability of the remaining tax assets, the Company determined that the recording of a full, 100% valuation allowance was appropriate. The Company believes that the realizability of future benefits associated with NOLs generated in 2002 is uncertain, and, accordingly, has recognized no income tax benefit for the three months ended June 30, 2002.
SIX MONTHS ENDED JUNE 30, 2002
NET SALES
Consolidated net sales for the six months ended June 30, 2002 decreased by 18.2% (or $82.6 million) compared to the same period in 2001. This decrease was primarily a result of lower new trailer sales, principally in the Company's manufacturing segment. This decrease was in part offset by an increase in used trailer sales, as the Company continued to reduce its used trailer inventory through the second quarter of 2002. New trailer sales for the six months ended June 30, 2002 continued to be adversely affected by the unfavorable economic conditions in the U.S. economy and weak demand. The Company believes that trailer order rates are being negatively affected by customers shifting capital expenditures into Class 8 tractor orders driven by new Federal emission standards for engines that become effective October 1, 2002.
The manufacturing segment's external net sales decreased by 30.2% (or $86.1 million) in the six months ended June 30, 2002 compared to the same period in 2001. This decrease was driven by a 25.3% decrease in the number of units sold from approximately 17,000 units during the six months ended June 30, 2001 to approximately 12,700 units during the six months ended June 30, 2002. The average new trailer selling price declined approximately 6.6% during the six months ended June 30, 2002 to approximately $15,600 per unit from $16,700 per unit during the same period in 2001. Contributing to the decline in average selling price was approximately 4,000 units of lower revenue dollar containers which were sold during the first six months of 2002 versus the same period in 2001.
At June 30, 2002, the Company's backlog of orders was approximately $197.6 million, approximately 65% of which is related to the DuraPlate trailer. The Company's criteria for determining backlog reflects: (1) only orders that have been confirmed by the customer in writing, and (2) orders that will be included in the Company's production schedule during the next 18 months.
The retail and distribution segment's external net sales increased by 2.0% (or $3.6 million) in the six months ended June 30, 2002 compared to the same period in 2001. The increase was primarily driven by a $17.6 million increase in used trailer revenues, as the Company continued to reduce its used trailer inventory through the second quarter of 2002. The increase was partially offset by slower new trailer sales and lower after-market parts revenues, which were down $9.3 million and $4.7 million, respectively, as compared to the same period in 2001. New trailer unit sales for the six months ended June 30, 2002 declined to 1,900 units versus 2,700 units sold during the same period in 2001.
GROSS PROFIT (LOSS)
Gross profit (loss) as a percentage of net sales totaled 1.7% for the six months ended June 30, 2002 compared to (0.4%) for the same period in 2001. This improvement was primarily attributable to the following factors:
- Decrease in inventory valuation charges related to new and used trailers of $6.1 million for the six months ended June 30, 2002, as compared to $15.0 million for the same period in 2001; and
- Negative gross profit of $5.7 million in 2001 from the Huntsville, Tennessee and Fort Madison, Iowa manufacturing plants, which closed at the end of 2001; offset by
- A write-down of $6.0 million in 2002 for loss lease contingencies related to the Company's financing business.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the six months ended June 30, 2002 increased $3.4 million from the same period in 2001. This primarily resulted from increases of $1.6 million for severance accruals and $1.1 million for the write-down to fair market value of the Company's airplane, which is held for sale.
OTHER INCOME (EXPENSE)
Interest expense for the six months ended June 30, 2002 was $13.5 million, as compared to $11.2 million during the same period in 2001. This increase was primarily driven by higher interest rates for the Company's bank term loan and senior notes, which were restructured in April 2002, combined with interest expense associated with capital leases recorded by the Company in December 2001.
Trade receivables facility costs related to the Company's trade accounts receivables facility, were $3.6 million in the six months ended June 30, 2002 compared to $1.4 million during the same period in 2001. This increase is primarily attributable to costs incurred in connection with the Company's restructuring of this facility.
Foreign exchange gains and losses, net were net gains of $2.0 million for the six months ended June 30, 2002, as compared to net losses of $0.7 million for the same period in 2001. The gains in 2002 reflect a strengthening of the Canadian Dollar, as it relates to operating activities of the Company's Canadian retail branches.
Equity in losses of unconsolidated affiliate for the six months ended June 30, 2002 was $0 compared to a loss of $4.3 million during the same period in 2001. This change is the result of the Company's divestiture of its German subsidiary on January 11, 2002
Other, net primarily includes items such as interest income, gain or loss from the sale of fixed assets and other non-operating items.
TAXES
The benefit from income taxes for the six months ended June 30, 2002 and 2001 was ($11.9) million and ($21.2) million, respectively. For the six months ended June 30, 2001, the effective rate of benefit recorded of 37.0% exceeded the Federal statutory rate of 35% primarily due to state income taxes. For 2002, the benefit recorded represents an additional realizable Federal net operating loss (NOL) carryback claim filed and liquidated under the provisions of the Job Creation and Worker Assistance Act of 2002, which revised the permitted carryback period for NOLs generated during 2001 from two years to five years. Because of uncertainty related to the realizability of NOLs generated in 2001 in excess of those utilized through carryback claims, the related tax assets were made subject to a 100% valuation allowance. The Company believes that the realizability of future benefits associated with NOLs generated in 2001 is uncertain, and, accordingly, has recognized no income tax benefit for the six months ended June 30, 2002, for NOLs for which carryback claims are not available.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that existing funds, cash generated from operations and availability of funds from its restructured credit facilities and accounts receivable securitization should be adequate to satisfy working capital needs, capital expenditure requirements, interest and principal repayments on debt for the next twelve months.
The Company's ongoing liquidity will depend upon a number of factors including its ability to manage cash resources and meet the financial covenants under its new debt agreements. The Company is exploring additional sources of liquidity including the sale of non-core assets. In the event the Company is unsuccessful in meeting its debt service obligations or if expectations regarding the management and generation of cash resources are not met, the Company would need to implement severe cost reductions, reduce capital expenditures, sell additional assets, restructure all or a portion of its existing debt and/or obtain additional financing.
In July 2002, the Company received a waiver of default from Pitney Bowes Credit Corporation (PBCC) under its Master Equipment Lease Agreement dated September 30, 1997. The event of default was the result of delinquent payment of lease obligations from the Company's sublessee under the agreement. The waiver permanently waived the provision of the agreement (effective from September 30, 1997) related to delinquent payment of rental obligations from the Company's sublessee. The Company is not and has never been delinquent with respect to its lease payments to PBCC. The Company has terminated its sublease agreement with the sublessee and is in the process of repossessing the equipment. The sublessee filed for bankruptcy protection in August 2002.
DEBT RESTRUCTURING
In April 2002, the Company entered into an agreement with its lenders to restructure its existing revolving credit facility and Senior Series Notes and waive violations of its financial covenants through March 30, 2002. The amendment changes debt maturity and principal payment schedules; provides for all unencumbered assets to be pledged as collateral equally to the lenders; increases the cost of funds; and requires the Company to meet certain additional financial conditions, among other items. The amended agreement also contains restrictions on acquisitions and the payment of preferred stock dividends.
The Company's existing $125 million Revolving Credit facility was restructured into a $107 million term loan (Bank Term Loan) and an $18 million revolving credit facility (Bank Line of Credit). The Bank Term Loan and Bank Line of Credit both mature on March 30, 2004 and are secured by all of the formerly unencumbered assets of the Company. Interest on the $107 million Bank Term Loan is variable based upon the adjusted London Interbank Offered Rate ("LIBOR") plus 380 basis points and is payable monthly. Interest on the borrowing under the $18 million Bank Line of Credit is based upon adjusted LIBOR plus 355 basis points or the agent bank's alternative borrowing rate as defined in the agreement and is payable monthly. There were no outstanding borrowings under this facility as of June 30, 2002.
As of December 31, 2001, the Company had $192 million of Senior Series Notes outstanding, which originally matured in 2002 through 2008. As part of the restructuring, the original maturity dates for $72 million of Senior Series Notes, payable in 2002 through March 2004, have been extended to March 30, 2004. The maturity dates for the other $120 million of Senior Series Notes, due subsequent to March 30, 2004, remain unchanged. As consideration for the extension of the maturity dates, the Senior Series Notes are now secured by all of the formerly unencumbered assets
of the Company. Interest on the Senior Series Notes, which is payable monthly, increased by 325 basis points, effective April 2002, and ranges from 9.66% to 11.29%.
The Company is required to make principal payments of approximately $7 million during the remainder of 2002 and approximately $60 million during 2003 on the Bank Term Loan and Senior Series Notes. The monthly principal payments are applied on a pro-rata basis to the Bank Term Loan and Senior Series Notes. In addition, principal payments will be made from excess cash flow, as defined in the agreement, on a quarterly basis. Such additional payments will also be applied on a pro-rata basis to the Bank Term Loan and Senior Series Notes.
The Company's new debt agreements contain restrictions on excess cash flow, the amount of new finance contracts the Company can enter into (not to exceed $5 million within any twelve month period), the payment of preferred stock dividends, and other restrictive covenants. These other restrictive covenants contain minimum requirements related to the following items, as defined in the agreement: Earnings Before Interest, Taxes, Depreciation and Amortization; quarterly equity positions; debt to asset ratios; interest coverage ratios; and capital expenditure amounts. These covenants became effective in April 2002 and become more restrictive in 2003. As of June 30, 2002, the Company was in compliance with all covenants under its borrowing arrangements.
In April 2002, the Company entered into an amendment of its sale and leaseback agreement with an independent financial institution related to its trailer rental fleet to waive financial covenant violations through March 30, 2002 and amend the terms of the existing agreement. The amendment provided for increased pricing and conforms the financial covenants to those in the amended Bank Term Loan, Bank Line of Credit and Senior Series Notes agreements described above. Further, the term of the facility was reduced from June 2006 to January 2005. Assuming all renewal periods are elected, the Company will make payments under this facility of $18.4 million, $14.2 million and $13.3 million in 2002, 2003 and 2004, respectively.
In April 2002, the Company replaced its existing $100 million receivable securitization facility with a new two year $110 million Trade Receivables Facility. The new facility allows the Company to sell, without recourse, on an ongoing basis predominantly all of its domestic accounts receivable to a wholly-owned, bankruptcy remote special purpose entity (SPE). The SPE sells an undivided interest in receivables to an outside liquidity provider who, in turn, remits cash back to the SPE for receivables eligible for funding. This new facility includes financial covenants identical to those in the amended Bank Term Loan, Bank Line of Credit and Senior Series Notes. There were no outstanding borrowings under this facility as of June 30, 2002.
The Company incurred approximately $9.8 million of costs associated with the debt and receivable securitization facility restructuring. Approximately $3.0 million of these costs were expensed in the first quarter of 2002 while an additional $3.0 million of costs were expensed in the second quarter of 2002. Approximately $3.8 million of debt restructuring costs were capitalized and will be amortized over the remaining term of the associated debt.
CONTRACTUAL CASH OBLIGATIONS AND COMMERCIAL COMMITMENTS
A summary of payments due by period of the Company's contractual obligations and commercial commitments as of June 30, 2002 is shown in the table below. The table reflects the obligations under the amended and restated credit agreement, which was effective April 2002.
$ Millions 2002 2003 2004 2005 Thereafter Total
--------------------------------- ----- ------- -------- ------- ---------- --------
DEBT (excluding interest):
---------------------------------
Trade Receivables Facility $ -- $ -- $ -- $ -- $ -- $ --
Mortgages & Other Notes Payable 7.7 3.9 3.4 3.5 7.4 25.9
Revolving Bank Line of Credit and
Bank Term Loan 2.5 21.3 55.4 -- -- 79.2
Senior Series Notes 4.5 38.2 71.4 20.0 59.4 193.5
----- ------- -------- ------- ------- --------
TOTAL DEBT $14.7 $ 63.4 $ 130.2 $ 23.5 $ 66.8 $ 298.6
===== ======= ======== ======= ======= ========
OTHER:
Capital Lease Obligations 18.4 14.2 13.3 36.8 -- 82.7
Operating Leases 6.1 11.0 9.3 5.5 $ 4.2 36.1
----- ------- -------- ------- ------- --------
TOTAL OTHER $24.5 $ 25.2 $ 22.6 $ 42.3 $ 4.2 $ 118.8
===== ======= ======== ======= ======= ========
TOTAL $39.2 $ 88.6 $ 152.8 $ 65.8 $ 71.0 $ 417.4
===== ======= ======== ======= ======= ========
|
Other Commercial Commitments
$ Millions 2002 2003 2004 2005 Thereafter Total
---------------------------- ------ ------ ------- ------- ---------- ---------
Letters of credit -- -- 29.0 -- -- 29.0
Residual guarantees 1.9 3.6 8.3 5.3 15.6 34.7
------ ------ ------- ------- ---------- ---------
TOTAL $ 1.9 $ 3.6 $ 37.3 $ 5.3 $ 15.6 $ 63.7
====== ====== ======= ======= ======= ========
|
EXPLANATION OF CASH FLOW
The Company's cash position decreased $2.0 million, from $11.1 million in cash and cash equivalents at December 31, 2001 to $9.1 million as of June 30, 2002. This decrease was due to cash used in financing and investing activities of $48.0 million and $8.7 million, respectively, offset by cash provided by operating activities of $54.7 million.
OPERATING ACTIVITIES
Net cash provided by operating activities of $54.7 million during the six months ended June 30, 2002 was primarily the result of changes in working capital along with the add back of non-cash charges, including depreciation and amortization, trailer valuation charges, loss contingencies and provision for losses on accounts receivable and finance contracts, offset somewhat by the Company's net loss. Cash provided by working capital was primarily the result of the collection of $24.6 million of income tax refunds during the period as well as the net impact of normal fluctuations in accounts receivable, inventories and accounts payable.
INVESTING ACTIVITIES
Net cash used in investing activities of $8.7 million during the six months ended June 30, 2002 was primarily due to capital expenditures, net additions to the Company's trailer rental fleet and the origination of finance contracts.
FINANCING ACTIVITIES
Net cash used in financing activities of $48.0 million during the six months ended June 30, 2002 was primarily due to net payments under the revolving bank line of credit resulting from net operating cash inflows, payments under capital lease obligations, pay-off of the receivable securitization facility and scheduled principle payments under the Company's other borrowing arrangements.
OTHER
EQUIPMENT OFF BALANCE SHEET AND RELATED CUSTOMER CREDIT RISK
In certain situations, the Company sold equipment leased to others to independent financial institutions and simultaneously leased the equipment back under operating leases. All of this equipment has been subleased to customers under long-term arrangements, typically five years. As of June 30, 2002, the unamortized lease value of equipment financed under these arrangements was approximately $21.8 million. In connection with these agreements, the Company has end of term purchase options and residual guarantees of $10.8 million and $4.3 million, respectively.
The Company has loss exposures related to these arrangements to the extent customers do not perform under their sublease arrangements or the fair value of the equipment is less than the Company's residual guarantee at the end of the lease term. The Company recognizes a loss when the Company's operating lease payments exceed the anticipated rents from the sublease arrangements with customers. Additionally, to the extent that the residual value exceeds the Company's estimate of fair value at the end of the lease terms, the Company recognizes a loss for this difference over the remaining term of the lease.
Due to economic and industry conditions, certain of the Company's customers are experiencing financial difficulties which have resulted in delinquencies in lease payments due to the Company.
The Company subleased equipment to a customer that became severely delinquent in its payments to the Company and, in August 2002, the customer filed for bankruptcy protection. The Company terminated its sublease agreement with this customer in July and began the process of repossessing the equipment. Accordingly, the Company recorded a charge of $6.0 million in the second quarter of 2002 related to this customer. As of June 30, 2002, the unamortized lease value of this arrangement was approximately $16.4 million for which the Company has recorded a total loss contingency of $10.4 million. While management believes that the loss contingency recorded adequately reflects the expected loss related to this customer, there can be no assurance that additional charges may not need to be taken in the future as circumstances dictate.
The Company also subleased certain highly specialized RoadRailer equipment to Amtrak, who is experiencing financial difficulties. Due to the highly specialized nature of the equipment, the recovery value of the equipment is considered to be minimal. The unamortized lease value, and; thus, the Company's potential loss under this arrangement, is approximately $5.4 million as of June 30, 2002. The Company also had finance contracts related to this customer recorded on its June 30, 2002 balance sheet of approximately $11.1 million. As of June 30, 2002, the customer was current in its obligations to the Company. As a result, the Company has not recorded any provision for a loss, if any, on this equipment.
BACKLOG
The Company's backlog of orders was approximately $197.6 million and $142.1 million at June 30, 2002 and December 31, 2001, respectively. The Company expects to fill a majority of its backlog within the next twelve months. The Company's criteria for determining backlog reflects: (1) only orders that have been confirmed by the customer in writing, and (2) orders that will be included in the Company's production schedule during the next 18 months.
NEW ACCOUNTING PRONOUNCEMENTS
a. INTANGIBLE ASSETS
The Company adopted Statement of Accounting Standards (SFAS) No. 142. Goodwill and Other Intangible Assets, as of January 1, 2002. This new standard changes the accounting for goodwill from an amortization method to an impairment-only approach, and introduces a new model for determining impairment charges. SFAS No. 142 requires completion of the initial step of a transitional impairment test within six months of the adoption of this standard and, if applicable, completion of the final step of the adoption by December 31, 2002. Goodwill amortization expense was $0.0 million and $0.3 million for the three months ended June 30, 2002 and 2001, respectively, and $0.0 million and $0.6 million for the six months ended June 30, 2002 and 2001, respectively. The Company has completed the initial transition impairment test. The results of this test indicate that the Company had no impairment of its goodwill as of the date of adoption. The Company will continue to perform annual impairment tests, as required under SFAS No. 142, and review its goodwill for impairment when circumstances indicate that the fair value has declined significantly.
b. ASSET RETIREMENT OBLIGATIONS
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, Accounting for Asset Retirement Obligations with an effective date of June 15, 2002, which becomes effective for the Company on January 1, 2003. This standard requires obligations associated with retirement of long-lived assets to be capitalized as part of the carrying value of the related asset. The Company does not believe the adoption of SFAS No. 143 will have a material effect on its financial statements.
c. ASSET IMPAIRMENT
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This standard supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. This standard retains the previously existing accounting requirements related to the recognition and measurement requirements of the impairment of long-lived assets to be held for used, while expanding the measurement requirements of long-lived assets to be disposed of by sale to include discontinued operations. The provisions of SFAS No. 144 could require the Company to reclassify assets held for sale if the sale is not completed prior to December 31, 2002. It also expands on the previously existing reporting requirements for discontinued operations to include a component of an entity that either has been disposed of or is classified as held for sale. The Company adopted the accounting provisions of this standard on January 1, 2002. The effect of adopting the accounting provisions of this standard was not material to the Company's financial statements. Consistent with the provisions of this new standard, financial statements for prior years have not been restated.
d. DEBT EXTINGUISHMENT COSTS
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections (SFAS No. 145). This standard is required to be adopted by the Company on January 1, 2003, but may be adopted early. SFAS No. 145 modifies the classification criteria for extraordinary items related to the extinguishment of debt. Effective April 1, 2002, the Company has decided to early adopt the provisions of SFAS No. 145. Under the new standard, $1.2 million in expenses associated with the Company's debt restructuring in April 2002, which under prior standards would have been recorded as an extraordinary item, is recorded in other, net on the Consolidated Statements of Operations.
e. TERMINATION BENEFITS AND EXIT COSTS
In June 2002, the FASB issued SFAS No. 146 Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 generally requires companies to recognize costs associated with exit activities when they are incurred rather than at the date of a commitment to an exit or disposal plan and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company is currently evaluating the effects, if any, that this standard will have on its results of operations or financial position.
CHANGES IN INDEPENDENT PUBLIC ACCOUNTANTS
On May 31, 2002, the Company filed a Current Report on Form 8-K announcing that its board of directors approved the selection of Ernst & Young LLP as its independent public accountants for the fiscal year 2002, replacing Arthur Andersen LLP. The decision to change independent public accountants was not the result of any disagreements with Arthur Andersen LLP on matters of accounting principles or practices, financial statement disclosure or auditing scope and procedure. The transition to Ernst & Young LLP began in June 2002.
CORPORATE REALIGNMENT
In July 2002, the Company announced that it will close its Retail and Distribution business unit office in St. Louis, Missouri and transfer the administrative functions to Lafayette, Indiana. The decision to integrate the St. Louis office is part of the Company's overall plan to align the corporate structure with the long-term goals of the organization. The transition is anticipated to be completed by the end of 2002. The majority of the costs associated with the closure and transfer, which are estimated to be $1.5 million, will be recognized in the third quarter of 2002.
MANAGEMENT CHANGES
In May 2002, the Company announced the appointment of William P. Greubel as Chief Executive Officer and President of Wabash National Corporation. In July 2002, Richard J. Giromini was appointed Chief Operating Officer of the Company. Also during the second quarter of 2002, the Company announced the departure of Richard E. Dessimoz, acting Chief Executive Officer and Arthur R. Brown, Chief Operating Officer. In addition, Derek L. Nagle, President of North America Trailer Centers, announced that he will retire at the end of 2002.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
In addition to the risks inherent in its operations, the Company has exposure to financial and market risk resulting from volatility in commodity prices, interest rates and foreign exchange rates. The following discussion provides additional detail regarding the Company's exposure to these risks.
a. COMMODITY PRICE RISKS
The Company is exposed to fluctuation in commodity prices through the purchase of raw materials that are processed from commodities such as aluminum, steel, wood and virgin plastic pellets. Given the historical volatility of certain commodity prices, this exposure can significantly impact product costs. The Company may manage aluminum price changes by entering into fixed price contracts with its suppliers upon a customer sales order being finalized. Because the Company typically does not set prices for its products in advance of its commodity purchases, it can take into account the cost of the commodity in setting its prices for each order. To the extent that the Company is unable to offset the increased commodity costs in its product prices, the Company's results would be materially and adversely affected.
b. INTEREST RATES
As of June 30, 2002, the Company had approximately $144 million of London Interbank Offered Rate (LIBOR) based debt outstanding under its various financing agreements. A hypothetical 100 basis-point increase in the floating interest rate from the current level would correspond to a $1.4 million increase in interest expense over a one-year period. This sensitivity analysis does not account for the change in the Company's competitive environment indirectly related to the change in interest rates and the potential managerial action taken in response to these changes.
c. FOREIGN EXCHANGE RATES
Effective with the divestiture of its German subsidiary in January 2002, the Company has ceased any foreign currency forward contracts related to its former European activities. In addition, in light of the Breadner acquisition in 2001, the Company continues to review its foreign currency exposure related to the Canadian dollar. The Company does not hold or issue derivative financial instruments for speculative purposes. As of June 30, 2002, the Company had no foreign currency forward contracts outstanding.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company arising in the ordinary course of business, including those pertaining to product liability, labor and health related matters, successor liability, environmental and possible tax assessments. While the amounts claimed could be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties that exist. Therefore, it is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on facts currently available, management believes that the disposition of matters that are pending or asserted will not have a material adverse effect on the Company's financial position or its annual results of operations.
Brazil Joint Venture
In March 2001, Bernard Krone Industria e Comercio de Maquinas Agricolas Ltda. ("BK") filed suit against the Company in the Fourth Civil Court of Curitiba in the State of Parana, Brazil. This action seeks recovery of damages plus pain and suffering. Because of the bankruptcy of BK, this proceeding is now pending before the Second Civil Court of Bankruptcies and Creditors Reorganization of Curitiba, State of Parana (No.232/99).
This case grows out of a joint venture agreement between BK and the Company, which was generally intended to permit BK and the Company to market the RoadRailer(R) trailer in Brazil and other areas of South America. When BK was placed into the Brazilian equivalent of bankruptcy late in 2000, the joint venture was dissolved. BK subsequently filed its lawsuit against the Company alleging that it was forced to terminate business with other companies because of the exclusivity and non-compete clauses purportedly found in the joint venture agreement. The lawsuit further alleges that Wabash did not properly disclose technology to BK and that Wabash purportedly failed to comply with its contractual obligations in terminating the joint venture agreement. In its complaint, BK asserts that it has been damaged by these alleged wrongs by the Company in the approximate amount of $8.4 million (U.S.).
The Company answered the complaint in May 2001, denying any wrongdoing and pointing out that, contrary to the allegation found in the complaint, a merger of the Company and BK, or the acquisition of BK by the Company, was never the purpose or intent of the joint venture agreement between the parties; the only purpose was the business and marketing arrangement as set out in the agreement.
The Company believes that the claims asserted against it by BK are without merit and intends to defend itself vigorously against those claims. The Company believes that the resolution of this lawsuit will not have a material adverse effect on its financial position or future results of operations; however, at this early stage of the proceeding, no assurance can be given as to the ultimate outcome of the case.
E-Coat System
On September 17, 2001 the Company commenced an action against PPG Industries, Inc. ("PPG") in the United States District Court, Northern District of Indiana, Hammond Division at Lafayette, Indiana, Civil Action No. 4:01 CV 55. In the lawsuit, the Company alleged that it has sustained substantial damages stemming from the failure of the PPG electrocoating system (the "E-coat system") and related products that PPG provided for the Company's Huntsville, Tennessee plant.
The Company alleges that PPG is responsible for defects in the design of the E-coat system and defects in PPG products that have resulted in malfunctions of the E-coat system and poor quality coatings on numerous trailers.
PPG filed a Counterclaim in that action on or about November 8, 2001, seeking damages in excess of approximately $1.35 million based upon certain provisions of the November 3, 1998 Investment Agreement between it and the Company. The Company filed a Reply to the Counterclaim denying liability for the claims asserted. The Company has subsequently amended its complaint to include two additional defendants, U.S. Filter and Wheelabrator Abrasives Inc., who designed or manufactured aspects of the E-coat system.
The Company believes that the claims asserted against it by PPG in the counterclaim are without merit and intends to defend itself vigorously against those claims. It also believes that the claims asserted in its complaint are valid and meritorious and it intends to prosecute those claims. The Company believes that the resolution of this lawsuit will not have a material adverse effect on its financial position or future results of operations; however, at this early stage of the proceeding, no assurance can be given as to the ultimate outcome of the case.
Environmental
In the second quarter of 2000, the Company received a grand jury subpoena requesting certain documents relating to the discharge of wastewaters into the environment at a Wabash facility in Huntsville, Tennessee. The subpoena sought the production of documents and related records concerning the design of the facility's discharge system and the particular discharge in question. On May 16, 2001, the Company received a second grand jury subpoena that sought the production of additional documents relating to the discharge in question. The Company is fully cooperating with federal officials with respect to their investigation into the matter. At this time, the Company is unable to predict the outcome of the federal grand jury inquiry into this matter, but does not believe it will result in a material adverse effect on its financial position or future results of operations; however, at this early stage of the proceedings, no assurance can be given as to the ultimate outcome of the case.
On April 17, 2000, the Company received a Notice of Violation/Request for Incident Report from the Tennessee Department of Environmental Conservation (TDEC) with respect to the same matter. On September 6, 2000, the Company received an Order and Assessment from TDEC directing the Company to pay a fine of $100,000 for violations of Tennessee environmental requirements as a result of the discharge. The Company filed an appeal of the Order and Assessment on October 10, 2000. The Company and TDEC have negotiated a settlement agreement to resolve this matter, under which the Company would pay $100,000, which was recorded in 2001. The proposed settlement requires the approval of the Tennessee Solid Waste Board, which is scheduled to vote on the settlement on August 27, 2002.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) Not Applicable
(b) The Company is in arrears with respect to payment of dividends on the following classes of preferred stock as of August 14, 2002:
Series B 6% Cumulative Convertible Exchangeable Preferred Stock -
$264,000
Series C 5.5% Cumulative Convertible Exchangeable Preferred Stock -
$178,800
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of security-holders on May 30, 2002, at which time the following nominees were elected to the Board of Directors:
WITHHOLD AUTHORITY
NOMINEES FOR TO VOTE
-------- --- -------
David C. Burdakin 22,960,119 177,456
William P. Greubel 22,959,889 177,686
John T. Hackett 22,639,871 497,704
E. Hunter Harrison 22,646,335 491,240
Martin C. Jischke 22,944,689 192,886
Ludvik F. Koci 22,645,864 491,711
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ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
--------
10.01 Richard E. Dessimoz - Severance Agreement including Exhibit A
Form of Waiver and Release Agreement dated May 6, 2002
10.02 Derek L. Nagle - Severance Agreement and Exhibit A Form of
Waiver and Release Agreement dated May 6, 2002 and Letter
Agreement dated July 1, 2002
10.03 Richard J. Giromini - Executive Employment Agreement dated
June 28, 2002
10.04 Richard J. Giromini - Nonqualified Stock Option Agreement
dated July 15, 2002
10.05 Richard J. Giromini - Restricted Stock Agreement
10.06 Mark R. Holden - Executive Employment Agreement dated June 14,
2002
10.07 Mark R. Holden - Nonqualified Stock Option Agreement dated
June 14, 2002
10.08 William P. Greubel - Nonqualified Stock Option Agreement dated
May 6, 2002
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(b) Reports on Form 8-K:
1. Form 8-K filed April 26, 2002 reporting under Item 5: Other Events and Item 7: Financial Statements and Exhibits.
2. Form 8-K filed April 26, 2002 reporting under Item 5: Other Events and Item 7: Financial Statements and Exhibits.
3. Form 8-K filed May 16, 2002 reporting under Item 5: Other Events and Item 7: Financial Statements and Exhibits.
4. Form 8-K filed May 31, 2002 reporting under Item 4: Changes in Registrant's Certifying Accountant and Item 7: Financial Statements and Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
WABASH NATIONAL CORPORATION
Date: August 14, 2002 By: /s/ Mark R. Holden
--------------- ------------------
Mark R. Holden
Senior Vice President and
Chief Financial Officer
(Principal Accounting Officer
And Duly Authorized Officer)
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EXHIBIT 10.01
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (the "Agreement") is dated as of May 6, 2002, between Wabash National Corporation (the "Company") and Richard E. Dessimoz (the "Employee").
WHEREAS, the Employee serves as Senior Vice President, and in that role has been and is expected to continue to be important in developing and expanding the business and operations of the Company and possesses valuable knowledge and skills with respect to such business; and
WHEREAS, the Board of Directors of the Company (the "Board") believes that it is in the best interests of the Company to encourage the Employee's continued employment with and dedication to the Company; and
WHEREAS, the Compensation Committee of the Board has adopted a policy which authorizes the Company to enter into this Agreement with the Employee; and
WHEREAS, the parties desire to enter into this Agreement setting forth the terms and conditions for the payment of compensation to the Employee in the event of a termination of the Employee's employment during the term of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements of the parties contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. TERM. The initial term of this Agreement shall be for a period commencing on May 6, 2002 and will remain in effect until May 6, 2004. This Agreement may be renewed by written agreement of the parties. References herein to the term of this Agreement shall include the initial term and any additional period for which this Agreement is extended or renewed.
2. TERMINATION OF EMPLOYMENT. Subject to the terms of this Agreement, the Employee shall be entitled to receive severance payments from the Company for services previously rendered to the Company and its affiliates in the event the Employee's employment is terminated by the Company other than for Cause (as defined in Section 7) or by the Employee for Good Reason
(as defined in Section 8). "Date of Termination" means the Employee's date of termination of employment with the Company and its affiliates.
(a) GOOD REASON; OTHER THAN FOR CAUSE.
If, during the term of this Agreement the Company terminates the Employee's employment other than for Cause or the Employee terminates employment with the Company for Good Reason:
(i) the Company shall pay to the Employee the following amounts, subject to the execution by the Employee of a waiver and release agreement, substantially in the form attached hereto as Exhibit A, in favor of the Company and its affiliates:
A. the sum of (1) the Employee's Annual Base Salary (as defined in Section 6) through the Date of Termination to the extent not theretofore paid and (2) any accrued vacation pay, to the extent not theretofore paid, (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as the "Accrued Obligations") in a lump sum in cash within 30 days of the Date of Termination; and
B. an amount equal to 1.5 times the sum of: (x) the Employee's Annual Base Salary and (y) the Target Bonus. This amount is to be paid in substantially equal proportionate installments in accordance with the Company's normal payroll practices, commencing with the first payroll period in the month following the month in which the Date of Termination occurs, for a period of one and one-half years.
(ii) for one and one-half year after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide at Company expense benefits to the Employee and/or the Employee's family at least equal to those which would have been provided to them in accordance with the welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer employees of the Company and its affiliated companies, as if the Employee's employment had not been terminated; provided, however, that if the Employee becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility; and
(iii) the Company shall, at its sole expense as incurred, provide the Employee with outplacement services the scope and provider of which shall be at the highest level provided by the Company to its peer employees.
(b) CAUSE; OTHER THAN FOR GOOD REASON. If the Employee's employment is terminated for Cause during the term of this Agreement, this Agreement shall terminate without further obligations to the Employee, other than the obligation to pay to the Employee his Accrued Obligations to the extent theretofore unpaid. If the Employee voluntarily terminates employment during the term of this Agreement, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Employee, other than for Accrued Obligations through the Date of Termination.
3. EFFECT ON OPTION AND RESTRICTED AGREEMENTS. Immediately prior to
(i) a termination of the Employee's employment during the term of this Agreement
that is subject to Section 2(a) hereof, all stock option and restricted stock
grants made to the Employee by Company which are outstanding at the time of such
event shall become fully vested. In addition, the Employee shall have until the
earlier of (i) two years following the Date of Termination and (ii) the
expiration date of the options to exercise the outstanding options. This
Agreement is intended to amend all stock option and restricted stock grants
previously awarded to the Employee to accelerate vesting and to provide an
extended exercise period as described above to the extent that the terms of the
grants are inconsistent with this Section 3.
4. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that it is determined that any payment or distribution of any type to or for the benefit of the Employee made by the Company, by any of its affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company's assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Code")) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of an employment agreement or otherwise (the "Total Payments"), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fund the payment by the Employee of any Excise Tax on the Total Payments as well as all income taxes imposed on the
Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration or any Excise Tax.
5. AGREEMENTS OF EMPLOYEE AND COMPANY.
(a) CONFIDENTIAL INFORMATION. The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliates, and their respective businesses, which shall have been obtained by the Employee during the Employee's employment by the Company or any of its affiliates and which shall not be or become public knowledge (other than by acts by the Employee or representatives of the Employee in violation of this Agreement). After termination of the Employee's employment with the Company, the Employee shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.
(b) NO DISPARAGEMENT. The Employee and the Company agree that, subsequent to the effective date of this Agreement, they will not make any disparaging or derogatory remarks or comments about the other, and the Employee agrees that he shall not make any disparaging or derogatory remarks or comments about the Company's current and former officers, directors, shareholders, principals, attorneys, agents or employees, or his employment with the Company.
(c) COOPERATION. In the event that the Company is involved in any investigation, litigation, or administrative proceeding subsequent to the effective date of this Agreement, the Employee agrees that, upon request, he will provide reasonable cooperation to the Company and its attorney in the prosecution or defense of any investigation, litigation, or administrative proceeding, including participation in interviews with the Company's attorneys, appearing for depositions, testifying in administrative or judicial proceedings, or any other reasonable participation necessary for the prosecution or defense of any subject investigation, litigation, or administrative proceeding. The Company agrees to reimburse the Employee for reasonable expenses in participating in the prosecution or defense of any investigation, litigation or administrative proceeding.
(d) RETURN OF PROPERTY. The Employee agrees that upon his separation of employment from the Company that he will surrender to the Company all Company property, including, but not limited to, any and all confidential information, licenses, trademarks, patents, in written, electronic or
other tangible form. In addition, the Employee agrees to return any and all computer equipment with passwords, Company issued credit, security, identification, or telephone cards, with passwords, and all other Company owned property and keys, contemporaneously with providing the proper means for accessing the property.
6. DEFINITION OF "ANNUAL BASE SALARY" AND "ANNUAL BONUS". Annual base salary ("Annual Base Salary") means the annual base salary payable to the Employee immediately prior to his promotion to Acting CEO and shall not include any promotional increase provided as a result of acceptance of the interim position, but shall not be less than $265,000. Target bonus (the "Target Bonus") means 25% of the annual base salary as defined above.
7. DEFINITION OF "CAUSE". For purposes of this Agreement, "Cause" for termination of the Employee's employment by the Company hereunder shall be deemed to exist if (a) the Employee is found guilty by a court of having committed fraud or theft against the Company or having committed a felony involving moral turpitude; (b) the Employee is found guilty by a court of having committed a crime involving moral turpitude; (c) in the reasonable judgment of the Board, the Employee has compromised trade secrets or other similarly valuable proprietary information of the Company; or (d) in the reasonable judgment of the Board, the Employee has engaged in gross misconduct that causes material harm to the business and operations of the Company or any of its affiliated companies, the continuation of which will continue to materially harm the business and operations of the Company or any of its affiliated companies in the future.
8. DEFINITION OF "GOOD REASON". "Good Reason" shall mean, without the consent of the Employee, any of the following: (1) any proposed reduction in the Employee's base salary, fringe benefits or bonus eligibility, except, in the case of fringe benefits or bonus eligibility, in connection with a reduction in such compensation generally applicable to peer employees of the Company; (2) the Employee has his responsibilities or areas of supervision with the Company substantially reduced; (3) the Employee has his responsibilities or areas of supervision with the Company substantially increased without an appropriate increase in Employee's compensation; or (4) the Employee is required to move his office more than 50 miles outside the metropolitan area in which the office of the Employee was located immediately prior to the move.
9. EXPENSES. The Company shall pay any and all reasonable legal fees and expenses incurred by the Employee in seeking to obtain or enforce, by bringing an action against the Company, any right or benefit
provided in this Agreement if the Employee is successful in whole or in part in such action.
10. WITHHOLDING. Notwithstanding anything in this Agreement to the contrary, all payments required to be made by the Company hereunder to the Employee or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provisions for the payment of taxes and any withholdings as required by law, provided that the Company is satisfied that all requirements of law affecting its responsibilities to withhold compensation have been satisfied.
11. NO DUTY TO MITIGATE. The Employee's payments received hereunder shall be considered severance pay in consideration of past service, and pay in consideration of continued service from the date hereof and entitlement thereto shall not be governed by any duty to mitigate damages by seeking further employment.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties hereto. The prior approval by the Board shall be required in order for the Company to authorize any amendments or additions to this Agreement.
13. GOVERNING LAW. This Agreement shall be governed by the laws of United States to the extent applicable and otherwise by the laws of the State of Indiana, excluding the choice of law rules thereof.
14. ASSIGNMENT. The rights and obligations of the Company under this Agreement shall be binding upon its successors and assigns and may be assigned by the Company to the successors in interest of the Company. The rights and obligations of the Employee under this Agreement shall be binding upon his heirs, legatees, personal representatives, executors or administrators. This Agreement may not be assigned by the Employee, but any amount owed to the Employee upon his death shall inure to the benefit of his heirs, legatees, personal representatives, executors, or administrators.
15. NOTICE. For purposes 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 hand delivered, sent by overnight courier, or mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or transmitted by telegram, telecopy, or telex, addressed as follows:
If to the Company:
Wabash National Corporation
1000 Sagamore Parkway
Lafayette, Indiana 47903
Attn: V.P. Human Resources
Fax: 765/446-1855
If to the Employee:
Richard E. Dessimoz
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
16. OTHER AGREEMENTS. This Agreement may not constitute the entire agreement between the parties hereto providing for severance payments in connection with a termination of employment; provided, however, that if the Employee is entitled to severance payments pursuant to this Agreement and pursuant to any other oral or written agreements, commitments or understandings calling for severance payments in connection with a termination of employment, the severance payments paid to the Employee by the Company in connection with such termination of employment shall be limited to the greater of (i) severance payments provided pursuant to this Agreement or (ii) severance payments provided by the Company pursuant to such other oral or written agreements, commitments or understandings.
17. SEVERABILITY. If any part of any provision of this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement, or have caused this Agreement to be executed and delivered, to be effective as of May 6, 2002.
WABASH NATIONAL CORPORATION
Date: 5/6/02 By: /s/ JOHN T. HACKETT
--------- ------------------------------------
Name: John T. Hackett
Title: Director, Chairman of the Board
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EMPLOYEE
EXHIBIT A:
FORM OF WAIVER AND RELEASE AGREEMENT
In consideration of the severance pay provided to me by Wabash National Corporation ("Wabash"), which severance pay is described in the Severance Agreement between me and the Company effective May 6, 2002 (the "Severance Payment") and is a payment I would not be entitled to without entering into this Waiver and Release Agreement, I voluntarily enter into this Waiver and Release Agreement. More specifically, the Severance Payment that is the consideration for this Waiver and Release Agreement is a payment of Four Hundred Ninety Six Thousand Eight Hundred Seventy Five Dollars and Zero Cents ($496,875.00) representing the entire Severance Payment.
I, on my own behalf and on behalf of my heirs, executors, administrators, attorneys and assigns, hereby unconditionally and irrevocably release, waive and forever discharge Wabash and each of its affiliates, parents, successors, predecessors, and the subsidiaries, directors, owners, members, shareholders, officers, agents, and employees of Wabash and its affiliates, parents, successors, predecessors, and subsidiaries (collectively all of the forgoing are referred to as the "Employer"), from any and all causes of action, claims and damages, including attorneys' fees, whether known or unknown, foreseen or unforeseen, presently asserted or otherwise arising through the date of my signing of the Waiver and Release Agreement, concerning my employment or separation from employment. This release includes, but is not limited to, any claim or entitlement to salary, bonuses, any other payments, benefits or damages arising under any federal law (including but not limited to, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, and the Family and Medical Leave Act, each as amended); any claim arising under any state or local ordinances or regulations, and any claim arising under any common law principle or public policy, including but not limited to all suits in tort or contract, such as, wrongful termination, defamation, emotional distress, invasion of privacy or loss of consortium.
I understand that by signing this Waiver and Release Agreement I am not waiving any claims or administrative charges which cannot be waived by law. I am waiving, however, any right to monetary recovery or individual relief should any federal, state or local agency (including the Equal Employment Opportunity Commission (the "EEOC")) pursue any claim on my behalf arising out of or related to my employment with and/or separation from employment with the Employer.
I further agree, without any reservation whatsoever, never to sue the Employer or become a party to a lawsuit on the basis of any and all claims of any type lawfully and validly released in this Waiver and Release Agreement. If I sue in violation of the preceding sentence of this Waiver and Release Agreement, I will (1) pay all costs and expenses incurred by the Employer in defending against a suit or enforcing this Waiver and Release Agreement, including litigation and court costs, expenses and reasonable attorneys' fees, and (2) I will repay the Severance Payment I received in consideration for this Waiver and Release Agreement.
I am signing this Waiver and Release Agreement knowingly and voluntarily. I acknowledge that:
(1) I am hereby advised in writing to consult an attorney before signing this Waiver and Release Agreement;
(2) I have relied solely on my own judgment and/or that of my attorney regarding the consideration for and the terms of this Waiver and Release Agreement and am signing this Waiver and Release Agreement knowingly and voluntarily of my own free will;
(3) I am not entitled to the Severance Payment amount unless I agree to and honor the terms of this Waiver and Release Agreement.
(4) I have been given at least twenty one (21) days to consider this Waiver and Release Agreement;
(5) I may revoke this Waiver and Release Agreement within seven (7) days after signing it by submitting a written notice of revocation to Wabash to Nick Fletcher, Vice President Human Resources, WABASH NATIONAL CORPORATION, P.O. Box 6129, Lafayette, IN 47903 prior to 5:00 pm on the seventh day after signing it. I further understand that this Waiver and Release Agreement is not effective or enforceable until after the seven (7) day period of revocation has expired without revocation, and that if I revoke this Waiver and Release Agreement, I will not receive any Severance Payment. THIS WAIVER AND RELEASE AGREEMENT DOES NOT BECOME EFFECTIVE UNTIL THE EXPIRATION OF THE SEVEN DAY PERIOD;
(6) I have read and understand the Waiver and Release Agreement and further understand that it includes a general release of any and all known and unknown, foreseen or unforeseen, claims presently asserted or otherwise arising through the date of my
signing of this Waiver and Release Agreement that I may have against the Employer; and
(7) I understand that this Waiver and Release Agreement does not waive any age discrimination claims that may arise after the effective date of this Waiver and Release Agreement.
(8) No statements or conduct by the Employer have in any way coerced or unduly influenced me to execute this Waiver and Release Agreement.
I represent and promise that prior to the execution of this Waiver and Release Agreement I have surrendered to the Company all Company property, including, but not limited to, any and confidential information, licenses, trademarks, patents, in written, electronic or other tangible form. In addition, I have returned any and all computer equipment with passwords, Company issued credit, security, identification, or telephone cards, with passwords, and all other Company owned property and keys, contemporaneously with providing the proper means for accessing the property.
I further agree that I will not make any disparaging or derogatory remarks or comments about the Company or the Company's current and former officers, directors, shareholders, principals, attorneys, agents or employees, or my employment with the Company.
I further acknowledge that there are no other agreements of any nature between the Employer and me with respect to the matters discussed in this Waiver and Release Agreement, except as expressly stated herein, and that in signing this Waiver and Release Agreement, I am not relying on any agreements or representation, except those expressly contained in this Waiver and Release Agreement and the Severance Agreement.
I further acknowledge and agree that if any provision of this Waiver and Release Agreement is found, held or deemed by a court of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or controlling law, the remainder of this Waiver and Release Agreement shall continue in full force and effect.
This Waiver and Release Agreement is deemed made and entered into in the State of Indiana, and in all respects shall be interpreted, enforced and governed under applicable federal law, and in the event that any reference shall be made to state law, the internal laws of the Indiana shall apply. Any
disputes under this Waiver and Release Agreement shall be adjudicated by a court of competent jurisdiction in the State of Indiana.
This Waiver and Release Agreement shall not in any way be construed as an admission by the Company of any liability for any claim or potential claim.
I understand that, to receive the Severance Payment amount, I must sign and return this Waiver and Release Agreement no sooner than my employment termination date and no later than twenty one (21) days from the date my employment was terminated.
EXECUTED on this 24th day of May, 2002 at Lafayette Indiana.
/s/ RICHARD E. DESSIMOZ
-----------------------
RICHARD E. DESSIMOZ
|
STATE OF Indiana
CITY/ COUNTY OF Benton
The foregoing instrument was acknowledged before me in the indicated jurisdiction this 24 day of May, 2002, by Richard E. Dessimoz.
My commission expires: 1/31/08
/s/ JOY PROSSER
-----------------------
Notary Public
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EXHIBIT 10.02
[WABASH NATIONAL LETTERHEAD]
July 1, 2002
Derek L. Nagle
12813 Flushing Meadows Drive
St. Louis, MO 63131
Dear Derek
On behalf of Wabash National Corporation I want to thank you for your past service as Senior Vice President, President - North American Trailer Centers, Inc. and your commitment to remain in that position through the end of the year. You have indicated that you intend to step down from your position with the Company at year end. In exchange for, and conditioned on, your commitment to remain with Wabash through December 31, 2002, we have agreed that upon the conclusion of your employment relationship with Wabash at December 31, 2002, assuming you remain in good standing through that date, you will be entitled to certain severance benefits. By countersigning this letter, you agree with Wabash that, subject to the terms of this letter, following completion of your employment relationship on December 31, 2002 you will receive severance benefits as if the conclusion of your employment were deemed to have been pursuant to Section 2(a) of the Severance Agreement between you and Wabash dated May 6, 2002 (the "Severance Agreement"), subject to the terms and conditions of the Severance Agreement.
All benefits under the Severance Agreement are, of course, conditioned upon your execution of the waiver and release agreement attached to your Severance Agreement as Exhibit A, prior to December 31, 2002, to your remaining an employee of the Company in good standing through that date and to there not being any basis for a termination for "Cause" prior to December 31, 2002.
If the terms of this letter agreement reflect your understanding of the agreement between you and Wabash, please countersign and return a copy of this letter to my attention.
Sincerely,
/s/ WILLIAM P. GREUBEL ---------------------- William P. Greubel President and CEO |
Agreed:
/s/ DEREK L. NAGLE ------------------ Derek L. Nagle |
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (the "Agreement") is dated as of May 6, 2002, between Wabash National Corporation (the "Company") and Derek L. Nagle (the "Employee").
WHEREAS, the Employee serves as Senior Vice President, President - North American Trailer Centers, Inc., and in that role has been and is expected to continue to be important in developing and expanding the business and operations of the Company and possesses valuable knowledge and skills with respect to such business; and
WHEREAS, the Board of Directors of the Company (the "Board) believes that it is in the best interests of the Company to encourage the Employee's continued employment with and dedication to the Company; and
WHEREAS, the Compensation Committee of the Board has adopted a policy which authorizes the Company to enter into this Agreement with the Employee; and
WHEREAS, the parties desire to enter into this Agreement setting forth the terms and conditions for the payment of compensation to the Employee in the event of a termination of the Employee's employment during the term of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements of the parties contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. TERM. The initial term of this Agreement shall be for a period commencing on May 6, 2002 and will remain in effect until May 6, 2004. This Agreement may be renewed by written agreement of the parties. References herein to the term of this Agreement shall include the initial term and any additional period for which this Agreement is extended or renewed.
2. TERMINATION OF EMPLOYMENT. Subject to the terms of this Agreement, the Employee shall be entitled to receive severance payments from the Company for services previously rendered to the Company and its affiliates in the event the Employee's employment is terminated by the Company other
than for Cause (as defined in Section 7) or by the Employee for Good Reason (as defined in Section 8). "Date of Termination" means the Employee's date of termination of employment with the Company and its affiliates.
(a) GOOD REASON; OTHER THAN FOR CAUSE.
If, during the term of this Agreement the Company terminates the Employee's employment other than for Cause or the Employee terminates employment with the Company for Good Reason:
(i) the Company shall pay to the Employee the following amounts, subject to the execution by the Employee of a waiver and release agreement, substantially in the form attached hereto as Exhibit A, in favor of the Company and its affiliates:
A. the sum of (1) the Employee's Annual Base Salary (as defined in Section 6) through the Date of Termination to the extent not theretofore paid and (2) any accrued vacation pay, to the extent not theretofore paid, (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as the "Accrued Obligations") in a lump sum in cash within 30 days of the Date of Termination; and
B. an amount equal to 1.5 times the sum of: (x) the Employee's Annual Base Salary and (y) the Target Bonus. This amount is to be paid in substantially equal proportionate installments in accordance with the Company's normal payroll practices, commencing with the first payroll period in the month following the month in which the Date of Termination occurs, for a period of one and one-half years.
(ii) for one and one-half year after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide at Company expense benefits to the Employee and/or the Employee's family at least equal to those which would have been provided to them in accordance with the welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer employees of the Company and its affiliated companies, as if the Employee's employment had not been terminated; provided, however, that if the Employee becomes reemployed with another employer and is eligible to receive medical or other welfare
benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility; and
(iii) the Company shall, at its sole expense as incurred, provide the Employee with outplacement services the scope and provider of which shall be at the highest level provided by the Company to its peer employees.
(b) CAUSE: OTHER THAN FOR GOOD REASON. If the Employee's employment is terminated for Cause during the term of this Agreement, this Agreement shall terminate without further obligations to the Employee, other than the obligation to pay to the Employee his Accrued Obligations to the extent theretofore unpaid. If the Employee voluntarily terminates employment during the term of this Agreement, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Employee, other than for Accrued Obligations through the Date of Termination.
3. EFFECT ON OPTION AND RESTRICTED AGREEMENTS. Immediately prior to
(i) a termination of the Employee's employment during the term of this Agreement
that is subject to Section 2(a) hereof, all stock option and restricted stock
grants made to the Employee by Company which are outstanding at the time of such
event shall become fully vested. In addition, the Employee shall have until the
earlier of (i) two years following the Date of Termination and (ii) the
expiration date of the options to exercise the outstanding options. This
Agreement is intended to amend all stock option and restricted stock grants
previously awarded to the Employee to accelerate vesting and to provide an
extended exercise period as described above to the extent that the terms of the
grants are inconsistent with this Section 3.
4. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that it is determined that any payment or distribution of any type to or for the benefit of the Employee made by the Company, by any of its affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company's assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Code")) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of an employment agreement or otherwise (the "Total Payments"), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fund the payment by the Employee of any
Excise Tax on the Total Payments as well as all income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration or any Excise Tax.
5. AGREEMENTS OF EMPLOYEE AND COMPANY
(a) CONFIDENTIAL INFORMATION. The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliates, and their respective businesses, which shall have been obtained by the Employee during the Employee's employment by the Company or any of its affiliates and which shall not be or become public knowledge (other than by acts by the Employee or representatives of the Employee in violation of this Agreement). After termination of the Employee's employment with the Company, the Employee shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.
(b) NO DISPARAGEMENT. The Employee and the Company agree that, subsequent to the effective date of this Agreement, they will not make any disparaging or derogatory remarks or comments about the other, and the Employee agrees that he shall not make any disparaging or derogatory remarks or comments about the Company's current and former officers, directors, shareholders, principals, attorneys, agents or employees, or his employment with the Company.
(c) COOPERATION. In the event that the Company is involved in any investigation, litigation, or administrative proceeding subsequent to the effective date of this Agreement, the Employee agrees that, upon request, he will provide reasonable cooperation to the Company and its attorney in the prosecution or defense of any investigation, litigation, or administrative proceeding, including participation in interviews with the Company's attorneys, appearing for depositions, testifying in administrative or judicial proceedings, or any other reasonable participation necessary for the prosecution or defense of any subject investigation, litigation, or administrative proceeding. The Company agrees to reimburse the Employee for reasonable expenses in participating in the prosecution or defense of any investigation, litigation or administrative proceeding.
(d) RETURN OF PROPERTY. The Employee agrees that upon his separation of employment from the Company that he will surrender to the Company all Company property, including, but not limited to, any and
confidential information, licenses, trademarks, patents, in written, electronic or other tangible form. In addition, the Employee agrees to return any and all computer equipment with passwords, Company issued credit, security, identification, or telephone cards, with passwords, and all other Company owned property and keys, contemporaneously with providing the proper means for accessing the property.
6. DEFINITION OF "ANNUAL BASE SALARY" AND "ANNUAL BONUS". Annual base salary ("Annual Base Salary") means the greater of (a) the annual base salary payable to the Employee by the Company and its affiliates as of the Date of Termination or (b) the amount equal to the Employee's annual base salary payable to the Employee by the Company and its affiliates as of the date of this Agreement. Annual bonus (the "Annual Bonus") means the annual bonus that would be payable to the Employee as of the Date of Termination if all performance targets under the Company's bonus plan with respect to such Employee were met.
7. DEFINITION OF "CAUSE". For purposes of this Agreement, "Cause" for termination of the Employee's employment by the Company hereunder shall be deemed to exist if (a) the Employee is found guilty by a court of having committed fraud or theft against the Company or having committed a felony involving moral turpitude; (b) the Employee is found guilty by a court of having committed a crime involving moral turpitude; (c) in the reasonable judgment of the Board, the Employee has compromised trade secrets or other similarly valuable proprietary information of the Company; or (d) in the reasonable judgment of the Board, the Employee has engaged in gross misconduct that causes material harm to the business and operations of the Company or any of its affiliated companies, the continuation of which will continue to materially harm the business and operations of the Company or any of its affiliated companies in the future.
8. DEFINITION OF "GOOD REASON". "Good Reason" shall mean, without the consent of the Employee, any of the following: (1) any proposed reduction in the Employee's base salary, fringe benefits or bonus eligibility, except, in the case of fringe benefits or bonus eligibility, in connection with a reduction in such compensation generally applicable to peer employees of the Company; (2) the Employee has his responsibilities or areas of supervision with the Company substantially reduced; (3) the Employee has his responsibilities or areas of supervision with the Company substantially increased without an appropriate increase in Employee's compensation; or (4) the Employee is required to move his office more than 50 miles outside the metropolitan area in which the office of the Employee was located immediately prior to the move.
9. EXPENSES. The Company shall pay any and all reasonable legal fees and expenses incurred by the Employee in seeking to obtain or enforce, by bringing an action against the Company, any right or benefit provided in this Agreement if the Employee is successful in whole or in part in such action.
10. WITHHOLDING. Notwithstanding anything in this Agreement to the contrary, all payments required to be made by the Company hereunder to the Employee or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provisions for the payment of taxes and any withholdings as required by law, provided that the Company is satisfied that all requirements of law affecting its responsibilities to withhold compensation have been satisfied.
11. NO DUTY TO MITIGATE. The Employee's payments received hereunder shall be considered severance pay in consideration of past service, and pay in consideration of continued service from the date hereof and entitlement thereto shall not be governed by any duty to mitigate damages by seeking further employment.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties hereto. The prior approval by the Board shall be required in order for the Company to authorize any amendments or additions to this Agreement.
13. GOVERNING LAW. This Agreement shall be governed by the laws of United States to the extent applicable and otherwise by the laws of the State of Indiana, excluding the choice of law rules thereof.
14. ASSIGNMENT. The rights and obligations of the Company under this Agreement shall be binding upon its successors and assigns and may be assigned by the Company to the successors in interest of the Company. The rights and obligations of the Employee under this Agreement shall be binding upon his heirs, legatees, personal representatives, executors or administrators. This Agreement may not be assigned by the Employee, but any amount owed to the Employee upon his death shall inure to the benefit of his heirs, legatees, personal representatives, executors, or administrators.
15. NOTICE. For purposes 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 hand delivered, sent by overnight courier, or mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by telegram, telecopy, or telex, addressed as follows:
If to the Company:
Wabash National Corporation
1000 Sagamore Parkway
Lafayette, Indiana 47903
Attn: V.P. Human Resources
Fax: 765/446-1855
If to the Employee:
Derek L. Nagle
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
16. OTHER AGREEMENTS. This Agreement may not constitute the entire agreement between the parties hereto providing for severance payments in connection with a termination of employment; provided, however, that if the Employee is entitled to severance payments pursuant to this Agreement and pursuant to any other oral or written agreements, commitments or understandings calling for severance payments in connection with a termination of employment, the severance payments paid to the Employee by the Company in connection with such termination of employment shall be limited to the greater of (i) severance payments provided pursuant to this Agreement or (ii) severance payments provided by the Company pursuant to such other oral or written agreements, commitments or understandings.
17. SEVERABILITY. If any part of any provision of this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in
any way affecting the remaining parts of such provision or the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement, or have caused this Agreement to be executed and delivered, to be effective as of May 6, 2002.
WABASH NATIONAL CORPORATION
Date: 5/6/02 By: /s/ John T. Hackett
--------------- -----------------------------
Name: John T. Hackett
Title: Director, Chairman of the Board
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EMPLOYEE
EXHIBIT A:
FORM OF WAIVER AND RELEASE AGREEMENT
In consideration of the severance pay provided to me by Wabash National Corporation ("Wabash"), which severance pay is described in the Severance Agreement between me and the Company effective May 6, 2002 (the "Severance Payment") and is a payment I would not be entitled to without entering into this Waiver and Release Agreement, I voluntarily enter into this Waiver and Release Agreement. More specifically, the Severance Payment that is the consideration for this Waiver and Release Agreement is a payment of ____________ representing the entire Severance Payment.
I, on my own behalf and on behalf of my heirs, executors, administrators, attorneys and assigns, hereby unconditionally and irrevocably release, waive and forever discharge Wabash and each of its affiliates, parents, successors, predecessors, and the subsidiaries, directors, owners, members, shareholders, officers, agents, and employees of Wabash and its affiliates, parents, successors, predecessors, and subsidiaries (collectively all of the forgoing are referred to as the "Employer"), from any and all causes of action, claims and damages, including attorneys' fees, whether known or unknown, foreseen or unforeseen, presently asserted or otherwise arising through the date of my signing of the Waiver and Release Agreement, concerning my employment or separation from employment. This release includes, but is not limited to, any claim or entitlement to salary, bonuses, any other payments, benefits or damages arising under any federal law (including but not limited to, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, and the Family and Medical Leave Act, each as amended); any claim arising under any state or local ordinances or regulations, and any claim arising under any common law principle or public policy, including but not limited to all suits in tort or contract, such as, wrongful termination, defamation, emotional distress, invasion of privacy or loss of consortium.
I understand that by signing this Waiver and Release Agreement I am not waiving any claims or administrative charges which cannot be waived by law. I am waiving, however, any right to monetary recovery or individual relief should any federal, state or local agency (including the Equal Employment Opportunity Commission (the "EEOC") pursue any claim on my behalf arising out of or related to my employment with and/or separation from employment with the Employer.
I further agree, without any reservation whatsoever, never to sue the Employer or become a party to a lawsuit on the basis of any and all claims
of any type lawfully and validly released in this Waiver and Release Agreement. If I sue in violation of the preceding sentence of this Waiver and Release Agreement, I will (1) pay all costs and expenses incurred by the Employer in defending against a suit or enforcing this Waiver and Release Agreement, including litigation and court costs, expenses and reasonable attorneys' fees, and (2) I will repay the Severance Payment I received in consideration for this Waiver and Release Agreement.
I am signing this Waiver and Release Agreement knowingly and voluntarily. I acknowledge that:
(1) I am hereby advised in writing to consult an attorney before signing this Waiver and Release Agreement;
(2) I have relied solely on my own judgment and/or that of my attorney regarding the consideration for and the terms of this Waiver and Release Agreement and am signing this Waiver and Release Agreement knowingly and voluntarily of my own free will;
(3) I am not entitled to the Severance Payment amount unless I agree to and honor the terms of this Waiver and Release Agreement.
(4) I have been given at least twenty one (21) days to consider this Waiver and Release Agreement;
(5) I may revoke this Waiver and Release Agreement within seven (7) days after signing it by submitting a written notice of revocation to Wabash to the Vice President Human Resources, WABASH NATIONAL CORPORATION, P.O. Box 6129, Lafayette, IN 47903 prior to 5:00 pm on the seventh day after signing it. I further understand that this Waiver and Release Agreement is not effective or enforceable until after the seven (7) day period of revocation has expired without revocation, and that if I revoke this Waiver and Release Agreement, I will not receive any Severance Payment. THIS WAIVER AND RELEASE AGREEMENT DOES NOT BECOME EFFECTIVE UNTIL THE EXPIRATION OF THE SEVEN DAY PERIOD;
(6) I have read and understand the Waiver and Release Agreement and further understand that it includes a general release of any and all known and unknown, foreseen or unforeseen, claims presently asserted or otherwise arising through the date of my signing of this Waiver and Release Agreement that I may have against the Employer; and
(7) I understand that this Waiver and Release Agreement does not waive any age discrimination claims that may arise after the effective date of this Waiver and Release Agreement.
(8) No statements or conduct by the Employer have in any way coerced or unduly influenced me to execute this Waiver and Release Agreement.
I represent and promise that prior to the execution of this Waiver and Release Agreement I have surrendered to the Company all Company property, including, but not limited to, any and confidential information, licenses, trademarks, patents, in written, electronic or other tangible form. In addition, I have returned any and all computer equipment with passwords, Company issued credit, security, identification, or telephone cards, with passwords, and all other Company owned property and keys, contemporaneously with providing the proper means for accessing the property
I further agree that I will not make any disparaging or derogatory remarks or comments about the Company or the Company's current and former officers, directors, shareholders, principals, attorneys, agents or employees, or my employment with the Company.
I further acknowledge that there are no other agreements of any nature between the Employer and me with respect to the matters discussed in this Waiver and Release Agreement, except as expressly stated herein, and that in signing this Waiver and Release Agreement, I am not relying on any agreements or representation, except those expressly contained in this Waiver and Release Agreement and the Severance Agreement.
I further acknowledge and agree that if any provision of this Waiver and Release Agreement is found, held or deemed by a court of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or controlling law, the remainder of this Waiver and Release Agreement shall continue in full force and effect.
This Waiver and Release Agreement is deemed made and entered into in the State of Indiana, and in all respects shall be interpreted, enforced and governed under applicable federal law, and in the event that any reference shall be made to state law, the internal laws of the Indiana shall apply. Any disputes under this Waiver and Release Agreement shall be adjudicated by a court of competent jurisdiction in the State of Indiana.
This Waiver and Release Agreement shall not in any way be construed as an admission by the Company of any liability for any claim or potential claim.
I understand that, to receive the Severance Payment amount, I must sign and return this Waiver and Release Agreement no sooner than my employment termination date and no later than twenty one (21) days from the date my employment was terminated.
EXECUTED on this ______ day of ________________, 20___ at Lafayette Indiana.
STATE OF ________________
CITY/ COUNTY OF ______________
The foregoing instrument was acknowledged before me in the indicated jurisdiction this ______ day of ___________________, _____, by Derek L. Nagle.
My commission expires: ________________
EXHIBIT 10.03
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement"), made this 28th day of June 2002, is entered into by Wabash National Corporation (the "Company") and Richard J. Giromini (the "Executive").
The Company desires to employ the Executive, and the Executive desires to be employed by the Company. In consideration of the mutual covenants and promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, the parties agree as follows:
1. TERM OF EMPLOYMENT; EXTENSION. The Company agrees to employ the Executive, and the Executive accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on July 15, 2002 (the "Commencement Date") and ending on July 15, 2003 (the "Employment Period"), unless sooner terminated in accordance with the provisions of Section 4; provided, however, that the term of the Executive's employment with the Company shall be automatically extended for a term of one (1) year beginning on the first anniversary hereof and on each subsequent anniversary unless the Executive or the Company shall have given written notice to the other at least sixty (60) days prior thereto that the term of the Executive's Employment shall not be so extended. In the event that the Company chooses not to extend the term of the Executive's Employment in accordance with this Section 1, the Executive shall not be entitled to any severance, benefits, or other payments, except that the Company shall continue to pay the Executive's then-current salary (or the base salary as that term is defined in Section 3.1 if that salary is greater) for a period of two (2) years following the termination of his employment. Such payments shall be less standard deductions and withholding for federal, state, and local taxes as required by federal, state, or local law reasonably determined by the Company. In addition, such payments shall be offset by any salary, wages, or bonuses received by the Executive during this two-year period. Accordingly, in the event that the Company pays the Executive such payments, the executive shall, at reasonable intervals, provide the Company with an accounting of any salary, wages, or bonuses that he receives during this two-year period. During this two (2) year period, or until Executive is eligible to receive health benefits from another employer, whichever is longer, the Company also shall continue Executive's participation in its group health plan. Such continuation of benefits shall run concurrently with Executive's rights under COBRA or any state benefit continuation plan.
2. TITLE; CAPACITY. The Executive shall serve as Chief Operating officer of the Company and shall report to the Chief Executive Officer. The
Executive agrees to undertake and faithfully perform the duties and responsibilities inherent in such position and such other duties. The Executive agrees to devote his entire business time, attention and energies to the business and interests of the Company during the Employment Period, excepting periods of vacation, illness or disability and except such time as the Executive may reasonably require for personal matters and affairs. Executive shall not engage in any activities which will interfere with the performance of his duties with the Company or which knowingly present a conflict of interest. During the Executive's employment with the Company, Executive may serve on the boards of directors of other entities and may pursue passive investments; provided that such activities do not unreasonably interfere with his duties and responsibilities hereunder or create a conflict of interest with the Company; and further provided that, with respect to serving on the boards of directors of entities other than charitable organizations and not-for-profit corporations, the Executive obtains written consent from the Company, such consent not to be unreasonably withheld.
3. COMPENSATION AND BENEFITS.
3.1. Salary. The Company shall pay the Executive, in semi-monthly installments, an annual base salary of not less than three hundred twenty-five thousand dollars ($325,000) during the Employment Period (the "Base Salary"). Executive's Base Salary shall be subject to an annual review and possible adjustment pursuant to such annual review based on a discussion between the parties of the Executive's performance hereunder. All payments hereunder shall be less deductions and withholdings as required by federal, state, or local law.
3.2. Signing Bonus. The Company shall pay the Executive, thirty (30) days after commencing employment with The Company, a signing Bonus of fifty four thousand dollars ($54,000), after deductions and withholdings as required by federal, state or local law. In the event the Executive's employment terminates for Cause or without Good Reason (as defined in Section 4.2 and 4.3, respectively) prior to July 15, 2003, Executive shall be required to return the full amount of this Signing Bonus to the Company.
3.3. Bonus Compensation. The Executive shall be eligible for an annual incentive bonus ("Bonus"), which is targeted at fifty percent (50%) of his Base Salary and which may range from zero percent (0%) to one hundred percent (100%) of his Base Salary. The amount of any Bonus shall be at the sole discretion of the Company, which shall make its determination based on the Company's performance and the Executive's performance. Notwithstanding the foregoing, the parties agree that the Executive's bonus shall be at least one hundred fifty thousand dollars ($150,000) for fiscal year 2002, payable in February 2003. Any
Bonus payment hereunder shall be less deductions and withholdings as required by federal, state, or local law.
3.4. Stock Awards.
3.4.1 Stock Options. Executive shall be granted concurrently with his start date stock options to purchase 125,000 shares of common stock of the Company (the "New Hire Option"), at an exercise price equal to the fair market value of the Company's common stock on the date of grant. Subject to the Executive's continuous employment with the Company, two-thirds of the New Hire Option shares shall vest on July 15, 2004, and an additional one-third of the New Hire Option shares shall vest on July 15, 2005, as set forth in the Nonqualified Stock Option Agreement, Exhibit A to this Agreement.
3.4.2 Restricted Stock. The Company and the Executive recognize and agree that, by becoming employed by the Company, the Executive may lose some or the entire value of the equity that he has in the forty shares (40) of common stock he owns in Accuride Corporation, his current employer (the "Accuride Shares"). To induce the Executive to become employed by the Company, the Company is willing to compensate the Executive for the current value of such equity if, and to the extent, the Executive loses it. For purposes of this Agreement, the Company and the Executive value the Accuride Shares at One Thousand Seven Hundred Fifty and No/100 Dollars ($1,750) per share, and they recognize and agree that the current value of the Executive's equity in the Accuride Shares is Seventy Thousand Dollars ($70,000) (the "Current Value"). The Executive shall negotiate in good faith with Accuride Corporation to redeem his Accuride Shares for the Current Value. If and to the extent that the Accuride Shares of the Executive are not redeemed by the Company within one hundred twenty (120) days from the date he leaves the employ of Accuride Corporation (the "Trigger Date") for the Current Value, the Company shall grant to the Executive an amount of shares of common stock in the Company equal to the Current Value of Executive's equity in the shares that Accuride Corporation does not redeem (the "Company Make Whole Common Stock"). If and to the extent that (i) the Executive realizes value from the Accuride Shares, whether redeemed by Accuride, exchanged for cash, notes and/or publicly traded securities or otherwise, or (ii) Accuride Corporation securities become publicly traded, prior to July 15, 2003, the Executive will forfeit and return to the Company a percentage of the shares of the Company Make Whole Common Stock equal to (A) the percentage of the Current Value realized by the Executive, or (B) the percentage the fair market value of the Accuride Corporation common stock is, if it has become publicly traded, of the Current Value. To the extent not previously forfeited, the Executive's shares of Common Make Whole Stock shall vest one hundred percent (100%) on July 15, 2003, subject, to the accelerated vesting provisions contained herein and except as otherwise set forth herein, and to the
standard terms and conditions under the Executive Restricted Stock Agreement, Exhibit B to this Agreement.
3.5 Fringe Benefits. The Executive shall be entitled to participate in the fringe benefit programs established by the Company according to the terms and conditions of those programs and to the extent those programs are generally applicable to other executives of the Company. The Executive shall be entitled to four (4) weeks of vacation each year. In addition to and notwithstanding the foregoing, the Company shall pay to Executive during each year of employment an additional sum of eighteen thousand two hundred fifty dollars ($18,250.00), which represents the premium payment and tax gross up amount paid by Executive's current employer, to enable Executive to participate in an executive life insurance program of his choosing.
3.6 Reimbursement of Expenses. The Company shall reimburse the Executive for all reasonable business expenses paid or incurred by the Executive in connection with the performance of his duties and responsibilities under this Agreement, upon presentation by the Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may reasonably request.
3.7. Relocation Expenses. The Company shall reimburse the Executive for the customary and reasonable relocation expenses that he and his family incur in moving his residence to the Lafayette, Indiana area. Without limiting the generality of the foregoing, the Company agrees that it will pay the reasonable costs of relocating the Executive and his family from his existing residence in Okemos, Michigan, (the "Okemos Home") to the Lafayette, Indiana area. Such costs shall include: (a) the cost of having a moving company or companies selected by the Executive move the household items and automobiles of the Executive and his family, such costs to be grossed up so that the Executive pays no federal or state income taxes for such move and storage; (b) the closing costs, including real estate commission, transfer taxes, title searches, survey costs, and reasonable attorneys' fees, incurred by the Executive in selling his Okemos home; and (c) the closing costs, including transfer taxes, title searches, survey costs, reasonable points (consistent with the marketplace) for a mortgage, inspection fees, and reasonable attorneys' fees, incurred by the Executive in purchasing a residence in the Lafayette, Indiana area. Until the sale of the Okemos Home is consummated, the Executive will be responsible for maintaining the Okemos Home (including mortgage payments, property taxes, upkeep, and insurance). Commencing with the Commencement Date, and continuing for a period of six (6) months, the Company shall reimburse the Executive for the monthly rental and utility expenses, up to five thousand dollars ($5,000.00) per month, for lodging at a hotel, apartment, townhouse, or house within reasonable commuting distance of the
Lafayette, Indiana area. Until the sale of the Okemos Home is consummated, the Company shall also reimburse the Executive for the travel expenses he incurs in commuting on weekends between the Lafayette, Indiana area and his Okemos Home so that the Executive may make periodic visits to his wife and family and assist in the sale of the Okemos Home. The Company shall also reimburse the Executive's wife for the travel expenses she incurs for up to two "House Hunting" and relocation trips from the Okemos Home to the Lafayette, Indiana area. In the event that the Company's moving expense and relocation package is, in whole or in part, more generous than provided above, then the Executive shall be entitled to receive the more generous package or portion thereof. The obligations of the Company under this Section 3.7 shall survive the termination of the Executive's employment for any reason.
3.8. Residual Compensation. All compensation due under the terms of this Agreement, but not yet paid, shall be paid to Executive notwithstanding the expiration of the term of the Agreement.
4. EMPLOYMENT TERMINATION. The employment of the Executive by the Company shall terminate upon the occurrence of any of the following:
4.1. Expiration or non-extension of the Employment Period in accordance with Section 1.
4.2. At the election of the Company, for Cause, upon written notice by
the Company to the Executive. For purposes of this Section 4.2., Cause for
termination shall be deemed to exist upon: (a) the Executive's willful and
continued failure to perform his principal duties (other than any such failure
resulting from vacation, leave of absence, or incapacity due to injury,
accident, illness, or physical or mental incapacity) as reasonably determined by
the board in good faith after the Executive has been given written, dated notice
by the Board specifying in reasonable detail his failure to perform and
specifying a reasonable period of time, but in any event not less than twenty
(20) business days, to correct the problems set forth in the notice; (b) the
Executive's chronic alcoholism or addiction to non-medically prescribed drugs;
(c) the Executive's theft or embezzlement of the Company's money, equipment, or
securities; (d) the conviction of the Executive of, or the entry of a pleading
of guilty or nolo contendere by the Executive to, any felony or misdemeanor
involving moral turpitude or dishonesty; or (e) a material breach of this
Agreement by the Executive, and the failure of the Executive to cure such breach
within ten (10) business days of written notice thereof specifying the breach.
In no event shall the failure to achieve the goals set forth in accordance with
Section 3.3. Of this Agreement be in and of itself Cause for termination, but
such failure may be considered as part of his overall performance. No act or
omission on the part of the Executive shall be considered "willful" unless it is
done by the
Executive in bad faith or without reasonable belief that the Executive's action was in the best interests of the Company. Any act or omission based upon authority given pursuant to a resolution duly adopted by the Board of Directors of the Company or based upon the advice of counsel for the Company shall be conclusively deemed to be done by the Executive in good faith and in the best interests of the Company.
4.3. At the election of the Executive, with Good Reason, upon written
notice by the Executive to the Company. For purposes of this Section 4.3., Good
Reason for termination shall be deemed to exist upon: (a) a material
diminishment of the Executive's position, duties, or responsibilities; (b) the
assignment by the Company to the Executive of substantial additional duties or
responsibilities which are inconsistent with the duties or responsibilities then
being carried by the Executive and which are not duties of an Executive nature;
(c) a material breach of this Agreement by the Company, and the failure of the
Company to cure such breach within twenty (20) business days of written notice
thereof specifying the breach; (d) material fraud on the part of the Company; or
(e) discontinuance of the active operation of business of the Company, or
insolvency of the Company, or the filing by or against the Company of a petition
in bankruptcy or for reorganization or restructuring pursuant to applicable
insolvency or bankruptcy law.
4.4. Upon the death or disability of the Executive. For purposes of this Section 4.4, the Executive shall be deemed to have a disability where: (a) the Executive has been unable, by reason of illness or injury and with or without a reasonable accommodation, to perform his normal duties on behalf of the Company on a full-time basis for a period of 180 days, whether or not consecutive, within the preceding 360-day period; or (b) the receipt by the Executive of disability benefits for permanent and total disability under any long-term disability income policy held by or on behalf of the Executive.
4.5. At the election of the Company, without Cause, upon thirty (30) days' written notice by the Company to the Executive, or at the election of the Executive, for Good Reason, upon thirty (30) days' written notice by the Executive to the Company, subject to the provisions of Sections 5.3. and 5.4. below. If the Executive is terminated at the election of the Company without cause or the Executive terminates at his election for Good Reason, then, except as otherwise provided in this Agreement, the payments set forth in Sections 5.3. and 5.4., whichever Section applies, shall be in complete accord and satisfaction of any claim that the Executive has or may have for compensation or payments of any kind from the Company arising from or relating in whole or in part to the Executive's employment with or termination by the Company.
4.6. At the election of the Executive, without Good Reason, upon thirty (30) days written notice to the Company.
5. EFFECT OF TERMINATION.
5.1. Termination for Cause or without Good Reason. If the Executive's employment is terminated for Cause (as defined in Section 4.2.) or if the Executive terminates his employment without Good Reason (as defined in Section 4.3.), the Company shall pay to the Executive the compensation and benefits otherwise payable to him under Section 3 through the last day of his actual employment by the Company. However, the Executive shall not be entitled to any bonus payment for the fiscal year in which he is terminated for Cause.
5.2. Termination for Death or Disability. If the Executive's employment is terminated by death or because of disability pursuant to Section 4.4., the Company shall pay to the estate of the Executive or to the Executive, as the case may be, the compensation and benefits which would otherwise be payable to him under Section 3 up to the date the termination of his employment occurs. However, the Executive's Bonus, assuming the attainment of the goals set forth in Section 3.3. of this Agreement, for the fiscal year in which termination occurs because of death or disability will be pro-rated based on his length of service with the Company in that year. For example, if the Executive terminates because of disability six months into the fiscal year, his Bonus, if any, would be fifty percent of the regular Bonus for that year. Executive shall maintain all of his rights in connection with his vested stock options. Such options shall be exercisable within the later of: (a) the time period provided for under Exhibits A and B hereto; or (b) three (3) years from the date of such termination.
5.3. Termination without Cause or for Good Reason. If the Executive's employment is terminated by the Company without Cause or by him for Good Reason pursuant to Section 4.5 at any time during the Term of this Agreement (or any extension hereof), the Company shall continue to pay the Executive's then-current salary (or the Base Salary as that term is defined in Section 3.1 if that salary is greater) for a period of two (2) years following the termination of his employment. Such payments shall be less standard deductions and withholdings for federal, state, and local taxes as required by federal, state, or local law reasonably determined by the Company. During this two (2) year period, or until Executive is eligible to receive health benefits from another employer, whichever is longer, the Company also shall continue Executive's participation in its group health plan. Such continuation of benefits shall run concurrently with Executive's rights under COBRA or any state benefit continuation plan. In addition, the Executive's Bonus, assuming the attainment of the goals set forth in Section 3.3 of this Agreement, for the fiscal year in which termination occurs at the
election of the Company without cause, will be pro-rated based on his length of service with the Company in that year. For example, if the Executive is terminated without Cause six months into the fiscal year, his Bonus, if any, would be fifty percent of the regular Bonus for that year. Any Bonus payments hereunder shall be less deductions and withholdings as required by federal, state, or local law. The Company shall also pay to the Executive the compensation and benefits otherwise payable to him under Section 3 through the last day of his actual employment by the Company, and the Executive shall maintain all of his rights in connection with his vested stock options. Such options shall be exercisable within the later of (a) the time period provided for under Exhibits A and B hereto; or (b) three (3) years from the date of such termination.
5.4. Termination at the Election of the Company After a Change of Control. If the Executive's employment is terminated without Cause by the Company or for Good Reason by the Executive pursuant to Section 4.5. Within 180 days after a change of control as defined below, the Company shall pay to the Executive a sum equal to three times his Base Salary (as set forth in Section 3.1.) plus his target bonus for that fiscal year, less applicable deductions required by federal, state, or local law. The Company shall also pay to the Executive the compensation and benefits otherwise payable to him under Section 3 through the last day of his actual employment by the Company. In addition, the parties agree that any unvested stock options or restricted stock held by the Executive shall be deemed immediately and fully vested as of the date of the termination of his employment by the Company without Cause or by the Executive for Good Reason after a change of control. Such stock options shall be exercisable within the later of: (a) the time period provided for under Exhibits A and B hereto; or (b) three (3) years from the date of such termination. The parties agree that the terms of this Section 5.4. (only if the Executive becomes entitled to the benefits described in this Section 5.4.) shall constitute amendments to any and all stock option and restricted stock agreements that will have been agreed to by the parties and that, except as so amended, the terms and conditions of such stock option and restricted stock agreements shall remain in full force and effect. The parties further agree that the Company, at its election, shall either continue the Executive's benefits (pursuant to the terms and conditions of the applicable benefits plans and policies) for a period of three (3) years from the date of the termination of his employment without Cause or for Good Reason, or shall pay to the Executive a lump sum payment, less applicable withholdings for federal, state, and local taxes, equal to three (3) years' premiums (at the rate and level of coverage applicable at the time of the Executive's termination) under the Company's health and dental insurance policy plus three (3) years' premiums (at the rate and level of coverage applicable at the time of the Executive's termination) under the Company's life insurance policy.
(a). Change of Control. For purposes of this Agreement, a "Change of 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 any person currently a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of the Company's securities becomes, after the date hereof, the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities; (B) during any two- (2-) year period, individuals who at the beginning of such period constitute the Board of Directors, including for this purpose any new director whose election resulted from a vacancy on the Board of Directors caused by the mandatory retirement, death, or disability of a director and was approved by a vote of at least two-thirds (2/3rds) of the directors then still in office who were directors at the beginning of the period, cease for any reason to constitute a majority thereof; (C) notwithstanding clauses (A) or (E) of this paragraph, the Company consummates a merger or consolidation of the Company with or into another corporation, the result of which is that the stockholders of the Company at the time of the execution of the agreement to merge or consolidate own less than eighty percent (80%) of the total equity of the corporation surviving or resulting from the merger or consolidation or of a corporation owning, directly or indirectly, one hundred percent (100%) of the total equity of such surviving or resulting corporation; (d) the sale in one or a series of transactions of all or substantially all of the assets of the Company; (E) any person has commenced a tender or exchange offer, or entered into an agreement or received an option to acquire beneficial ownership of fifty percent (50%) or more of the total number of voting shares of the Company unless the Board of Directors has made a reasonable determination that such action does not constitute and will not constitute a change in the persons in control of the Company; or (F) there is a change of control in the Company of a nature that would be required to be reported in response to item 6(e) of Schedule 14A of regulation 14A promulgated under the Exchange Act other than in circumstances specifically covered by clauses (A)-(E) above.
(b). Excise Tax Restoration Payment. In the event that it is
determined that any payment, benefit, or distribution described in this Section
5.4. made by the Company, by any of its affiliates, by any person who acquires
ownership or effective control or ownership of a substantial portion of the
Company's assets (within the meaning of Section 280g of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder (the "Code")) or by any
affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of this Section 5.4. or otherwise (the
"Total Payments"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest or penalties, are collectively
referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fund the payment by the Executive of any Excise Tax on the Total Payments as well as all income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise Tax.
5.5. Release. The parties acknowledge and agree that the payments and benefits to the Executive described in Sections 5.3. and 5.4. shall be contingent upon the Executive's signing and executing a General Release of Claims acceptable to both the Company and him. The parties further acknowledge and agree that Executive shall not be required to seek other employment or take other action in order to mitigate his damages or to be entitled to the benefits and payments under Sections 5.3 and 5.4 of this Agreement. The Company is not entitled to set off against such benefits and payments due, or any other amounts of money payable to the Executive, any amounts he earns in other employment or engagement after the termination of his employment by the Company without Cause or by him for Good Reason, or any amounts that he might or could have earned in other employment or engagement had he sought such other employment or engagement.
5.6. Termination at the Election of the Executive. If the Executive's employment is terminated at his election pursuant to Section 4.6., the Company shall pay to the Executive the compensation and benefits which would otherwise be payable to him under Section 3 through the last day of his actual employment with the Company. However, the Executive will not be entitled to any Bonus payment for the fiscal year in which his employment is terminated at his election. Executive shall maintain all of his rights in connection with his vested stock options. Such options shall be exercisable within the later of: (a) the time period provided for under Exhibits A and B hereto; or (b) ninety (90) days from the date of such termination.
6. CONFIDENTIAL MATERIALS AND INFORMATION. Executive acknowledges that during his employment with the Company, he will occupy a position of trust and confidence with respect to the Company's affairs and business and will have access to the Company's trade secrets and other confidential and/or proprietary information ("Confidential Information"). Executive agrees that, both during his employment and after the termination of his employment, he will use his best efforts and utmost diligence to preserve, protect, and prevent the disclosure of such Confidential Information. Executive acknowledges that as used herein, Confidential Information includes, but is not limited to, all methods, processes, techniques, practices, product designs, pricing information, billing histories, customer requirements, customer lists, employee lists, salary information,
personnel matters, financial data, operating results, plans, contractual relationships, projections for new business opportunities for new or developing businesses, and technological innovations in any stage of development. Confidential Information also includes, but is not limited to, all notes, records, software, drawings, handbooks, manuals, policies, contracts, memoranda, sales files, or any other documents generated or compiled by any employee of the Company. Such information is, and shall remain, the exclusive property of the Company, and Executive agrees that he shall promptly return all such information to the Company upon termination of his employment. Any information publicly available or generally known within the industry or trade in which the Company operates and competes is not Confidential Information.
6.1. Executive Obligations. The Executive agrees to take the following steps to preserve the confidential and proprietary nature of the Company's Confidential Information and materials.
(a). Non-Disclosure. During and after his employment with the Company, the Executive will not use, disclose or transfer any of the Company's Confidential Information or materials other than as authorized by the Company within the scope of his duties with the Company, and will not use in any way other than in Company's business any of the Company's Confidential Information, including information or material received by the Company from others and intended by the Company to be kept in confidence by its recipients. The Executive understands that he is not allowed to sell, license or otherwise exploit any products which embody or otherwise exploit in whole or in part any of the Company's Confidential Information or materials, except on behalf of the Company.
(b). Disclosure Prevention. The Executive will take all reasonable precautions to prevent the inadvertent or accidental exposure of the Company's Confidential Information.
(c). Removal of Material. The Executive will not remove any of the Company's Confidential Information from the Company's premises or make copies of such materials except for use in the Company's business.
(d). Return All Materials. The Executive will return to the Company all the Company's Confidential Information, materials and copies of the foregoing at any time upon the request of the Company, in any event and without such request, prior to the termination of Executive's employment by Company. Executive agrees not to retain any copies of any of the Company's Confidential Information and materials after his termination of employment for any reason.
(e). Computer Security. During his employment with the Company, the Executive agrees only to use computer resources (both on and off Company's premises) for which he has been granted access and then only to the extent authorized. The Executive agrees to comply with all Company policies and procedures, including, but not limited to, those concerning computer security. The Company recognizes and agrees that the Executive may use such computer resources for de minimis personal use.
6.2. Prior Proprietary Information. The Executive agrees not to knowingly disclose to the Company or knowingly use in the Company's business any information or material obtained prior to his employment with the Company relating to the business of any third person and intended by that person not to be disclosed to the Company. The Executive represents that to the best of his knowledge the Executive's performance of all of the terms of this Agreement and as an Executive of the Company does not and will not breach any agreement to keep in confidence proprietary information acquired by the Executive prior to the Executive's employment by the Company. Further, Executive represents that to the best of his knowledge the performance of his duties with the Company will not breach any contractual or other legal obligation to any third person.
7. POST EMPLOYMENT OBLIGATIONS.
7.1. Covenants. The Executive acknowledges: (a) his services to the Company will be special and unique; (b) his work for the Company will allow him access to the Company's confidential information and customers; (c) the Company's business is national and international in scope; (d) the Company, would not have entered into this Agreement but for the covenants and agreements contained in this Section 7; and (e) the agreements and covenants contained in this Section 7 are essential to protect the business and goodwill of the Company. In order to induce the Company to enter into this Agreement, the Executive covenants and agrees that:
7.2. Non-Compete. During the term of his Employment with the Company and for a period of twenty-four (24) months after his termination ("The Restricted Period"), for whatever reason, the Executive will not directly or indirectly, individually or as an officer, director, Executive, shareholder (except if he is a shareholder of less than 1% of a publicly traded security), consultant, contractor, partner, joint venturer, agent, equity owner, or in any capacity whatsoever, engage in or promote any business that is competitive with the business of the Company in any geographic area in which the Company does or plans to do business while the Executive was employed, including but not limited to the United States and Canada. A business competitive with the business of the Company is defined as a business engaged in the manufacture, distribution or
wholesale or retail sale of new or used truck trailers and related parts and service businesses.
7.3. Non-Solicitation and Non-Interference with Customers and other Business Relationships. During the Restricted Period, the Executive will not directly or indirectly knowingly solicit (other than on behalf of the Company) business or contracts for any products or services of the type provided, developed or under development by the Company during the Executive's employment by the Company, from or with (i) any person or entity which was a customer of the Company for such products or services as of, or within one year prior to the Executive's date of termination with the Company, or (ii) any prospective customer which the Company was soliciting as of, or within one year prior to the Executive's termination. Additionally, during the Restricted Period, the Executive will not directly or indirectly contract with any such customer or prospective customer for any product or service of the type provided, developed or which was under development by the Company during the Executive's employment with the Company. Further, the Executive shall not during the Restricted Period knowingly interfere or attempt to interfere with any transaction, agreement or business relationship in which the Company was involved during the Executive's employment with the Company.
7.4. Non-Solicitation of Employees and Contractors. During the Restricted Period, the Executive shall not knowingly solicit any person employed by the Company, or who within 180 days of termination of Executive's employment had been so employed by the Company, to leave the employ of the Company. Further, during the Restricted Period, the Executive will not knowingly solicit any contractor of the Company to terminate or reduce its business with the Company.
7.5. Executive Acknowledgment. The Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and no broader than are necessary to protect the legitimate business interests of the company.
7.6. Enforcement. The parties agree that if a Court of competent
jurisdiction finds that any term of this Section 7 is for any reason excessively
broad in scope or duration, such term shall be construed in a manner to enable
it to be enforced to the maximum extent possible. Further, the covenants in this
Section 7 shall be deemed to be a series of separate covenants and agreements,
one for each and every region of each state and political division worldwide.
If, in any judicial proceeding, a court of competent jurisdiction shall refuse
to enforce any of the separate covenants deemed included herein, then at the
option of the Company, wholly unenforceable covenants shall be deemed eliminated
from the
provision hereof for the purpose of such proceeding to the extent necessary to permit the remaining separate covenants to be enforced in such proceeding.
8. REMEDIES. Executive acknowledges that the restrictions contained in Sections 6 and 7 of this Agreement are reasonable and necessary to protect the business and interests of the Company and that any violation of these restrictions would cause the Company substantial irreparable injury. Accordingly, the Executive agrees that a remedy at law for any breach of the foregoing covenants would be inadequate and that the Company, in addition to any other remedies available, shall be entitled to obtain preliminary and permanent injunctive relief to secure specific performance of such covenants and to prevent a breach or contemplated breach of this Agreement without the necessity of proving actual damage. It is the express intention of the parties that the obligations of Sections 6, 7, and 8 of this Agreement shall survive its expiration.
9. NOTICES. All required or permitted notices under this Agreement shall be in writing and shall be effective upon personal delivery or three (3) business days after being deposited in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown on the signature page hereof, or at such other address as either party may designate to the other in accordance with this Section 9, with a copy to counsel for the Executive, addressed as follows:
Mr. Richard Giromini
and a copy to counsel for the Company, addressed as follows:
Chief Legal Officer
Wabash National Corporation
P.O. Box 6129
Lafayette, IN 47909
10. ATTORNEY'S FEES. The Company shall pay the Executive's reasonable attorneys' fees, not to exceed $10,000, incurred in reaching this Agreement.
11. ENTIRE AGREEMENT. This Agreement (including the Exhibits to the Agreement) constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of Indiana, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him.
15. MISCELLANEOUS.
15.1. No delay or omission by the Company or the Executive in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company or the Executive on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.
15.2. The captions of the Sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.
15.3. The unenforceability of any provision of this Agreement shall not affect the enforceability of any other provision of this Agreement.
15.4. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
16. INDEMNIFICATION. The Company, to the extent that it does so generally for its officers and directors and to the extent permitted by its corporate by-laws, shall provide the Executive with directors and officers liability insurance and shall indemnify, defend, and hold the Executive harmless from and against any and all demands, actions, claims, suits, liabilities, losses, damages, fees (including reasonable attorneys' fees) and expenses relating to any acts or omissions in the course or scope of the duties he performs on behalf of the Company while employed by it and/or while serving as an officer and/or director of the Company. The provisions of this Section 16, though only with respect to acts or omissions by the Executive while still employed by the Company, shall survive the expiration of this
Agreement or the termination of Executive's employment with the Company for any reason.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.
WABASH NATIONAL CORPORATION
1000 Sagamore Parkway South
Lafayette, Indiana 47905
/s/ WILLIAM P. GREUBEL ---------------------------- By: William P. Greubel Title: President, CEO |
RICHARD J. GIROMINI
/s/ R. J. GIROMINI ----------------------------- |
EXHIBIT 10.04
WABASH NATIONAL CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants an option to purchase shares of its common stock, $.01 par value, (the "Stock") to the optionee named below. The terms and conditions of the option are set forth in this cover sheet and in the attachment.
Grant Date: July 15, 2002
Name of Optionee: Richard J. Giromini
Optionee's Social Security Number:
Number of Shares Covered by Option: 125,000
Option Price per Share: 8.65 (fair market value)
Vesting Start Date: First day of employment with the Company
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED IN THE ATTACHED AGREEMENT.
Optionee: /s/ R. J. Giromini
-------------------------------------------------
(Signature)
Company: /s/ William P. Greubel
-------------------------------------------------
(Signature)
Title: President, CEO
------------------------------------------------
|
Attachment
This is not a stock certificate or a negotiable instrument
WABASH NATIONAL CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
NONQUALIFIED STOCK This option is not intended to be an incentive
OPTION stock option under Section 422 of the Internal
Revenue Code and will be interpreted accordingly.
VESTING This option is only exercisable before it expires
and then only with respect to the vested portion of
the option. Subject to the preceding sentence, you
may exercise this option, in whole or in part, to
purchase a whole number of vested shares not less
than 100 shares, unless the number of shares
purchased is the total number available for
purchase under the option, by following the
procedures set forth in this Agreement.
Your right to purchase shares of Stock under this
option vests as to:
-- two-thirds (2/3) of the total number of shares
covered by this option, as shown on the cover sheet
(the "Option Shares"), on the second anniversary of
the Vesting Start Date ("Anniversary Date"),
provided you then continue in Service.
-- provided you then continue in Service, one-third
(1/3) of the Option Shares shall vest on the third
Anniversary Date.
Notwithstanding the vesting schedule set forth in
the preceding two subparagraphs, 100% of the Option
Shares shall become vested upon your termination of
employment: (i) by the Company without Cause (as
defined in Section 4.2 of your employment agreement
with the Company dated June 28 2002 ("Employment
Agreement")) or (ii) by you for Good Reason (as
defined in Section 4.3 of your Employment
Agreement).
The aggregate number of vested shares will be
rounded to the nearest whole number, and you cannot
vest in more than the number of shares covered by
this option. Unless otherwise provided in this
Agreement, your Restricted Stock Agreement, or the
Employment Agreement, no additional shares of Stock
will vest after your Service has terminated for any
reason.
For purposes of this Agreement, Service means
service with the Company as an employee, director
or consultant, or independent contractor.
TERM Your option will expire in any event at the close
of business at Company headquarters on the day
before the 10th anniversary of the Grant Date, as
shown on the cover sheet. Your option will
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expire earlier if your Service terminates, as
described below.
REGULAR TERMINATION If your Service terminates for any reason, other
than death, permanent and total disability, a
termination by the Company with or without Cause,
or a termination by you for Good Reason, then your
option will expire at the close of business at
Company headquarters on the 90th day after your
termination date.
TERMINATION FOR If your Service is terminated for Cause, then you
CAUSE shall immediately forfeit all rights to your option
and the option shall immediately expire.
DEATH If your Service terminates because of your death,
then your option will expire at the close of
business at Company headquarters on the date one
year after the date of death. During that one year
period, your estate or heirs may exercise the
vested portion of your option.
In addition, if you die during the 90 day period
described above in connection with a regular
termination, and a vested portion of your option
has not yet been exercised, then your option will
instead expire on the date one year after your
termination date. In such a case, during the period
following your death up to the date one year after
your termination date, your estate or heirs may
exercise the vested portion of your option.
DISABILITY If your Service terminates because of your
permanent and total disability, then your option
will expire at the close of business at Company
headquarters on the date one year after your
termination date.
WITHOUT CAUSE OR FOR If your Service terminates because your employment
GOOD REASON with the Company is terminated by the Company
without Cause or because you terminate your
employment with the Company for Good Reason, then
your option will expire at the close of business at
Company headquarters on the date twenty four (24)
months after the date of such termination.
LEAVES OF ABSENCE For purposes of this option, your Service does not
terminate when you go on a bona fide employee
leave of absence that was approved by the Company
in writing, if the terms of the leave provide for
continued Service crediting, or when continued
Service crediting is required by applicable law.
However, your Service will be treated as
terminating 180 days after you went on employee
leave, unless your right to return to active work
is guaranteed by law or by a contract. Your Service
terminates in any event when the approved leave
ends unless you immediately return to active
employee work.
The Company determines, in its reasonable
discretion, which leaves
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count for this purpose, and when your Service
terminates for all purposes under the Agreement.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form.
Your notice must specify how many shares you wish
to purchase (in a parcel of at least 100 shares
generally). Your notice must also specify how your
shares of Stock should be registered (in your name
only or in your and your spouse's names as joint
tenants with right of survivorship). The notice
will be effective when it is received by the
Company.
If someone else wants to exercise this option after
your death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the shares
you are purchasing. Payment may be made in one (or
a combination) of the following forms:
- Cash, your personal check, a cashier's check,
a money order or another cash equivalent
acceptable to the Company.
- Shares of Stock which have already been owned
by you for more than six months and which are
surrendered to the Company. The value of the
shares, determined as of the effective date of
the option exercise, will be applied to the
option price.
- By delivery (on a form prescribed by the
Company) of an irrevocable direction to a
licensed securities broker acceptable to the
Company to sell Stock and to deliver all or
part of the sale proceeds to the Company in
payment of the aggregate option price and any
withholding taxes.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or sale of Stock
acquired under this option. In the event that the
Company determines that any federal, state, local
or foreign tax or withholding payment is required
relating to the exercise or sale of shares arising
from this grant, the Company shall have the right
to require such payments from you, or withhold such
amounts from other payments due to you from the
Company or any affiliate.
TRANSFER OF OPTION During your lifetime, only you (or, in the event of
your legal
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incapacity or incompetency, your guardian or legal
representative) may exercise the option. You cannot
transfer or assign this option. For instance, you
may not sell this option or use it as security for
a loan. If you attempt to do any of these things,
this option will immediately become invalid. You
may, however, dispose of this option in your will
or living trust or it may be transferred upon your
death by the laws of descent and distribution.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from your spouse, nor is the
Company obligated to recognize your spouse's
interest in your option in any other way.
INVESTMENT If the sale of Stock under this Agreement is not
REPRESENTATION registered under the Securities Act, but an
exemption is available which requires an investment
or other representation, you shall represent and
agree at the time of exercise that the Stock being
acquired upon exercise of this option is being
acquired for investment, and not with a view to the
sale or distribution thereof, and shall make such
other representations as are deemed necessary or
appropriate by the Company and its counsel.
RETENTION RIGHTS Neither your option nor this Agreement give you the
right to be retained by the Company in any
capacity. The Company reserves the right to
terminate your Service pursuant to the Employment
Agreement.
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for
your option's shares has been issued (or an
appropriate book entry has been made). No
adjustments are made for dividends or other rights
if the applicable record date occurs before your
stock certificate is issued (or an appropriate book
entry has been made).
ADJUSTMENTS In the event of a stock split, the number of shares
covered by this option and the option price per
share shall be adjusted (and rounded down to the
nearest whole number) by the Board. Your option
shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event
the Company is subject to such corporate activity.
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of Delaware, other than
any conflicts or choice of law rule or principle
that might otherwise refer construction or
interpretation of this Agreement to the substantive
law of another jurisdiction.
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BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE.
EXHIBIT 10.05
WABASH NATIONAL CORPORATION
EXECUTIVE RESTRICTED STOCK AGREEMENT
Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants shares of its common stock, $.01 par value, (the "Stock") to the Grantee named below, subject to the vesting conditions set forth in the attachment.
Name of Grantee: Richard J. Giromini
Grantee's Social Security Number:
Purchase Price per Share of Stock: $.01
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED IN THE ATTACHED AGREEMENT.
Grantee: /s/ R. J. Giromini
-------------------------------------------------
(Signature)
Company: /s/ William P. Greubel
-------------------------------------------------
(Signature)
Title: President, CEO
------------------------------------------------
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Attachment
THIS IS NOT A STOCK CERTIFICATE OR A NEGOTIABLE INSTRUMENT.
WABASH NATIONAL CORPORATION
EXECUTIVE RESTRICTED STOCK AGREEMENT
RESTRICTED STOCK/ This grant is an award of Stock in the number of
NONTRANSFERABILITY shares set forth on the cover sheet, at the
purchase price set forth on the cover sheet, and
subject to the vesting conditions described below
("Restricted Stock"). You agree to pay the purchase
price for the Restricted Stock concurrent with your
execution of this agreement. To the extent not yet
vested, your Restricted Stock may not be
transferred, assigned, pledged or hypothecated,
whether by operation of law or otherwise, nor may
the Restricted Stock be made subject to execution,
attachment or similar process.
ISSUANCE AND VESTING The Company will issue your Restricted Stock in
your name as of the Grant Date.
This Restricted Stock grant vests as to 100% of the
total number of shares covered by this grant on the
first to occur of: (i) your termination by the
Company without Cause or for Good Reason as defined
in sections 4.2 and 4.3 of your employment
agreement with the Company dated June 28, 2002 (the
"Employment Agreement"), or (ii) July 15, 2003.
Notwithstanding anything to the contrary contained
in this Agreement or the Employment Agreement, this
Restricted Stock grant is not subject to forfeiture
on a termination of your employment with the
Company for any reason.
FORFEITURE AND REPURCHASE If and to the extent that (i) you realize value
FOR UNVESTED STOCK from the 40 shares of common stock of Accuride
Corporation which you own on the date of grant of
the Restricted Stock (the "Accuride Shares"),
whether such shares are redeemed by Accuride,
exchanged for cash, notes and/or publicly traded
securities or otherwise, or (ii) Accuride
Corporation securities become publicly traded,
prior to July 15, 2003, you will forfeit and return
to the Company a percentage of unvested shares of
Restricted Stock equal to (A) the percentage of
$70,000 realized by you, or (B) the percentage the
fair market value of the Accuride Corporation
common stock is, if it has become publicly traded,
of $70,000. The Company will repay the amount that
you paid for those shares of Stock, if any, which
amount shall be paid in cash.
ESCROW The certificates for the Restricted Stock shall be
deposited in escrow with the Secretary of the
Company to be held in accordance with the
provisions of this paragraph. Each deposited
certificate shall be accompanied by a duly executed
Assignment Separate from Certificate in the form
attached
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hereto as Exhibit A. The deposited certificates
shall remain in escrow until such time or times as
the certificates are to be released or otherwise
surrendered for cancellation as discussed below.
Upon delivery of the certificates to the Company,
you shall be issued an instrument of deposit
acknowledging the number of shares of Stock
delivered in escrow to the Secretary of the
Company.
All regular cash dividends on the Stock (or other
securities at the time held in escrow) shall be
paid directly to you and shall not be held in
escrow. However, in the event of any stock
dividend, stock split, recapitalization or other
change affecting the Company's outstanding common
stock as a class effected without receipt of
consideration or in the event of a stock split, a
stock dividend or a similar change in the Company
Stock, any new, substituted or additional
securities or other property which is by reason of
such transaction distributed with respect to the
Stock shall be immediately delivered to the
Secretary of the Company to be held in escrow
hereunder, but only to the extent the Stock is at
the time subject to the escrow requirements hereof.
The shares of Stock held in escrow hereunder shall
be subject to the following terms and conditions
relating to their release from escrow or their
surrender to the Company for repurchase and
cancellation:
- As your interest in the shares vests as
described above, the certificates for such
vested shares shall be released from escrow
and delivered to you, at your request.
- Should the Company exercise its Repurchase
Right with respect to any unvested shares held
at the time in escrow hereunder, then the
escrowed certificates for such unvested shares
shall, concurrently with the payment of the
purchase price for such shares of Stock, be
surrendered to the Company for cancellation,
and you shall have no further rights with
respect to such shares of Stock.
- Should the Company elect not to exercise its
Repurchase Right with respect to any shares
held at the time in escrow hereunder, then the
escrowed certificates for such shares shall be
surrendered to you.
WITHHOLDING TAXES You agree, as a condition of this grant, that you
will make acceptable arrangements to pay any
withholding or other taxes
3
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that may be due as a result of the vesting of Stock
acquired under this grant. In the event that the
Company determines that any federal, state, local
or foreign tax or withholding payment is required
relating to the vesting of shares arising from this
grant, the Company shall have the right to require
such payments from you, or withhold such amounts
from other payments due to you from the Company.
SECTION 83(B) Under Section 83 of the Internal Revenue Code of
ELECTION 1986, as amended (the "Code"), the difference
between the purchase price paid for the shares of
Stock and their fair market value on the date any
forfeiture restrictions applicable to such shares
lapse will be reportable as ordinary income at that
time. For this purpose, "forfeiture restrictions"
include the Company's Repurchase Right as to
unvested Stock described above. You may elect to be
taxed at the time the shares are acquired rather
than when such shares cease to be subject to such
forfeiture restrictions by filing an election under
Section 83(b) of the Code with the Internal Revenue
Service within thirty (30) days after the Grant
Date. You will have to make a tax payment to the
extent the purchase price is less than the fair
market value of the shares on the Grant Date. No
tax payment will have to be made to the extent the
purchase price is at least equal to the fair market
value of the shares on the Grant Date. The form for
making this election is attached as Exhibit B
hereto. Failure to make this filing within the
thirty (30) day period will result in the
recognition of ordinary income by you (in the event
the fair market value of the shares increases after
the date of purchase) as the forfeiture
restrictions lapse.
YOU ACKNOWLEDGE THAT IT IS YOUR SOLE
RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A
TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU
REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY
ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION
AS TO WHETHER OR NOT TO FILE ANY 83(b) ELECTION.
SHAREHOLDER RIGHTS You have the right to vote the Restricted Stock and
to receive any dividends declared or paid on such
stock. Any distributions you receive as a result of
any stock split, stock dividend, combination of
shares or other similar transaction shall be deemed
to be a part of the Restricted Stock and subject to
the same conditions and restrictions applicable
thereto. The Company may in its sole discretion
require any dividends paid
4
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on the Restricted Stock to be reinvested in shares
of Stock, which the Company may in its sole
discretion deem to be a part of the shares of
Restricted Stock and subject to the same conditions
and restrictions applicable thereto. No adjustments
are made for dividends or other rights if the
applicable record date occurs before your stock
certificate is issued.
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in the Company stock, the number
of shares covered by this grant shall be adjusted
(and rounded down to the nearest whole number).
Your Restricted Stock shall be subject to the terms
of the agreement of merger, liquidation or
reorganization in the event the Company is subject
to such corporate activity.
LEGENDS All certificates representing the Stock issued in
connection with this grant shall, where applicable,
have endorsed thereon the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND
OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN
INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL
BE FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER OF
RECORD OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of Delaware, other than
any conflicts or choice of law rule or principle
that might otherwise refer construction or
interpretation of this Agreement to the substantive
law of another jurisdiction.
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ________________ hereby sells, assigns and transfers unto Wabash National Corporation, a Delaware corporation (the "Company"), ______________ (_____________) shares of common stock of the Company represented by Certificate No. ____ herewith and does hereby irrevocable constitute and appoint ____________ Attorney to transfer the said stock on the books of the Company with full power of substitution in the premises.
Dated: ________________, 2002
Spouse Consent (if applicable)
____________________ (Purchaser's spouse) indicates by the execution of this Assignment his or her consent to be bound by the terms herein as to his or her interests, whether as community property or otherwise, if any, in the shares of common stock of the Company.
INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE. THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO EXERCISE ITS "REPURCHASE OPTION" SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL SIGNATURES ON THE PART OF PURCHASER.
EXHIBIT B
ELECTION UNDER SECTION 83(b) OF THE INTERNAL
REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:
1. The name, address and social security number of the undersigned:
2. Description of property with respect to which the election is being
made:
____________ shares of common stock, par value $.01 per share, Wabash
National Corporation, a Delaware corporation, (the "Company").
3. The date on which the property was transferred is _______ __, 2002.
4. The taxable year to which this election relates is calendar year 2002.
5. Nature of restrictions to which the property is subject:
The shares of stock are subject to the provisions of a Restricted Stock Agreement between the undersigned and the Company. The shares of stock are subject to forfeiture under the terms of the Agreement.
6. The fair market value of the property at the time of transfer (determined without regard to any lapse restriction) was $__________ per share, for a total of $___________.
7. The amount paid by taxpayer for the property was $__________.
8. A copy of this statement has been furnished to the Company.
Dated:________________ ,2002
PROCEDURES FOR MAKING ELECTION
UNDER INTERNAL REVENUE CODE SECTION 83(b)
The following procedures MUST be followed with respect to the attached form for making an election under Internal Revenue Code section 83(b) in order for the election to be effective:
1. You must file one copy of the completed election form with the IRS Service Center where you file your federal income tax returns within 30 days after the Grant Date of your Restricted Stock.
2. At the same time you file the election form with the IRS, you must also give a copy of the election form to the Secretary of the Company.
3. YOU MUST FILE ANOTHER COPY OF THE ELECTION FORM WITH YOUR FEDERAL INCOME TAX RETURN (GENERALLY, FORM 1040) FOR THE TAXABLE YEAR IN WHICH THE STOCK IS TRANSFERRED TO YOU.
EXHIBIT 10.06
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement"), made this 14th day of June 2002, is entered into by Wabash National Corporation (the "Company") and Mark Holden (the "Executive").
WHEREAS, the Executive is currently employed by the Company as Chief Financial Officer, and has entered into a Severance Agreement with the Company dated May 6, 2002 (the "Severance Agreement"); and
WHEREAS, the Executive and the Company desire to and hereby agree to nullify the Severance Agreement.
NOW, THEREFORE, the parties, desiring to set forth the terms of Executive's employment, agree as follows:
1. TERM OF EMPLOYMENT; EXTENSION. The Company agrees to employ the Executive, and the Executive accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on June 14, 2002 (the "Commencement Date") and ending on June 14, 2003 (the "Employment Period"), unless sooner terminated in accordance with the provisions of Section 4; provided, however, that the term of the Executive's employment with the Company shall be automatically extended for a term of one (1) year beginning on the first anniversary hereof and on each subsequent anniversary unless the Executive or the Company shall have given written notice to the other at least sixty (60) days prior thereto that the term of the Executive's employment shall not be so extended. In the event that the Company chooses not to extend the term of the Executive's employment in accordance with this Section 1, the Executive shall not be entitled to any severance, benefits, or other payments, except that the Company shall continue to pay the Executive's then-current salary (or the Base Salary as that term is defined in Section 3.1 if that salary is greater) for a period of two (2) years following the termination of his employment. Such payments shall be made according to the Company's regular payroll practices and policies and shall be less deductions and withholding for federal, state, and local taxes as determined by the Company. In addition, such payments shall be offset by any salary, wages, or bonuses received by the Executive during this two-year period. Accordingly, in the event that the Company pays the Executive such payments, the Executive shall, at reasonable intervals, provide the Company with an accounting of any salary, wages, or bonuses that he receives during this two-year period. During this two-year period, or until Executive is eligible to receive health benefits from another employer, whichever is shorter, the Company also shall continue Executive's participation in its group health plan, to the extent that continuation is permitted by such plan. Such continuation of benefits shall run concurrently with Executive's rights under COBRA or any state benefit continuation plan.
The Company's right to offset as noted in this paragraph is specific to this section and shall not be confused with any rights and benefits contained in section 5.5.
2. TITLE; CAPACITY. The Executive shall serve as Chief Financial Officer of the Company and shall report to the Chief Executive Officer. The Executive agrees to undertake and faithfully perform the duties and responsibilities inherent in such position and such other duties. The Executive agrees to devote his entire business time, attention and energies to the business and interests of the Company during the Employment Period, excepting periods of vacation, illness or disability and except such time as the Executive may reasonably require for personal matters and affairs. Executive shall not engage in any activities which will interfere with the performance of his duties with the Company or which knowingly present a conflict of interest. During the Executive's employment with the Company, Executive may serve on the boards of directors of other entities and may pursue passive investments; provided that such activities do not unreasonably interfere with his duties and responsibilities hereunder or create a conflict of interest with the Company; and further provided that, with respect to serving on the boards of directors of entities other than charitable organizations and not-for-profit corporations, the Executive obtains written consent from the Company, such consent not to be unreasonably withheld.
3. COMPENSATION AND BENEFITS.
3.1. Salary. The Company shall pay the Executive, in accordance with its regular payroll practices, an annual base salary of not less than three hundred fifty thousand dollars ($350,000) during the Employment Period (the "Base Salary"). Executive's Base Salary shall be subject to an annual review and possible adjustment pursuant to such annual review based on a discussion between the parties of the Executive's performance hereunder. All payments hereunder shall be less deductions and withholding for federal, state, and local taxes as determined by the Company.
3.2. Bonus Compensation. The Executive shall be eligible for an annual incentive bonus ("Bonus"), which is targeted at fifty percent (50%) of his Base Salary and which may range from zero percent (0%) to one hundred percent (100%) of his Base Salary. The amount of any Bonus shall be at the sole discretion of the Company, which shall make its determination based on the Company's performance and the Executive's performance. Notwithstanding the foregoing, the parties agree that the Executive's bonus shall be at least one hundred fifty thousand dollars ($150,000) for fiscal year 2002, payable in February 2003. Any Bonus payment hereunder shall be less deductions and withholding for federal, state, and local taxes as determined by the Company.
3.3. Stock Options. Executive shall be granted concurrently with his start date stock options to purchase 125,000 shares of common stock of the Company (the "New Hire Option"), at an exercise price equal to the fair market value of the Company's common stock on the date of grant. Subject to the Executive's continuous employment with the Company, two-thirds of the New Hire Option shares shall vest on June 14, 2004, and the remaining one-third of the New Hire Option shares shall vest on June 14, 2005, as set forth in the Nonqualified Stock Option Agreement, Exhibit A to this Agreement.
3.4. Fringe Benefits. The Executive shall be entitled to participate in the fringe benefit programs established by the Company according to the terms and conditions of those programs and to the extent those programs are generally applicable to other executives of the Company. The Executive shall be entitled to four (4) weeks of vacation each year. In addition to and notwithstanding the foregoing, the Company shall pay to Executive during each year of employment an additional sum of twenty thousand dollars ($20,000.00), which represents the premium payment and tax gross up amount paid by Executive's current employer, to enable Executive to participate in an executive life insurance program of his choosing.
3.5. Reimbursement of Expenses. The Company shall reimburse the Executive for all reasonable business expenses paid or incurred by the Executive in connection with the performance of his duties and responsibilities under this Agreement, upon presentation by the Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may reasonably request.
3.6. Relocation Expenses. If during the term of this Agreement the Corporate headquarters is relocated more than 30 miles from the current location in Lafayette, Indiana, the Company shall reimburse the Executive for the customary and reasonable relocation expenses that he and his family incur in moving his residence to the relocation area. Without limiting the generality of the foregoing, the Company agrees that it will pay the reasonable costs of relocating the Executive and his family from his existing residence in West Lafayette, Indiana, (the " West Lafayette Home") to the relocation area. Such costs shall include: (a) the cost of having a moving company or companies selected by the Executive move the household items and automobiles of the Executive and his family, such costs to be grossed up so that the Executive pays no federal or state income taxes for such move and storage; (b) the closing costs, including real estate commission, transfer taxes, title searches, survey costs, and reasonable attorneys' fees, incurred by the Executive in selling his West Lafayette Home; and (c) the closing costs, including transfer taxes, title searches, survey costs, reasonable points (consistent with the marketplace) for a mortgage, inspection fees, and reasonable attorneys' fees incurred by the Executive in purchasing a residence in relocation area. Until the sale of the West Lafayette Home is consummated, the Executive will be responsible for maintaining the West Lafayette Home (including mortgage payments, property taxes, upkeep, and insurance). The Company shall also reimburse the Executive's wife for the travel expenses she incurs for up to two "house hunting" and relocation trips from the West Lafayette Home to the relocation, Indiana area. In the event that the Company's moving expense and relocation package is, in whole or in part, more generous than provided above, then the Executive shall be entitled to receive the more generous package or portion thereof. The obligations of the Company under this Section 3.6. shall survive the termination of the Executive's employment for any reason.
3.7. Residual Compensation. All compensation due under the terms of this Agreement, but not yet paid, shall be paid to Executive notwithstanding the expiration of the term of the Agreement.
4. EMPLOYMENT TERMINATION. The employment of the Executive by the Company shall terminate upon the occurrence of any of the following:
4.1. Expiration or non-extension of the Employment Period in accordance with Section 1.
4.2. At the election of the Company, for Cause, upon written
notice by the Company to the Executive. For purposes of this Section 4.2., Cause
for termination shall be deemed to exist upon: (a) the Executive's willful and
continued failure to perform his principal duties (other than any such failure
resulting from vacation, leave of absence, or incapacity due to injury,
accident, illness, or physical or mental incapacity) as reasonably determined by
the Board in good faith after the Executive has been given written, dated notice
by the Board specifying in reasonable detail his failure to perform and
specifying a reasonable period of time, but in any event not less than twenty
(20) business days, to correct the problems set forth in the notice; (b) the
Executive's chronic alcoholism or addiction to non-medically prescribed drugs;
(c) the Executive's theft or embezzlement of the Company's money, equipment, or
securities; (d) the conviction of the Executive of, or the entry of a pleading
of guilty or nolo contendere by the Executive to, any felony or misdemeanor
involving moral turpitude or dishonesty; or (e) a material breach of this
Agreement by the Executive, and the failure of the Executive to cure such breach
within ten (10) business days of written notice thereof specifying the breach.
In no event shall the failure to achieve the goals set forth in accordance with
Section 3.2. of this Agreement be in and of itself Cause for termination, but
such failure may be considered as part of his overall performance. No act or
omission on the part of the Executive shall be considered "willful" unless it is
done by the Executive in bad faith or without reasonable belief that the
Executive's action was in the best interests of the Company. Any act or omission
based upon authority given pursuant to a resolution duly adopted by the Board of
Directors of the Company or based upon the advice of counsel for the Company
shall be conclusively deemed to be done by the Executive in good faith and in
the best interests of the Company.
4.3. At the election of the Executive, with Good Reason, upon
written notice by the Executive to the Company. For purposes of this Section
4.3., Good Reason for termination shall be deemed to exist upon: (a) a material
diminishment of the Executive's position, duties, or responsibilities; (b) the
assignment by the Company to the Executive of substantial additional duties or
responsibilities which are inconsistent with the duties or responsibilities then
being carried by the Executive and which are not duties of an executive nature;
(c) a material breach of this Agreement by the Company, and the failure of the
Company to cure such breach within twenty (20) business days of written notice
thereof specifying the breach; (d) material fraud on the part of the Company; or
(e) discontinuance of the active operation of business of the Company, or
insolvency of the Company, or the filing by or against the Company of a petition
in bankruptcy or for reorganization or restructuring pursuant to applicable
insolvency or bankruptcy law.
4.4. Upon the death or disability of the Executive. For purposes
of this Section 4.4, the Executive shall be deemed to have a disability where:
(a) the Executive has been unable, by reason of illness or injury and with or
without a reasonable accommodation, to
perform his normal duties on behalf of the Company on a full-time basis for a period of 180 days, whether or not consecutive, within the preceding 360-day period; or (b) the receipt by the Executive of disability benefits for permanent and total disability under any long-term disability income policy held by or on behalf of the Executive.
4.5. At the election of the Company, without Cause, upon thirty
(30) days' written notice by the Company to the Executive, or at the election of
the Executive, for Good Reason, upon thirty (30) days' written notice by the
Executive to the Company, subject to the provisions of Sections 5.3. and 5.4.
below. If the Executive is terminated at the election of the Company without
Cause or the Executive terminates at his election for Good Reason, then, except
as otherwise provided in this Agreement, the payments set forth in Sections 5.3.
and 5.4., whichever Section applies, shall be in complete accord and
satisfaction of any claim that the Executive has or may have for compensation or
payments of any kind from the Company arising from or relating in whole or in
part to the Executive's employment with or termination by the Company.
4.6. At the election of the Executive, without Good Reason, upon thirty (30) days' written notice to the Company.
5. EFFECT OF TERMINATION.
5.1. Termination for Cause or without Good Reason. If the
Executive's employment is terminated for Cause (as defined in Section 4.2.) or
if the Executive terminates his employment without Good Reason (as defined in
Section 4.3.), the Company shall pay to the Executive the compensation and
benefits otherwise payable to him under Section 3 through the last day of his
actual employment by the Company. However, the Executive shall not be entitled
to any Bonus payment for the fiscal year in which he is terminated for Cause.
5.2. Termination for Death or Disability. If the Executive's employment is terminated by death or because of disability pursuant to Section 4.4., the Company shall pay to the estate of the Executive or to the Executive, as the case may be, the compensation and benefits which would otherwise be payable to him under Section 3 up to the date the termination of his employment occurs. However, the Executive's Bonus, assuming the attainment of the goals set forth in Section 3.2. of this Agreement, for the fiscal year in which termination occurs because of death or disability will be pro-rated based on his length of service with the Company in that year. For example, if the Executive terminates because of disability six months into the fiscal year, his Bonus, if any, would be fifty percent of the regular Bonus for that year. Executive shall maintain all of his rights in connection with his vested stock options. Such options shall be deemed immediately and fully vested as of the date of the termination of his employment by the Company, and they shall be exercisable within the earlier of: (a) the time period provided for under Exhibit A hereto; or (b) three (3) years from the date of such termination.
5.3. Termination without Cause or for Good Reason.
(a) If the Executive's employment is terminated by the Company
without Cause or by him for Good Reason pursuant to Section 4.5 at any time
during the Term of this Agreement (or any ex on hereof), the Company shall
continue to pay the Executive's then-current salary (or the Base Salary as that
term is defined in Section 3.1 if that salary is greater) for a period of two
(2) years following the termination of his employment. Such payments shall be
less deductions and withholding for, federal, state, and local taxes as
determined by the Company. During this two-year period, or until Executive is
eligible to receive health and other welfare benefits from another employer,
whichever is longer, the Company shall also continue Executive's participation
in its group health plan. Such continuation of benefits shall run concurrently
with Executive's rights under COBRA or any state benefit continuation plan. In
addition, the Executive's bonus, assuming the attainment of the goals set forth
in Section 3.2 of this Agreement, for the fiscal year in which termination
occurs at the election of the Company without cause, will be pro-rated based on
his length of service with the Company in that year. For example, if the
Executive is terminated without Cause six months into the fiscal year, his
Bonus, if any, would be fifty percent of the regular Bonus for that year. Any
Bonus payments hereunder shall be less deductions and withholding for federal,
state, and local taxes as determined by the Company. The Company shall also pay
to the Executive the compensation and benefits otherwise payable to him under
Section 3 through the last day of his actual employment by the Company, and the
Executive shall maintain all of his rights in connection with his vested stock
options. Such options shall exercisable within the earlier of: (a) the time
period provided for under Exhibit A; or (b) three (3) years from the date of
such termination.
5.4. TERMINATION AT THE ELECTION OF THE COMPANY AFTER A CHANGE OF
CONTROL. If the Executive's employment is terminated without Cause by the
Company or for Good Reason by the Executive pursuant to Section 4.5. within 180
days after a change of control as defined below, the Company shall pay to the
Executive a sum equal to three times his Base Salary (as set forth in Section
3.1.) plus his target bonus for that fiscal year, less applicable deductions and
withholding for federal, state, and local taxes as determined by the Company.
The Company shall also pay to the Executive the compensation and benefits
otherwise payable to him under Section 3 through the last day of his actual
employment by the Company. In addition, the parties agree that any unvested
stock options or restricted stock held by the Executive shall be deemed
immediately and fully vested as of the date of the termination of his employment
by the Company without Cause or by the Executive for Good Reason after a change
of control. Such stock options shall be exercisable within the earlier of: (a)
the time period provided for under Exhibits A and B hereto; or (b) two (2) years
from the date of such termination. The parties agree that the terms of this
Section 5.4. (only if the Executive becomes entitled to the benefits described
in this Section 5.4.) shall constitute amendments to any and all stock option
and restricted stock agreements that will have been agreed to by the parties and
that, except as so amended, the terms and conditions of such stock option and
restricted stock agreements shall remain in full force and effect. The parties
further agree that the Company, at its election, shall either continue the
Executive's benefits (pursuant to the terms and conditions of the applicable
benefits plans and policies) for a period of three (3) years from the date of the termination of his employment without Cause or for Good Reason, or shall pay to the Executive a lump sum payment, less applicable withholdings for federal, state, and local taxes, equal to three (3) years' premiums (at the rate and level of coverage applicable at the time of the Executive's termination) under the Company's health and dental insurance policy plus three (3) years' premiums (at the rate and level of coverage applicable at the time of the Executive's termination) under the Company's life insurance policy.
(a). Change of Control. For purposes of this Agreement, a "Change of 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 any person currently a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of the Company's securities becomes, after the date hereof, the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities; (B) during any two- (2-) year period, individuals who at the beginning of such period constitute the Board of Directors, including for this purpose any new director whose election resulted from a vacancy on the Board of Directors caused by the mandatory retirement, death, or disability of a director and was approved by a vote of at least two-thirds (2/3rds) of the directors then still in office who were directors at the beginning of the period, cease for any reason to constitute a majority thereof; (C) notwithstanding clauses (A) or (E) of this paragraph, the Company consummates a merger or consolidation of the Company with or into another corporation, the result of which is that the stockholders of the Company at the time of the execution of the agreement to merge or consolidate own less than eighty percent (80%) of the total equity of the corporation surviving or resulting from the merger or consolidation or of a corporation owning, directly or indirectly, one hundred percent (100%) of the total equity of such surviving or resulting corporation; (D) the sale in one or a series of transactions of all or substantially all of the assets of the Company; (E) any person has commenced a tender or, exchange offer, or entered into an agreement or received an option to acquire beneficial ownership of fifty percent (50%) or more of the total number of voting shares of the Company unless the Board of Directors has made a reasonable determination that such action does not constitute and will not constitute a change in the persons in control of the Company; or (F) there is a change of control in the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act other than in circumstances specifically covered by clauses (A) - (E) above.
(b). In the event that it is determined that any payment, benefit, or distribution described in this Section 5.4 made by the Company, by any of its affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company's assets (within the meaning of section 280G of the Internal Revenue code of 1986, as amended, and the regulations thereunder (the "Code")) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of this Section 5.4. or otherwise (the "Total Payments"), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together
with any such interest or penalties, are collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment by the Executive of any Excise Tax on the Total Payments as well as all income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise tax.
5.5. RELEASE. The parties acknowledge and agree that the payments and benefits to the Executive described in Sections 5.3. and 5.4. shall be contingent upon the Executive's signing and executing a General Release of Claims acceptable to both the Company and him. The parties further acknowledge and agree that Executive shall not be required to seek other employment or take other action in order to mitigate his damages or to be entitled to the benefits and payments under Sections 5.3 and 5.4 of this Agreement. The Company is not entitled to set off against such benefits and payments due, or any other amounts of money payable to the Executive, any amounts he earns in other employment or engagement after the termination of his employment by the Company without Cause or by him for Good Reason, or any amounts that he might or could have earned in other employment or engagement had he sought such other employment or engagement.
5.6. TERMINATION AT THE ELECTION OF THE EXECUTIVE. If the
Executive's employment is terminated at his election pursuant to Section 4.6.,
the Company shall pay to the Executive the compensation and benefits which would
otherwise be payable to him under Section 3 through the last day of his actual
employment with the Company. However, the Executive will not be entitled to any
Bonus payment for the fiscal year in which his employment is terminated at his
election. Executive shall maintain all of his rights in connection with his
vested stock options. Such options shall be exercisable within the earlier of:
(a) the time period provided for under Exhibit A hereto; or (b) ninety (90) days
from the date of such termination.
6. CONFIDENTIAL MATERIALS AND INFORMATION. Executive acknowledges that during his employment with the Company, he will occupy a position of trust and confidence with respect to the Company's affairs and business and will have access to the Company's trade secrets and other confidential and/or proprietary information ("Confidential Information"). Executive agrees that, both during his employment and after the termination of his employment, he will use his best efforts and utmost diligence to preserve, protect, and prevent the disclosure of such Confidential Information. Executive acknowledges that as used herein, Confidential Information includes, but is not limited to, all methods, processes, techniques, practices, product designs, pricing information, billing histories, customer requirements, customer lists, employee lists, salary information, personnel matters, financial data, operating results, plans, contractual relationships, projections for new business opportunities for new or developing businesses, and technological innovations in any stage of development. Confidential Information also includes, but is not limited to, all notes, records, software, drawings, handbooks, manuals, policies, contracts, memoranda, sales files, or any other documents generated or compiled by any employee of the Company. Such information is, and shall remain, the exclusive property of the Company, and Executive agrees that he shall promptly return all such information to the Company upon termination of his employment. Any information publicly available or generally
known within the industry or trade in which the Company operates and competes is not Confidential Information.
6.1. Executive Obligations. The Executive agrees to take the following steps to preserve the confidential and proprietary nature of the Company's Confidential Information and materials.
(a). Non-Disclosure. During and after his employment with the Company, the Executive will not use, disclose or transfer any of the Company's Confidential Information or materials other than as authorized by the Company within the scope of his duties with the Company, and will not use in any way other than in Company's business any of the Company's Confidential Information, including information or material received by the Company from others and intended by the Company to be kept in confidence by its recipients. The Executive understands that he is not allowed to sell, license or otherwise exploit any products which embody or otherwise exploit in whole or in part any of the Company's Confidential Information or materials, except on behalf of the Company.
(b). Disclosure Prevention. The Executive will take all reasonable precautions to prevent the inadvertent or accidental exposure of the Company's Confidential Information.
(c). Removal of Material. The Executive will not remove any of the Company's Confidential Information from the Company's premises or make copies of such materials except for use in the Company's business.
(d). Return All Materials. The Executive will return to the Company all the Company's Confidential Information, materials and copies of the foregoing at any time upon the request of the Company, in any event and without such request, prior to the termination of Executive's employment by Company. Executive agrees not to retain any copies of any of the Company's Confidential Information and materials after his termination of employment for any reason.
(e). Computer Security. During his employment with the Company, the Executive agrees only to use computer resources (both on and off Company's premises) for which he has been granted access and then only to the extent authorized. The Executive agrees to comply with all Company policies and procedures, including, but not limited to, those concerning computer security. The Company recognizes and agrees that the Executive may use such computer resources for de minimis personal use.
6.2. Prior Propriety Information, The Executive agrees not to knowingly disclose to the Company or knowingly use in the Company's business any information or material obtained prior to his employment with the Company relating to the business of any third person and intended by that person not to be disclosed to the Company. The Executive represents that to the best of his knowledge the Executive's performance of all of the terms of this Agreement and as an Executive of the Company does not and will not breach
any agreement to keep in confidence proprietary information acquired by the Executive prior to the Executive's employment by the Company. Further, Executive represents that to the best of his knowledge the performance of his duties with the Company will not breach any contractual or other legal obligation to any third person.
7. POST EMPLOYMENT OBLIGATIONS.
7.1. Covenants. The Executive acknowledges: (a) his services to
the Company will be special and unique; (b) his work for the Company will allow
him access to the Company's confidential information and customers; (c) the
Company's business is national and international in scope; (d) the Company would
not have employed him but for the covenants and agreements contained in this
Section 7; and (e) the agreements and covenants contained in this Section 7 are
essential to protect the business and goodwill of the Company. In order to
induce the Company to employ him and to enter into this Agreement, the Executive
covenants and agrees that:
7.2. Non-Compete. During the term of his Employment with the Company and for a period of twenty-four (24) months after his termination ("the Restricted Period"), for whatever reason, the Executive will not directly or indirectly, individually or as an officer, director, Executive, shareholder (except if he is a shareholder of less than 1% of a publicly traded security), consultant, contractor, partner, joint venturer, agent, equity owner, or in any capacity whatsoever, engage in or promote any business that is competitive with the business of the Company in any geographic area in which the Company does or plans to do business while the Executive was employed, including but not limited to the United States and Canada. A business competitive with the business of the Company is defined as a business engaged in the manufacture, distribution or wholesale or retail sale of new or used truck trailers and related parts and service businesses.
7.3. Non-Solicitation and Non-Interference with Customers and other Business Relationships. During the Restricted Period, the Executive will not directly or indirectly knowingly solicit (other than on behalf of the Company) business or contracts for any products or services of the type provided, developed or under development by the Company during the Executive's employment by the Company, from or with (i) any person or entity which was a customer of the Company for such products or services as of, or within one year prior to the Executive's date of termination with the Company, or (ii) any prospective customer which the Company was soliciting as of, or within one year prior to the Executive's termination. Additionally, during the Restricted Period, the Executive will not directly or indirectly contract with any such customer or prospective customer for any product or service of the type provided, developed or which was under development by the Company during the Executive's employment with the Company. Further, the Executive shall not during the Restricted Period knowingly interfere or attempt to interfere with any transaction, agreement or business relationship in which the Company was involved during the Executive's employment with the Company.
7.4. Non-Solicitation of Employees and Contractors. During the Restricted Period, the Executive shall not knowingly solicit any person employed by the Company, or who within 180 days of termination of Executive's employment had been so employed by the Company, to leave the employ of the Company. Further, during the Restricted Period, the Executive will not knowingly solicit any contractor of the Company to terminate or reduce its business with the Company.
7.5. Executive Acknowledgment. The Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and no broader than are necessary to protect the legitimate business interests of the Company.
7.6. Enforcement. The parties agree that if a Court of competent
jurisdiction finds that any term of this Section 7 is for any reason excessively
broad in scope or duration, such term shall be construed in a manner to enable
it to be enforced to the maximum extent possible. Further, the covenants in this
Section 7 shall be deemed to be a series of separate covenants and agreements,
one for each and every region of each state and political division worldwide.
If, in any judicial proceeding, a court of competent jurisdiction shall refuse
to enforce any of the separate covenants deemed included herein, then at the
option of the Company, wholly unenforceable covenants shall be deemed eliminated
from the provision hereof for the purpose of such proceeding to the extent
necessary to permit the remaining separate covenants to be enforced in such
proceeding.
8. REMEDIES. Executive acknowledges that the restrictions contained in Sections 6 and 7 of this Agreement are reasonable and necessary to protect the business and interests of the Company and that any violation of these restrictions would cause the Company substantial irreparable injury. Accordingly, the Executive agrees that a remedy at law for any breach of the foregoing covenants would be inadequate and that the Company, in addition to any other remedies available, shall be entitled to obtain preliminary and permanent injunctive relief to secure specific performance of such covenants and to prevent a breach or contemplated breach of this Agreement without the necessity of proving actual damage. It is the express intention of the parties that the obligations of Sections 6, 7, and 8 of this Agreement shall survive its expiration.
9. NOTICES. All required or permitted notices under this Agreement shall be in writing and shall be effective upon personal delivery or three (3) business days after being deposited in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown on the signature page hereof, or at such other address as either party may designate to the other in accordance with this Section 9, with a copy to counsel for the Executive, addressed as follows:
Mark R. Holden
and a copy to counsel for the Company, addressed as follows:
Chief Legal Officer
Wabash National Corporation
P.O. Box 6129
1000 Sagamore Pkwy. South
Lafayette, Indiana 47903
10. ATTORNEY'S FEES. The Company shall pay the Executive's reasonable attorneys' fees, not to exceed $10,000, incurred in reaching this Agreement.
11. ENTIRE AGREEMENT. This Agreement (including the Exhibit to the Agreement) constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of Indiana, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him.
15. MISCELLANEOUS.
15.1. No delay or omission by the Company or the Executive in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company or the Executive on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.
15.2. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.
15.3. The unenforceability of any provision of this Agreement shall not affect the enforceability of any other provision of this Agreement.
15.4. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
16. INDEMNIFICATION. The Company, to the extent that it does so generally for its officers and directors and to the extent permitted by its corporate by-laws, shall provide the Executive with directors and officers liability insurance and shall indemnify, defend, and hold the Executive harmless from and against any and all demands, actions, claims, suits, liabilities, losses, damages, fees (including reasonable attorney's fees) and expenses relating to any acts or omissions in the course or scope of the duties he performs on behalf of the Company while employed by it and/or while serving as an officer and/or director of the Company. The provisions of this Section 16, though only with respect to acts or omissions by the Executive while still employed by the Company, shall survive the expiration of this Agreement or the termination of Executive's employment with the Company for any reason.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.
WABASH NATIONAL CORPORATION
1000 Sagamore Parkway South
Lafayette, Indiana 47905
/s/ WILLIAM P. GREUBEL ---------------------------------- By: William P. Greubel Title: Chief Executive Officer |
MARK HOLDEN
Mark R. Holden
/s/ MARK HOLDEN ---------------------------------- |
EXHIBIT 10.07
WABASH NATIONAL CORPORATION
STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants an option to purchase shares of its common stock, (the "Stock") to the optionee named below. The terms and conditions of the option are set forth in this cover sheet, in the attachment and in the Company's Amended 1992 Stock Option Plan (the "Plan").
Grant Date: June 14, 2002
Vesting Start Date: June 14, 2002
Name of Optionee: Mark R. Holden
Optionee's Social Security Number:
Number of Shares Covered by Option: 125,000
Option Price per Share: $7.79
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS ALSO ATTACHED. YOU ACKNOWLEDGE THAT YOU HAVE CAREFULLY REVIEWED THE PLAN, AND AGREE THAT THE PLAN WILL CONTROL IN THE EVENT ANY PROVISION OF THIS AGREEMENT SHOULD APPEAR TO BE INCONSISTENT.
Optionee: /s/ Mark R. Holden
-------------------------------------------------
(Signature)
Company: /s/ William P. Greubel
-------------------------------------------------
(Signature)
Title: President CEO
------------------------------------------------
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Attachment
This is not a stock certificate or a negotiable instrument.
WABASH NATIONAL CORPORATION
AMENDED 1992 STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
NONQUALIFIED STOCK This option is not intended to be an incentive
OPTION stock option under Section 422 of the Internal
Revenue Code and will be interpreted accordingly.
DEFINED TERMS For purposes of this Agreement, the following
definitions shall apply:
"Cause" means cause as defined in Section 4.2 of
your employment agreement between you and the
Company dated June 14, 2002 (the "Employment
Agreement").
"Disability" means a disability as defined in
Section 4.4 of your Employment Agreement.
"Good Reason" means good reason as defined in
Section 4.3 of your Employment Agreement.
"Service" means service with the Company as an
employee, director or consultant, or independent
contractor.
"Involuntary Termination" means a termination of
your employment by the Company without Cause, by
you for Good Reason or by you because of your
Disability.
VESTING This option is only exercisable before it expires
and then only with respect to the vested portion of
the option. Subject to the preceding sentence, you
may exercise this option, in whole or in part, to
purchase a whole number of vested shares not less
than 100 shares, unless the number of shares
purchased is the total number available for
purchase under the option, by following the
procedures set forth in the Plan and below in this
Agreement.
Your right to purchase shares of Stock under this
option vests as to:
-- two-third (2/3) of the total number of shares
covered by this option, as shown on the cover sheet
(the "Option Shares"), on the second anniversary of
the Vesting Start Date ("Anniversary Date"),
provided you
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then continue in Service.
-- one-third (1/3) of the Option Shares on the
third Anniversary Date, provided you then continue
in Service.
Notwithstanding the vesting schedule set forth in
the preceding two subparagraphs, 100% of the Option
Shares shall become vested upon your Involuntary
Termination.
TERM Notwithstanding any other provision of this
Agreement to the contrary, your option will expire
no later than the close of business at Company
headquarters on the day before the 10th anniversary
of the Grant Date, as shown on the cover sheet.
Your option will expire earlier if your Service
terminates, as described below.
VOLUNTARY If your Service terminates for any reason other
TERMINATION than for Cause, because of an Involuntary
Termination or because of your death, then your
option will expire at the close of business at
Company headquarters on the day of your
termination.
TERMINATION FOR If your Service is terminated for Cause, then you
CAUSE shall immediately forfeit all rights to your option
and the option shall immediately expire.
DEATH If you terminate your Service due to your death,
then your option shall become 100% vested and will
expire at the close of business at Company
headquarters two (2) years after your termination
of Service and your estate or heirs may exercise
the option. Notwithstanding the foregoing, in no
event will your option expire later than the close
of business at Company headquarters on the day
before the 10th anniversary of the Grant Date, as
shown on the cover sheet.
INVOLUNTARY If your Service terminates because of your
TERMINATION Involuntary Termination, then your option shall
expire at the close of business at Company
headquarters on the date two (2) years after the
date of your termination of Service.
Notwithstanding the foregoing, in no event will
your option expire later than the close of business
at Company headquarters on the day before the 10th
anniversary of the Grant Date, as shown on the
cover sheet.
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LEAVES OF ABSENCE For purposes of this option, your Service does not
terminate when you go on a bona fide employee leave
of absence that was approved by the Company in
writing, if the terms of the leave provide for
continued Service crediting, or when continued
Service crediting is required by applicable law.
Your Service terminates when the approved leave
ends unless you immediately return to active
employee work. The Company determines, in its sole
discretion, which leaves count for this purpose,
and when your Service terminates for all purposes
under the Plan.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form.
Your notice must specify how many shares you wish
to purchase. Your notice must also specify how your
shares of Stock should be registered (in your name
only or in your and your spouse's names as joint
tenants with right of survivorship). The notice
will be effective when it is received by the
Company.
If someone else wants to exercise this option after
your death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the shares
you are purchasing. Payment may be made in one (or
a combination) of the following forms:
- Cash, your personal check, a cashier's check,
a money order or another cash equivalent
acceptable to the Company.
- Shares of Stock which have already been owned
by you for more than six months and which are
surrendered to the Company. The value of the
shares, determined as of the effective date of
the option exercise, will be applied to the
option price.
- By delivery (on a form prescribed by the
Company) of an irrevocable direction to a
licensed securities broker acceptable to the
Company to sell
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Stock and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate
option price and any withholding taxes.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or sale of Stock
acquired under this option. In the event that the
Company determines that any federal, state, local
or foreign tax or withholding payment is required
relating to the exercise or sale of shares arising
from this grant, the Company shall have the right
to require such payments from you, or withhold such
amounts from other payments due to you from the
Company or any Subsidiary.
TRANSFER OF OPTION During your lifetime, only you (or, in the event of
your legal incapacity or incompetency, your
guardian or legal representative) may exercise the
option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do any
of these things, this option will immediately
become invalid. You may, however, dispose of this
option in your will or it may be transferred upon
your death by the laws of descent and distribution.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from your spouse, nor is the
Company obligated to recognize your spouse's
interest in your option in any other way.
RETENTION RIGHTS Neither your option nor this Agreement give you the
right to be retained by the Company (or any
Subsidiaries) in any capacity.
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for
your option's shares has been issued (or an
appropriate book entry has been made). No
adjustments are made for dividends or other rights
if the applicable record date occurs before your
stock certificate is issued (or an appropriate book
entry has been made), except as
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described in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in the Stock, the number of shares
covered by this option and the option price per
share shall be adjusted (and rounded down to the
nearest whole number) if required pursuant to the
Plan. Your option shall be subject to the terms of
the agreement of merger, liquidation or
reorganization in the event the Company is subject
to such corporate activity.
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of Delaware, other than
any conflicts or choice of law rule or principle
that might otherwise refer construction or
interpretation of this Agreement to the substantive
law of another jurisdiction.
THE PLAN The text of the Plan is incorporated in this
Agreement by reference. Certain capitalized terms
used in this Agreement are defined in the Plan, and
have the meaning set forth in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding
this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.
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BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS
AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
EXHIBIT 10.08
WABASH NATIONAL CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants an option to purchase shares of its common stock, $.01 par value, (the "Stock") to the optionee named below. The terms and conditions of the option are set forth in this cover sheet and in the attachment.
Grant Date: May 6 , 2002
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Name of Optionee: William P. Greubel
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Optionee's Social Security Number:
Number of Shares Covered by Option: 250,000
Option Price per Share: $10.01 (fair market value)
Vesting Start Date: First day of employment with the Company
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED IN THE ATTACHED AGREEMENT.
Optionee: /s/ William P. Greubel
-------------------------------------------------
(Signature)
Company: /s/ John T. Hackett
-------------------------------------------------
(Signature)
Title: Director, Chairman of the Board
------------------------------------------------
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Attachment
This is not a stock certificate or a negotiable instrument
WABASH NATIONAL CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
NONQUALIFIED STOCK This option is not intended to be an incentive
OPTION stock option under Section 422 of the Internal
Revenue Code and will be interpreted accordingly.
VESTING This option is only exercisable before it expires
and then only with respect to the vested portion of
the option. Subject to the preceding sentence, you
may exercise this option, in whole or in part, to
purchase a whole number of vested shares not less
than 100 shares, unless the number of shares
purchased is the total number available for
purchase under the option, by following the
procedures set forth in this Agreement.
Your right to purchase shares of Stock under this
option vests as to:
-- one-third (1/3) of the total number of shares
covered by this option, as shown on the cover sheet
(the "Option Shares"), on the first anniversary of
the Vesting Start Date ("Anniversary Date"),
provided you then continue in Service.
-- for each of the next two Anniversary Dates
thereafter that you remain in Service, the number
of shares of Stock which you may purchase under
this option shall vest at the rate of one-third
(1/3) of the Option Shares on the Anniversary Date.
Notwithstanding the vesting schedule set forth in
the preceding two subparagraphs, 100% of the Option
Shares shall become vested upon your termination by
the Company without cause (as defined in Section
4.2 of your Employment Agreement ("Cause")) or for
good reason (as defined in Section 4.3 of your
Employment Agreement ("Good Reason")) within 180
days following a change of control pursuant to
Section 5.4 of your employment agreement with the
Company dated April 12, 2002 (the "Employment
Agreement").
The aggregate number of vested shares will be
rounded to the nearest whole number, and you cannot
vest in more than the number of shares covered by
this option. Unless otherwise provided in this
Agreement, your Restricted Stock Agreement, or the
Employment Agreement, no additional shares of Stock
will vest after your Service has terminated for any
reason.
For purposes of this Agreement, Service means
service with the Company as an employee, director
or consultant, or independent contractor.
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TERM Your option will expire in any event at the close
of business at Company headquarters on the day
before the 10th anniversary of the Grant Date, as
shown on the cover sheet. Your option will expire
earlier if your Service terminates, as described
below.
REGULAR TERMINATION If your Service terminates for any reason, other
than death, permanent and total disability, a
termination by the Company for Cause or by the
Company without Cause, or a termination by you for
Good Reason, then your option will expire at the
close of business at Company headquarters on the
90th day after your termination date.
TERMINATION FOR If your Service is terminated for Cause, then you
CAUSE shall immediately forfeit all rights to your option
and the option shall immediately expire.
DEATH If your Service terminates because of your death,
then your option will expire at the close of
business at Company headquarters on the date thirty
six (36) months after the date of death. During
that thirty six month period, your estate or heirs
may exercise the vested portion of your option.
In addition, if you die during the 90 day period
described in connection with any termination of
your employment other than for Cause, and a vested
portion of your option has not yet been exercised,
then your option will instead expire on the date
thirty six (36) months after your termination date.
In such a case, during the period following your
death up to the date thirty six (36) months after
your termination date, your estate or heirs may
exercise the vested portion of your option.
DISABILITY If your Service terminates because of your
permanent and total disability, then your option
will expire at the close of business at Company
headquarters on the date thirty six (36) months
after your termination date.
WITHOUT CAUSE OR FOR If your Service terminates because your employment
GOOD REASON with the Company is terminated by the Company
without Cause or because you terminate your
employment with the Company for Good Reason, then
your option will expire at the close of business at
Company headquarters on the date thirty six (36)
months after the date of such termination.
LEAVES OF ABSENCE For purposes of this option, your Service does not
terminate when you go on a bona fide employee leave
of absence that was approved by the Company in
writing, if the terms of the leave provide for
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continued Service crediting, or when continued
Service crediting is required by applicable law.
However, your Service will be treated as
terminating 180 days after you went on employee
leave, unless your right to return to active work
is guaranteed by law or by a contract. Your Service
terminates in any event when the approved leave
ends unless you immediately return to active
employee work.
The Company determines, in its reasonable
discretion, which leaves count for this purpose,
and when your Service terminates for all purposes
under the Agreement.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form.
Your notice must specify how many shares you wish
to purchase (in a parcel of at least 100 shares
generally). Your notice must also specify how your
shares of Stock should be registered (in your name
only or in your and your spouse's names as joint
tenants with right of survivorship). The notice
will be effective when it is received by the
Company.
If someone else wants to exercise this option after
your death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the shares
you are purchasing. Payment may be made in one (or
a combination) of the following forms:
- Cash, your personal check, a cashier's check,
a money order or another cash equivalent
acceptable to the Company.
- Shares of Stock which have already been owned
by you for more than six months and which are
surrendered to the Company. The value of the
shares, determined as of the effective date of
the option exercise, will be applied to the
option price.
- By delivery (on a form prescribed by the
Company) of an irrevocable direction to a
licensed securities broker acceptable to the
Company to sell Stock and to deliver all or
part of the sale proceeds to the Company in
payment of the aggregate option price and any
withholding taxes.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or sale of Stock
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acquired under this option. In the event that the
Company determines that any federal, state, local
or foreign tax or withholding payment is required
relating to the exercise or sale of shares arising
from this grant, the Company shall have the right
to require such payments from you, or withhold such
amounts from other payments due to you from the
Company or any affiliate.
TRANSFER OF OPTION During your lifetime, only you (or, in the event of
your legal incapacity or incompetency, your
guardian or legal representative) may exercise the
option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do any
of these things, this option will immediately
become invalid. You may, however, dispose of this
option in your will or living trust or it may be
transferred upon your death by the laws of descent
and distribution.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from your spouse, nor is the
Company obligated to recognize your spouse's
interest in your option in any other way.
INVESTMENT If the sale of Stock under this Agreement is not
REPRESENTATION registered under the Securities Act, but an
exemption is available which requires an investment
or other representation, you shall represent and
agree at the time of exercise that the Stock being
acquired upon exercise of this option is being
acquired for investment, and not with a view to the
sale or distribution thereof, and shall make such
other representations as are deemed necessary or
appropriate by the Company and its counsel.
RETENTION RIGHTS Neither your option nor this Agreement give you the
right to be retained by the Company in any
capacity. The Company reserves the right to
terminate your Service pursuant to the Employment
Agreement.
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for
your option's shares has been issued (or an
appropriate book entry has been made). No
adjustments are made for dividends or other rights
if the applicable record date occurs before your
stock certificate is issued (or an appropriate book
entry has been made).
ADJUSTMENTS In the event of a stock split, the number of shares
covered by this option and the option price per
share shall be adjusted (and rounded down to the
nearest whole number) by the Board. Your option
shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event
the Company is subject to such corporate activity.
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APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of Delaware, other than
any conflicts or choice of law rule or principle
that might otherwise refer construction or
interpretation of this Agreement to the substantive
law of another jurisdiction.
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BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS
AND CONDITIONS DESCRIBED ABOVE.