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Memorandum

 

 

TO

Steve Filipov

   

FROM

Kevin Barr

   

CC

Tom Riordan

   

DATE

3/6/2008

   

RE

New Appointment

 

 

We are pleased to confirm your appointment as President, Strategic Accounts &
Developing Markets, Terex Corporation (the “Company”), effective January 16,
2008. We anticipate that this assignment will end no later than December 31,
2009. Your appointment is conditioned upon your formal acceptance of the terms
of this offer and ratification of the terms by the Compensation Committee of the
Board of Directors of Terex Corporation. In this position, you will be based in
Westport, Connecticut, USA and you will report to Tom Riordan.

 

Base Salary

Your base salary will be €311,000 per year, less deductions required by law or
as authorized by you in writing. Upon your relocation to the United States your
Annual Base Salary will be $450,000, less deductions required by law or
authorized by you, payable as follows:

 

•

€68,502 (equivalent of $100,000) of your Annual Base Salary will be wire
transferred on monthly basis (€5,709) to your bank account in France or other
location. The Company will comply with applicable French tax obligations, if
any, as a result of these payments; and

 

•

The remainder of your Annual Base Salary will be paid in US dollars on a
semi-monthly basis, or as otherwise paid in accordance with normal payroll
practices in the Westport office.

 

At your election, the Company will consider an adjustment to the payroll split,
effective the first day in January, 2009, up to a maximum of 50% of your Annual
Base Salary. If you elect to adjust the payroll split proportions, the Company
will calculate the salary that you are otherwise eligible to receive in US
dollars by converting the euro (€) portion into US dollars and subtracting that
amount from your Annual Base Salary. The euro (€) portion will be adjusted in
accordance with the December FX rate as determined by the rates issued by the
Terex Corporation Finance Department. Exchange rate differences will not be
compensated for in the adjustment.

 

If your appointment extends beyond December 31, 2009, you are appointed to
another position, or if the euro paid portion should unexpectedly create
substantial tax liabilities as determined by the Company, the Company may
discontinue this payroll split.

 

As a senior executive of the Company, your compensation will be reviewed
periodically by the Compensation Committee of the Board of Directors.

 

It is the Company’s intention that if you are later appointed to a position
based in Europe, your euro denominated salary of €311,000 will be adjusted to
reflect, on a percentage basis, any salary adjustments received during this
appointment. For example, if you receive a 10%

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Memorandum

 

salary adjustment during this appointment and you later return to a European
position, your base salary will be €342,100 (€311,000 + €31,100).

 

Terex Corporation Management Incentive Bonus

In this executive position, you continue to be eligible for participation in the
Terex Corporation Management Incentive Bonus Plan (the “Plan”). The Plan
currently has the potential to generate an annual bonus of up to 75% of your
salary, based upon Corporation and individual performance against targets and
objectives established from time to time. The Plan provides the opportunity to
achieve a bonus payout in excess of 75% of your salary.

 

Long Term Incentive Compensation

You will continue to be eligible to participate in the Terex Corporation 2000
Incentive Plan or any successor program available to similarly situated
executives.

 

Change in Control and Severance Protection

Your acceptance of the terms of this offer does not trigger a Termination for
Good Reason or other termination event pursuant to the Change in Control and
Severance Agreement, effective March 17, 2006 between you and the Company or as
otherwise in effect. Nothing in this offer letter should be construed as
providing tax protection for any compensation received pursuant to a Change in
Control, severance or other “termination of employment trigger” provision in any
agreement to which you and the Company are parties.

 

SERP

You will continue to be eligible to participate in the Terex Corporation
Supplement Executive Retirement Plan (“SERP”), a copy of which has been
previously provided to you.

 

Deferred Compensation  

Upon transfer to the U.S. payroll. you will be eligible to participate in the
Terex Deferred Compensation Plan offered to senior executives. This Plan
provides investment options and is an alternative to use in deferring income
taxes. There is a 25% matching contribution on eligible deferrals to the Terex
Stock Fund. You will be responsible for any French or US income tax incurred in
the year of distribution and any social tax required in the year of
participation. Any taxable amounts in the year of tax distribution will not be
tax protected. For comparative purposes in calculating the French hypothetical
tax, any deferred amount in the US, will be included in the definition and
determination of French income.

 

Automobile

Upon transfer to the U.S. payroll, an executive level company car will be
provided. The Company will be responsible for all operating costs, including
gasoline, insurance, repairs, and maintenance. Any incremental costs are to be
borne by you if a more expensive car is leased. Personal use of a company car is
taxed in the US and you will be responsible for paying any US tax on the imputed
value.

 

Holidays and Vacation

Upon transfer to the U.S. payroll, you will be eligible for 20 paid days of
vacation annually (prorated for a partial year) as well as the observed holidays
for the Westport office. Should you terminate your employment, you will not
qualify for payment for vacation or holidays subsequent to the date of
termination. Your paid vacation will accrue on the basis of 1/12th of the full
entitlement for each completed calendar month in the current year. Annual
vacation not taken by the end of each calendar year will be forfeited.

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Benefits  

Upon transfer to the U.S. payroll, you will be eligible to participate in the
Company’s medical, dental, vision, disability benefits, 401K, life insurance
benefits and employee stock purchase plan upon the same terms and conditions
offered to similarly situated executives in the Westport office.

 

Social Security in France

Upon transfer to the U.S. payroll and confirmation that prior to this assignment
you had a French employment contract, the Company will fund contributions on
your behalf to the to the voluntary CFE (Caisee de Francais) social security
scheme for expatriates if such funding is permissible under French Law. The
Company will gross up US Federal, Connecticut state income, and social security
(Medicare only) tax for US calendar years 2008 and 2009 on the contributions to
the voluntary CFE (Caisee de Francais) social security scheme. If the Company,
through reasonable efforts, is unable to fund contributions on your behalf to
the voluntary CFE (Caisee de Francais) social security scheme for expatriates,
then the Company will have no further obligations to you pursuant to this
paragraph.

 

You will not participate in the mandatory social security scheme in France
during your assignment upon transfer to the US payroll.

 

Relocation

It is anticipated that you will relocate to the Westport area within 240 days
from the effective date of this appointment. In connection with your relocation,
you will receive or be reimbursed for reasonable costs, including a one month
salary allowance of $37,500, relating to your relocation to the Westport area.
More specific information is included in Terex’s Relocation Guidelines. The
Company will gross up US Federal, Connecticut state income and social security
(Medicare only) tax on these relocation costs.

 

Should you resign or be released “for cause” within one (1) year of relocation,
you would be required to repay the Company a prorated amount of the relocation
expenses based on the number of full months of employment.

 

Housing Rental and Housing Allowance  

Upon transfer to the U.S. payroll and submission of receipts and a fully
executed lease held by you to rent a home in the Westport Area, the Company will
reimburse you for up to $10,000 per month for housing, electricity, and
telephone expenses incurred. The monthly housing rental and housing allowance
will terminate upon the earlier of December 29, 2009 or appointment to another
position. The Company will gross up US Federal, Connecticut state income and
social security (Medicare only) tax on the taxable portion of the housing rental
and housing allowance.

 

Tuition reimbursement  

Upon relocation of your family to the U.S. and submission of receipts, the
Company will reimburse up to $25,000 per year per child for school tuition
expenses incurred by you for your children’s attendance at a French speaking
school. Tuition reimbursement will terminate upon the earlier of December 29,
2009 or appointment to another position. The Company will gross up US Federal,
state or local income and social security (Medicare only) tax on the taxable
portion of tuition reimbursement.

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Home Visits  

Upon relocation to the US, you will receive $15,000 per year (prorated for
partial years) to cover the cost of home visits. Payment will be made in two
equal installments on the first business day in June and December of each year.
Payment for home visits will end upon the earlier of December 31, 2009 or
appointment to another position. The Company will gross up US Federal,
Connecticut state income and social security (Medicare only) tax for US calendar
years 2008 and 2009.

 

Termination of Employment

Nothing in this offer of employment should be construed, understood or
interpreted to mean, promise, guarantee or imply employment by Terex Corporation
for any definite or specific length of time. Employment is strictly at will and
will be governed by the laws of the State of Connecticut. Your acceptance of
this assignment terminates any other employment contract or obligation that you
may have with a subsidiary or affiliate of the Company, regardless of location
and you waive all rights to any recourse which you may have pursuant to any such
agreement or obligation.

 

Termination of employment by you is subject to nine (9) months notice from you
to the Company in writing.

 

Confidentiality  

You agree that you will not at any time, either during the term of this
Agreement or thereafter, divulge to any person, firm or corporation outside of
the Company, or any affiliated companies, or subsidiaries, any confidential or
privileged information or trade secrets received by you during the course of
your employment, with regard to the financial, business operations, strategic
accounts, marketing plans, strategic plans, manufacturing methods, processes,
know-how, or procedures, or other affairs of the Company, or any of its
affiliated companies or subsidiaries. All such information shall be kept
confidential and shall not, in any manner, be revealed to anyone, provided,
however, that the foregoing provision shall not apply to any information which
is or generally becomes available to the public through no breach by you.

 

Non-Competition

You agree that you will not at any time during the period of your employment
hereunder and for a period of twelve (12) months thereafter, directly or
indirectly, engage in any business or own or control any interest in, or act as
a director, officer, employee, agent or consultant of, any firm, corporation,
partnership or other entity, directly or indirectly engaged in the business
being conducted by the Company, or its affiliated companies or subsidiaries, or
which manufactures or sells products which are in direct competition with the
products sold by the Company, or its affiliated companies or subsidiaries.
Notwithstanding the foregoing, you agree that you will not at any time during
the period of your employment hereunder and for a period of eighteen (18) months
thereafter, directly or indirectly, engage in any business or own or control any
interest in, or act as a director, officer, employee, agent or consultant of
Caterpillar Inc., Astec Industries, Inc., CNH Global, Deere & Company, The
Manitowoc Company, Inc., JCB, Altec Industries, Inc., Oshkosh Truck Corporation,
Liebherr, Komatsu Ltd, AB Volvo, Metso Corporation, Hitachi Construction
Machinery, Doosan, Xuzhou Construction Machinery Group Co. Ltd ( XCMG), Sany
Heavy Industry Co. Ltd., Changsha Zoomlion Heavy Industry Science & Technology
Development Co., Ltd., Zhangjiagang Fusan Construction Machinery Co.,Ltd. and
any of their parent companies, subsidiaries or affiliates.

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Non-Solicitation

You agree that for a period of twelve (12) months from the date that your
employment terminates (“Date of Termination”), you will not solicit, induce or
entice, or cause any other person or entity to solicit, induce or entice any
person who was employed or retained by the Company, its affiliated companies or
subsidiaries on the Date of Termination to leave the employ of Company, its
affiliated companies or subsidiaries or to terminate or alter their contractual
relationships, if any, in a way that is adverse to Company’s, its affiliated
companies or subsidiaries best business interests.

 

Tax Protection

Your Employment Income for US calendar years 2008 and 2009 will be tax protected
to France. Your Employment Income for this purpose will be base salary, bonus,
and other executive compensation including but not limited to Restricted Stock,
income received from the exercise of Stock Options, and imputed income resulting
from your use of a company car. It will not include other compensation that may
be received pursuant to a Change in Control, severance or other “termination of
employment trigger” provision in any agreement to which you and the Company are
parties or as otherwise provided for in this offer letter. It is the intent of
the Company that you should not realize an income tax-related financial
detriment on your Employment Income which originates during this 24 month
period. This may cover US and/or French taxes to be paid in year(s) after 2009
but only to the extent any Employment Income paid during the 24 month period is
taxed after 2009 due to tax rules both in the US and France and this income is
eligible for tax protection.

 

You will be eligible for financial and tax planning services as provided to
other similarly situated executives of the Company. To assist you in this
process, the Company will also engage the services of Ernst & Young or a
comparable firm to provide you with exit and entry tax counseling in France and
in the US along with French and US tax return preparation services for calendar
years 2008, 2009, and 2010. Although the Company provides assistance, it remains
your responsibility to ensure the accuracy of and timely filings of your home
and host country tax returns. You also share the responsibility to assist the
Company in implementing tax-planning strategies, which reduce the Company’s cost
during your assignment.

 

The Company will tax protect income on Employment Income for US calendar years
2008 and 2009 only. Accordingly, at the end of the French and US taxable year,
the accounting firm identified by Terex, will calculate your final income and
social tax for the year. The amount of any US and French tax actually paid by
you for such year will be compared to the final French income tax and mandatory
social tax you would have paid had you remained working in France. If you paid
more taxes because you worked in the US, the Company will reimburse you for the
difference.

 

The Company will not reimburse any interest or penalties incurred on your actual
return if such interest and penalties resulted because of delays caused by you
in providing the accounting firm with information on a timely basis or not
filing the tax returns by the due dates.

 

Your compensation will be subject to income taxes and payroll taxes in the
United States. The Company will report the amount of your compensation to the
United States Internal Revenue Service, appropriate state agencies or other
jurisdictions and will withhold taxes as required by law. Your other income,
including income from the investment of funds

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transferred to your bank account, will also be subject to income taxes in the
United States. You may also have tax obligations in France as well, including
tax obligations on income earned prior to your transfer. By accepting this
offer, you agree to provide to the accounting firm all information regarding
your income, both from sources in the United States and from sources outside the
United States that may be necessary to correctly determine the amount of United
States and any French taxes. You also agree to indemnify the Company for any
cost, including any fine or penalty, it might incur if you fail to timely
provide all such information.

 

I hope you will find the terms of offer acceptable, and to complete the
confirmation of your

Appointment, a formal acceptance will be required. This can be done conveniently
by signing this memo and returning it to me.

 

 

I accept the above offer, including all terms and conditions:

 

Signature:

/s/ Steve Filipov

 

Steve Filipov

 

 

Dated: May 5, 2008