Document:

EFL-Amend.-FLOOR-5th

Exhibit 4.7

SECOND AMENDMENT AND WAIVER

SECOND AMENDMENT AND WAIVER (this "Amendment"), dated as of February 4, 2003, among THE MANITOWOC COMPANY, INC., a Wisconsin corporation (the "Borrower"), the lending institutions from time to time party to the Credit Agreement referred to below (the "Lenders") and DEUTSCHE BANK TRUST COMPANY AMERICAS (f/k/a Bankers Trust Company), as Administrative Agent (in such capacity, the "Administrative Agent"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement referred to below.

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to a Credit Agreement, dated as of May 9, 2001 (as amended, modified and/or supplemented to, but not including, the date hereof, the "Credit Agreement"); and

WHEREAS, subject to the terms and conditions of this Amendment, the Lenders wish to grant certain waivers to the Credit Agreement and the parties hereto wish to amend the Credit Agreement, in each case as herein provided; 

NOW, THEREFORE, it is agreed:

I.     Amendments and Waivers to Credit Agreement.

1.Section 9.01 of the Credit Agreement is hereby amended by deleting the text "and (xiv)" appearing in the last sentence of said Section and inserting the text ", (xiv) and (xx)" in lieu thereof.

2.Section 9.05 of the Credit Agreement is hereby amended by (i) deleting the word "and" appearing at the end clause (xii) of said Section, (ii) inserting the text "above or clause (xiv) below" immediately prior to the text "of this Section 9.05" appearing in clause (xiii) of said Section, (iii) deleting the period at the end of clause (xiii) of said Section and inserting the text "; and" in lieu thereof and (iv) inserting the following new clause (xiv) at the end of said Section:
"(xiv) the Borrower and its Subsidiaries may make transfers of assets to their respective Subsidiaries in accordance with the requirements of Sections 9.02(ix), (x) and (xi).".

3.Section 9.08 of the Credit Agreement is hereby amended by deleting the table appearing in said Section in its entirety and inserting the following new table in lieu thereof:

	
"Fiscal Quarter Ending
	
Ratio

	
December 31, 2002
	
2.50:1.00

	
March 31, 2003
	
2.50:1.00

	
June 30, 2003
	
2.50:1.00

	
September 30, 2003
	
2.50:1.00

	
December 31, 2003
	
2.75:1.00

	
March 31, 2004
	
2.75:1.00

	
June 30, 2004

and thereafter
	
3.00:1.00".

4.Section 9.09 of the Credit Agreement is hereby amended by deleting the table appearing in said Section in its entirety and inserting the following new table in lieu thereof:

	
"Fiscal Quarter Ending
	
Amount

	
December 31, 2002
	
$155,000,000

	
March 31, 2003
	
$155,000,000

	
June 30, 2003
	
$155,000,000

	
September 30, 2003
	
$155,000,000

	
December 31, 2003
	
$155,000,000

	
March 31, 2004
	
$160,000,000

	
June 30, 2004
	
$165,000,000

	
September 30, 2004
	
$165,000,000

	
December 31, 2004
	
$165,000,000

	
March 31, 2005
	
$170,000,000

	
June 30, 2005
	
$175,000,000

	
September 30, 2005
	
$175,000,000

	
December 31, 2005
	
$180,000,000

	
March 31, 2006
	
$180,000,000

	
June 30, 2006
	
$180,000,000

	
September 30, 2006
	
$180,000,000

	
December 31, 2006
	
$190,000,000

	
March 31, 2007
	
$200,000,000".

5.Subject to the immediately succeeding proviso, the Lenders hereby waive any Event of Default arising under Section 10.03 of the Credit Agreement solely as a result of the failure of the Borrower to comply with the covenant contained in Section 9.09 of the Credit Agreement for (and only for) the Test Period ended on the last day of the fiscal quarter of the Borrower ended on December 31, 2002; provided however, that if the Borrower fails to demonstrate compliance with Section 9.09 of the Credit Agreement (as amended hereby) for such Test Period (i.e., fails to achieve Consolidated EBITDA of at least $155,000,000 for such Test Period) as set forth in the compliance certificate required to be delivered by the Borrower pursuant to Section 8.01(e) of the Credit Agreement in respect of the fiscal year of the Borrower ended on December 31, 2002, the foregoing waiver shall be deemed rescinded and such failure shall constitute an "Event of Default" for all purposes of the Credit Agreement.

6.Section 9.11 of the Credit Agreement is hereby amended by deleting the table appearing in said Section in its entirety and inserting the following new table in lieu thereof: 

	

"Period
	
Ratio

	

December 31, 2002

   through and including

   December 30, 2003
	

4.25:1.00

	
December 31, 2003

   through and including

   June 29, 2004
	

4.00:1.00

	
June 30, 2004

   through and including 

   September 29, 2004
	

3.75:1.00

	
September 30, 2004

   through and including 

   December 30, 2004
	

3.50:1.00

	
December 31, 2004

   through and including 

   March 30, 2005
	

3.25:1.00

	Thereafter 

	
2.85:1.00".

7.The Lenders hereby waive any Event of Default arising under Section 10.03 of the Credit Agreement solely as a result of the failure of the Borrower to comply with the covenant contained in Section 9.11 of the Credit Agreement during (and only during) the period commencing on September 30, 2002 and ending on the Second Amendment Effective Date (as defined below); it being understood and agreed, however, that the failure of the Borrower to demonstrate compliance with Section 9.11 of the Credit Agreement (as amended hereby) as at the last day of the fiscal year of the Borrower ended on December 31, 2002 (i.e., the failure to demonstrate a Consolidated Total Leverage Ratio of 4.25:1.00 or less as at such day) as set forth in the compliance certificate required to be delivered by the Borrower pursuant to Section 8.01(e) of the Credit Agreement in respect of such fiscal year shall constitute an "Event of Default" for all purposes of the Credit Agreement.

8.Section 9.12 of the Credit Agreement is hereby amended by deleting said Section in its entirety and inserting the following new Section 9.12 in lieu thereof:
"9.12  Minimum Consolidated Fixed Charge Coverage Ratio.  The Borrower will not permit the Consolidated Fixed Charge Coverage Ratio for any Test Period ending on the last day of any fiscal quarter of the Borrower (commencing with the Borrower's fiscal quarter ended on December 31, 2002) to be less than 1.50:1.0.".

9.The definition of "Factor" appearing in Section 11.01 of the Credit Agreement is hereby amended by deleting the text "General Electric Capital Corporation" appearing in said definition and inserting the text "GMAC" in lieu thereof.

10.The definition of "Factoring Agreement" appearing in Section 11.01 of the Credit Agreement is hereby amended by deleting the text "General Electric Capital Corporation" appearing in said definition and inserting the text "GMAC" in lieu thereof.

11.Section 12 of the Credit Agreement is hereby amended by inserting the following new Section 12.10 after Section 12.09 appearing in said Section:
"12.10  Collateral Matters.  (a)  Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors.  Each Lender hereby agrees, and each holder of any Note or participant in Letters of Credit by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders.  The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.

(b)The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations at any time arising under or in respect of this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or disposed of (to Persons other than the Borrower and its Subsidiaries) upon the sale or disposition thereof in compliance with Section 9.02 or (iii) if approved, authorized or ratified in writing by the Required Lenders (unless such release is required to be approved by all of the Lenders hereunder).  Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent's authority to release particular types or items of Collateral pursuant to this Section 12.10.

(c)Upon any sale and transfer of Collateral which is expressly permitted pursuant to the terms of this Agreement, or consented to in writing by the Required Lenders, or all of the Lenders, as applicable, and upon at least five (5) Business Days' (or such shorter period as is acceptable to the Collateral Agent) prior written request by the Borrower, the Collateral Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Collateral Agent for the benefit of the Lenders herein or pursuant hereto upon the Collateral that was sold or transferred, provided, that (i) the Collateral Agent shall not be required to execute any such document on terms which, in the Collateral Agent's opinion, would expose the Collateral Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse, representation or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of any Credit Party or any of its Subsidiaries in respect of) all interests retained by any Credit Party or any of its Subsidiaries, including, without limitation, the proceeds of the sale, all of which shall continue to constitute part of the Collateral.

(d)The Collateral Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Credit Party or any of its Subsidiaries or is cared for, protected or insured or that the Liens granted to the Collateral Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 12.10 or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent's own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

(e)Notwithstanding anything to the contrary contained in this Agreement or in any other Credit Document, (i) to the extent the Borrower or any of its Subsidiaries enters into any operating lease which does not cause a violation of the terms of this Agreement, the Collateral Agent is authorized to enter into such disclaimers of a security interest in the assets subject to such operating lease, or such releases or subordinations of the assets subject to such operating lease, as may be reasonably requested by the Borrower or such Subsidiary in connection therewith and (ii) in connection with the incurrence of any Indebtedness permitted to remain outstanding pursuant to Section 9.04(iv), at the reasonable request of the Borrower, the Collateral Agent shall, and is hereby authorized to, enter into such releases or subordinations of security interests in the assets securing such Indebtedness in accordance with the relevant requirements of Section 9.01, all as may be requested by the Borrower.  In taking any actions pursuant to the requirements of this Section 12.10(e), the Collateral Agent shall be entitled to rely on a certificate of an officer of the Borrower as to its entitlement to such release, subordination or other action, and shall have no liability in connection therewith.".

12.The Lenders hereby waive any Event of Default that may have arisen pursuant to Section 10.01 of the Credit Agreement or Section 3 of the Consent and Agreement to Credit Agreement, dated as of July 31, 2002, among the Borrower, the Lenders and the Administrative Agent (the "Consent"), solely as result of the failure of the Borrower to apply the Net Sale Proceeds from the sale of the capital stock of Manitowoc Boom Trucks, Inc. (the "Boom Trucks Proceeds") in accordance with the requirements of Sections 4.02(e), (i) and (j) of the Credit Agreement or Section 2(i) of the Consent, as the case may be, so long as (and only so long as) the Borrower uses cash on hand or the proceeds of Revolving Loans (incurred in accordance with the relevant requirements of the Credit Agreement) in an amount equal to the amount of the Boom Trucks Proceeds on the last day of the first Interest Period applicable to any Borrowing of Term Loans to expire after the Second Amendment Effective Date (or, if the Second Amendment Effective Date has not occurred on or prior to February 6, 2003, the Business Day following the Second Amendment Effective Date), to repay Term Loans in accordance with the requirements of Section 4.01(a) of the Credit Agreement.

II.     Miscellaneous Provisions.

	In order to induce the Lenders to enter into this Amendment, the Borrower hereby represents and warrants that:

(a)no Default or Event of Default exists as of the Second Amendment Effective Date, after giving effect this Amendment; and

(b)all of the representations and warranties contained in the Credit Agreement and in the other Credit Documents are true and correct in all material respects on the Second Amendment Effective Date, both before and after giving effect to this Amendment, with the same effect as though such representations and warranties had been made on and as of the Second Amendment Effective Date (it being understood that any representation or warranty made as of a specific date shall be true and correct in all material respects as of such specific date).

	This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement or any other Credit Document.

	This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  A complete set of counterparts shall be lodged with the Borrower and the Administrative Agent.

	THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

	This Amendment shall become effective on the date (the "Second Amendment Effective Date") when each of the Borrower and the Required Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of facsimile transmission) the same to the Administrative Agent at its Notice Office.

	The Borrower hereby covenants and agrees, so long as the Second Amendment Effective Date occurs, to pay to each Lender which has executed and delivered to the Administrative Agent (or its designee) a counterpart hereof by the later to occur of (x) 5:00 P.M. (New York time) on February 4, 2003 or (y) the close of business on the Second Amendment Effective Date (such later date, the "Outside Date"), a non-refundable cash amendment fee equal to 0.125% of the sum of (x) its Revolving Loan Commitment as in effect on the Second Amendment Effective Date and (y) the aggregate principal amount of its Term Loans outstanding on the Second Amendment Effective Date, which fee shall not be subject to counterclaim or set-off, or be otherwise affected by, any claim or dispute relating to any other matter and shall be paid by the Borrower to the Administrative Agent for distribution to the Lenders on the second Business Day following the Outside Date.

	From and after the Second Amendment Effective Date, all references in the Credit Agreement and each of the other Credit Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as modified hereby.

*        *        *

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Amendment as of the date first above written.

	
THE MANITOWOC COMPANY, INC.

	 
	 
	
By  /s/ Carl Laurino                                              

	
Title: Treasurer

	 
	 
	
DEUTSCHE BANK TRUST COMPANY AMERICAS (f/k/a Bankers Trust Company),

Individually and as Administrative Agent

	 
	
By  /s/ Diane F. Rolfe                                         

	
Title: Vice-PresidentMANAGEMENT INCENTIVE COMPENSATION PLAN

Exhibit 10.2

MANAGEMENT INCENTIVE COMPENSATION PLAN

Economic Value Added (EVA) Bonus Plan

As Amended July 21, 2002

ARTICLE I

Statement of Purpose

 

1.1     The purpose of the Plan is to provide a system of incentive compensation which will promote the maximization of shareholder value over the long term.  In order to align management incentives with shareholder interests, incentive compensation will reward the creation of value.  This Plan will tie incentive compensation to Economic Value Added ("EVA") and, thereby, reward management for creating value and penalize management for destroying value.

1.2     EVA is the performance measure of value creation.  EVA reflects the benefits and costs of capital employment.  Managers create value when they employ capital in an endeavor that generates a return that exceeds the cost of the capital employed.  Managers destroy value when they employ capital in an endeavor that generates a return that is less than the cost of capital employed.  By imputing the cost of capital upon the operating profits generated by a business group, EVA measures the total value created (or destroyed) by management.

     EVA  =  (Net Operating Profit After Tax - Capital Charge)

1.3     Each Plan Participant is placed in a classification.  Each classification has a prescribed target bonus %. The bonus earned in any one year is the result of multiplying the Actual Bonus Percentage times the Participant's base pay.   Bonuses that fall within a pre-specified range will be fully paid out.  Positive and negative bonuses falling outside this range are banked forward in the Participant's Bonus Bank, with one-third of the net positive balance paid out each year in cash.

 

ARTICLE II

Definition of EVA and the Components of EVA

Unless the context provides a different meaning, the following terms shall have the following meanings.

2.1     "Participating Group" means a business division or group of business divisions which are uniquely identified for the purpose of calculating EVA and EVA based bonus awards.  Some Participants' awards may be a mixture of more than one Participating Group.

          For the purpose of this plan, the Participating Groups are listed on Exhibit C.

2.2.     "Capital" means the net investment employed in the operations of each Participating Group.  The components of Capital are as follows:

          Gross Accounts Receivable (including trade A/R from another Manitowoc unit)

     Plus:     FIFO Inventory

     Plus:     Other Current Assets

     Less:     Non-Interest Bearing Current Liabilities (NIBCL's - See Note 1)

     Plus:     Net PP&E

     Plus:     Other Operating Assets

     Plus:     Capitalized Research & Development

     Plus:     Goodwill acquired after July 3, 1993

     Plus:     Accumulated Amortization on Goodwill acquired after July 3, 1993

     Plus (Less):  Special Items (one-time)

     Equals:     Capital

Notes:      (1) NIBCL's include trade A/P to another Manitowoc unit, but do not include the contingent liability associated with Bonus Banks.

2.3     Each component of Capital will be measured by computing an average balance based on the ending monthly balance for the twelve months of the Fiscal Year.

2.4     "Cost of Capital" or "C*" means the weighted average of the after tax cost of debt and equity for the year in question.

The Cost of Capital will be reviewed annually and revised if it has changed significantly.  Calculations will be carried to one decimal point.

The cost of capital for the initial year is 12.6%.  See Exhibit A.  In subsequent plan years the methodology for the calculation of the Cost of Capital will be:

a)   Cost of Equity = Risk Free Rate + (Beta x Market Risk Premium)

b)   Debt Cost of Capital = Debt Yield x (1 - Tax Rate) 

c)   The weighted average of the Cost of Equity and the Debt Cost of Capital is determined by reference to a projected debt to capital ratio of 40%.  The Risk Free Rate is the average  daily closing yield rate on 30 year U.S. Government Bonds for the month of December immediately preceding the Plan Year, the BETA is one, and the Market Risk Premium is 5%.  The Debt Yield is the projected weighted average yield on the Company's long term obligations for the 12 month period ending December 31 of the Plan Year, and the tax rate is 39% for U.S. Companies, and the full statutory rate of the country where a foreign division or subsidiary is based.

The debt to capital ratio, BETA, and Market Risk Premium should be reviewed at least every three years with the assistance of an independent compensation consulting firm.

     d)  Short-term debt is to be treated as long-term for purposes of computing the cost of capital.

2.5     "Capital Charge"  means the deemed opportunity cost of employing Capital in the business of each Participating Group.  The Capital Charge is computed as follows:

     Capital Charge = Capital x Cost of Capital (C*)

2.6     "Net Operating Profit After Tax" or "NOPAT"

"NOPAT" means the after tax cash earnings attributable to the capital employed in the Participating Group for the year in question.  The components of NOPAT are as follows:

          Operating Earnings

     Plus:     Increase (Decrease) in Capitalized R & D (See Note 1)

     Plus:     Increase (Decrease) in Bad Debt Reserve

     Plus:     Increase (Decrease) in Inventory Reserves

     Plus:     Amortization of Goodwill acquired after July 3, 1993

     Less:     Other  Expense (Excluding interest on debt)

     Plus:     Other  Income (Excluding investment income)

     Equals:     Net Operating Profit Before Tax

     Less:     Taxes (See Note 2)

     Equals:     Net Operating Profit After Tax

     1)     Since R & D is Capitalized, the difference in the balance is the expensed amount for that 

                year.

     (2)     Taxes is assumed to be 39% of Net Operating Profit Before Tax.  (For exceptions see 

                 2.4(c)).

2.7     "Economic Value Added" or "EVA" means the NOPAT that remains after subtracting the Capital Charge, expressed as follows:

                NOPAT

      Less:     Capital Charge
Equals:     EVA

EVA may be positive or negative.

ARTICLE III

Definition and Computation of Target Bonus Value

3.1     "Actual EVA" means the EVA as calculated for each Participating Group for the year in question.

3.2     "Target EVA" means the level of EVA that is expected in order for the Participating Group to receive the Target Bonus Value.

          The Target EVA for a participating group's initial year is set by looking at historical levels of EVA achieved by the group, expectations going forward, amount of capital utilized in the business and level of seasonality, cyclicality and risk.  An independent compensation consulting firm assists in setting these initial year targets. 

          After the first year, the Base-Line EVA is revised according to the following formula:
Target EVA = Last Year's Actual EVA+ Expected Improvement in EVA
3.3     "Expected Improvement in EVA" means the constant EVA improvement that is added to shift the target up each year.  This is determined by the expected growth in EVA per year.

          See Exhibit C for the Expected Improvement for each Participating Group.

3.4     "Target Bonus Value" means the "Target Bonus Percentage" times a Participant's base pay.

3.5     "Target Bonus Percentage" is determined by a Participant's classification as shown on Exhibit B. 

3.6     "Actual Bonus Value" means the bonus earned (*) by a Participant and is computed as the Actual Bonus Percentage times a Participant's base pay.

3.7     "Actual Bonus Percentage" is determined by multiplying the Target Bonus Percentage by the Bonus Performance Value.

3.8     "Bonus Performance Value" means the difference between the Actual EVA and the Target EVA divided by the Leverage Factor plus 1.0.

3.9     "Leverage Factor" is the negative (positive) deviation from Target EVA necessary before a zero (two times Target) bonus is earned.  See Exhibit C for the Leverage Factor of each Participating Group.

3.10     A Participant's classification is determined by each business unit manager.  They are subject to approval by the CEO and the Compensation Committee of the Board of Directors.

* Note: A portion of the Actual Bonus Value may be placed in the Participants' Bonus Bank.  See Article IV for details on the Bonus Bank.

ARTICLE IV

     Description of Bonus Banks

4.1     Establishment of a Bonus Bank.  To encourage a long-term commitment by Participants to the Company, a portion of exceptional bonuses (amounts above Target as well as negative bonuses) shall be credited to "at risk" deferred accounts ("Bonus Banks"), with the level of payout contingent on sustained high performance and improvements and continued employment as provided herein.

4.2     Although a Bonus Bank may, as a result of negative EVA, have a deficit, no Plan Participant shall be required, at any time, to reimburse his/her Bonus Bank.

4.3     "Bonus Bank"  means, with respect to each Participant, a bookkeeping record of an account to which amounts are added to, or deducted from, as the case may be, from time to time under the Plan and from which bonus payments to such Participant are paid out.

4.4     "Bank Balance" means, with respect to each Participant, a bookkeeping record of the net balance of the amounts earned and paid out of such Participant's Bonus Bank.  A Participant's Bank Balance shall initially be equal to zero.  

4.5     Payout Rule:  

                 If the Bank Balance entering the Plan Year is zero or positive, then

     1)  Pay any positive bonus earned up to the "Target Bonus Value",

     2) Add any unpaid portion of the bonus earned (including negative bonuses) to the Bonus Bank,

     3)  Pay out 1/3 of any Positive Bank Balance

     4)  Carry the remaining Bank Balance forward to the next year.

     If the Bank Balance entering the Plan Year is negative, then

     1)  Pay up to 100% of the bonus earned and 50% of any bonus earned above 100%,

     2)  Add 50% of any portion of the bonus earned above 100% (including negative bonuses) to the Bonus Bank,

     3)  Pay out 1/3 of any Positive Bank Balance,

     4)  Carry the remaining Bank Balance forward to the next year.

4.6     In addition, once Participants have been in the plan for three consecutive years, the Participants will be paid their full Bank Balance up to the amount of their Bank Balance at the end of the third prior year. 

 

ARTICLE V

Plan Participation, Transfers and Terminations

5.1     Participant Group. Except as otherwise provided (primarily in Section 8.1) the Administrator will determine who shall participate in the EVA Bonus Plan.  Employees designated for Plan participation shall be management or highly compensated employees.  In order for a Participant to receive or be credited with his or her Actual Bonus Value for a Plan Year, the Participant must have (I) remained employed by the Company or an affiliate through the last day of such Plan Year, (ii) terminated employment with the Company for any reason during the Plan Year at or after the earlier of attainment of age sixty, or the first of the month following the date on which the participant's attained age plus years of service with the Company equal 80 (iii) suffered a disability within the meaning of Section 5.3 during the Plan Year, or (iv) died during the Plan Year.  In all other cases of termination of employment prior to the last day of the Plan Year, a Participant shall not be entitled to any Actual Bonus Value for such Plan Year.

5.2     Transfers.  A Participant who transfers his employment from one Participating Unit of the Company to another shall retain his Bonus Bank and will be eligible to receive future EVA Plan Awards in accordance with the provisions of the EVA Plan.  If a participant transfers to a non-participating position, any positive Bonus Bank balance would be paid out in full as soon as is practical.

5.3     Retirement or Disability.  A Participant who terminates employment with the Company, at the earlier of attainment of age sixty, or the first of the month following the date on which the participant's attained age plus years of service with the Company equal 80 for retirement, or suffers a "disability," as such term is defined in the Company's long-term disability benefits program, while in the Company's employ shall be eligible to receive the balance of their Bonus Bank.  In the case of retirement, the Participant will receive any positive bank balance in the year immediately following their retirement.  In the case of disability while in the Company's employ, the Participant will receive their balance as soon as practical after qualifying for benefit payments under the Company's long-term disability benefits program.

5.4     Involuntary Termination Without Cause or Death.  A Participant who is Terminated without cause or who dies shall receive any positive Bonus Bank balance.  Such payments will be made as soon as is practical.

5.5     Voluntary Termination.  In the event that a Participant voluntarily terminates employment with the Company, the right of the Participant to their Bonus Bank shall be forfeited unless a different determination is made by the Committee.

5.6     Involuntary Termination for Cause.  In the event of termination of employment for cause, the right of the Participant to the Bonus Bank shall be determined by the Committee.  

     "Cause" shall mean:

     (i)     any act or acts of the Participant constituting a felony under the laws of the United States, any state thereof or any foreign jurisdiction;  

     (ii)     any material breach by the Participant of any employment agreement with the Company or the policies of the Company or the willful and persistent (after written notice to the Participant) failure or refusal of the Participant to comply with any lawful directives of the Board;  

     (iii)     a course of conduct amounting to gross neglect, willful misconduct or dishonesty; or 

     (iv)     any misappropriation of material property of the Company by the Participant or any misappropriation of a corporate or business opportunity of the Company by the Participant.

5.7     Breach of Agreement.  Notwithstanding any other provision of the Plan or any other agreement, in the event that a Participant shall breach any non-competition agreement with the Company or breach any agreement with respect to the post-employment conduct of such Participant, the Bonus Bank held by such Participant shall be forfeited.

5.8              No Guarantee.  Participation in the Plan provides no guarantee that a payment under the Plan will be paid.  Selection as a Participant is no guarantee that payments under the plan will be paid or that selection as a Participant will be made in the subsequent Calendar Year.

ARTICLE VI

General Provisions

6.1     Withholding of Taxes.  The Company shall have the right to withhold the amount of taxes, which in the determination of the Company, are required to be withheld under law with respect to any amount due or paid under the Plan.

6.2     Expenses.  All expenses and costs in connection with the adoption and administration of the plan shall be borne by the Company.

6.3     No prior Right or Offer.  Except and until expressly granted pursuant to the Plan, nothing in the Plan shall be deemed to give any employee any contractual or other right to participate in the benefits of the Plan.

6.4     Claims for Benefits.  In the event a Participant (a "claimant") desires to make a claim with respect to any of the benefits provided hereunder, the claimant shall submit evidence satisfactory to the Committee of facts establishing his entitlement to a payment under the Plan.  Any claim with respect to any of the benefits provided under the Plan shall be made in writing within ninety (90) days of the event which the claimant asserts entitles him to benefits.  Failure by the claimant to submit his claim within such ninety (90) day period shall bar the claimant from any claim for benefits under the Plan.

6.5     In the event that a claim which is made by a claimant is wholly or partially denied, the claimant will receive from the Committee a written explanation of the reason for denial and the claimant or his duly authorized representative may appeal the denial of the claim to the Committee at any time within ninety (90) days after the receipt by the claimant of written notice from the Committee of the denial of the claim.  In connection therewith, the claimant or his duly authorized representative may request a review of the denied claim; may review pertinent documents; and may submit issues and comments in writing.  Upon receipt of an appeal, the Committee shall make a decision with respect to the appeal and, not later than sixty (60) days after receipt of a request for review, shall furnish the claimant with a decision on review in writing, including the specific reasons for the decision written in a manner calculated to be understood by the claimant, as well as specific reference to the pertinent provisions of the Plan upon which the decision is based.  In reaching its decision, the Committee shall have complete discretionary authority to determine all questions arising in the interpretation and administration of the Plan, and to construe the terms of the Plan, including any doubtful or disputed terms and the eligibility of a Participant for benefits.

6.6     Action Taken in Good Faith; Indemnification.  The Committee may employ attorneys, consultants, accountants or other persons and the Company's directors and officers shall be entitled to rely upon the advice, opinions or valuations of any such persons.  All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon all employees who have received awards, the Company and all other interested parties.  No member of the Committee, nor any officer, director, employee or representative of the Company, or any of its affiliates acting on behalf of or in conjunction with the Committee, shall be personally liable for any action, determination, or interpretation, whether of commission or omission, taken or made with respect to the Plan, except in circumstances involving actual bad faith or willful misconduct.  In addition to such other rights of indemnification as they may have as members of the Board, as members of the Committee or as officers or employees of the Company, all members of the Committee and any officer, employee or representative of the Company or any of its subsidiaries acting on their behalf shall be fully indemnified and protected by the Company with respect to any such action, determination or interpretation against the reasonable expenses, including attorneys' fees actually and necessarily incurred, in connection with the defense of any civil or criminal action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or an award granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by Company ) or paid by them in satisfaction of a judgment in any action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person claiming indemnification shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.  Expenses (including attorneys' fees) incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding if such person claiming indemnification is entitled to be indemnified as provided in this Section.

6.7     Rights Personal to Employee.  Any rights provided to an employee under the Plan shall be personal to such employee, shall not be transferable (except by will or pursuant to the laws of descent or distribution), and shall be exercisable, during his lifetime, only by such employee.

6.8     Upon termination of the Plan or suspension for a period of more than 90 days, the Bank Balance of each Participant shall be distributed as soon as practicable but in no event later than 90 days from such event.  The Committee, in its sole discretion, may accelerate distribution of the Bank Balance, in whole or in part, at any time without penalty.

6.9     Non-Allocation of Award.  In the event of a suspension of the Plan in any Plan Year, as provided herein at Article VIII, Section 8, the Current Bonus for the subject Plan year shall be deemed forfeited and no portion thereof shall be allocated to Participants.  Any such forfeiture shall not affect the calculation of EVA in any subsequent year.

ARTICLE VII

Limitations

7.1     No Continued Employment.  Nothing contained herein shall provide any employee with any right to continued employment or in any way abridge the rights of the Company and its Participating Units to determine the terms and conditions of employment and whether to terminate employment of any employee.

7.2     No Vested Rights.  Except as otherwise provided herein, no employee or other person shall have any claim of right (legal, equitable, or otherwise)to any award, allocation, or distribution or any right, title, or vested interest in any amounts in his Bonus Bank and no officer or employee of the Company or any Participating Group or any other person shall have any authority to make representations or agreements to the contrary.  No interest conferred herein to a Participant shall be assignable or subject to claim by a Participant's creditors.  The right of the Participant to receive a distribution hereunder shall be an unsecured claim against the general assets of the Company and the Participant shall have no rights in or against any specific assets of the Company as the result of participation hereunder.

7.3     Not Part of Other Benefits.  The benefits provided in this plan shall not be deemed a part of any other benefit provided by the Company to its employees.  The Company assumes no obligation to plan Participants except as specified herein.  This is a complete statement, along with the Schedules and Appendices attached hereto, of the terms and conditions of the plan.

7.4     Other Plans.  Nothing contained herein shall limit the Company or the Compensation Committee's power to grant bonuses to employees of the Company, whether or not Participants in this plan.

7.5     Limitations.  Neither the establishment of the plan or the grant of an award hereunder shall be deemed to constitute an express or implied contract of employment for any period of time or in any way abridge the rights of the Company to determine the terms and conditions of employment or to terminate the employment of any employee with or without cause at any time.

7.6     Unfunded Plan.  This Plan is unfunded and is maintained by the Company in part to provide deferred compensation to a select group of management and highly compensated employees.  Nothing herein shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant.

ARTICLE VIII

Authority

 

8.1     Plan Adminstration.  "Committee" means the Compensation Committee of the Board of Directors of the Company, or if there is none, The Board of Directors.  "Administrator" means the Company's Senior Vice President-Human Resources or, if that position is vacant, the Committee.  Except as otherwise expressly provided herein, full power and authority to interpret and administer this plan shall be vested in the Committee.  The Committee may authorize the Administrator to determine who shall participate in the EVA Bonus Plan, except for the participation of officers.  Participation of officers shall require Committee approval.  The Committee may from time to time make such decisions and adopt such rules and regulations for implementing the Plan as it deems appropriate for any Participant under the Plan.  Any decision taken by the Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall be final, conclusive and binding upon all Participants and any person claiming under or through them.

 

8.2     Board of Directors Authority.  The Board shall be ultimately responsible for administration of the plan.  References made herein to the "Compensation Committee" assume that the Board of Directors has created a Compensation Committee to administer the Plan.  In the event a Compensation Committee is not so designated, the Board shall administer the Plan.  The Board or its Compensation Committee, as appropriate, shall work with the CEO of the Company in all aspects of the administration of the Plan.

 

ARTICLE IX

Notice

 

9.1     Any notice to be given pursuant to the provisions of the Plan shall be in writing and directed to the appropriate recipient thereof at his business address or office location.

 

ARTICLE X

Effective Date

10.1     This Plan shall be effective as of  July 4, 1993.

ARTICLE XI

Amendments

11.1     This Plan may be amended, suspended or terminated at any time at the sole discretion of the Board upon the recommendation of the Compensation Committee.  Provided, however, that no such change in the Plan shall be effective to eliminate or diminish the distribution of any Award that has been allocated to the Bank of a Participant prior to the date of such amendment, suspension or termination.  Notice of any such amendment, suspension or termination shall be given promptly to each Participant.

 

ARTICLE XII

Applicable Law

 

12.1     This Plan shall be construed in accordance with the provisions of the laws of the State of Wisconsin.

 

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Exhibit A

Calculation of the Cost of Capital

Inputs Variables:

Risk Free Rate = Average Daily closing yield on U.S. Government 30 Yr. Bonds (for the month of December preceding the Plan Year).

Market Risk Premium = 5.0% (Fixed)

Beta =  One (Fixed)

Debt/Capital Ratio = 40% (Fixed)

b = Cost of Debt Capital (Projected & Weighted Average Yield on the Company's Long Term Debt Obligations).

Marginal Tax Rate = 39.0% (Historical Average).  However, for exceptions see 2.4(C)

pagebreak

Calculations:

y = Cost of Equity Capital

   = Risk Free Rate + (Beta x Market Risk Premium)

Weighted Average Cost of Capital = [Cost of Equity Capital x (1 - Debt/Capital Ratio)] + [Cost of Debt x (Debt/Capital Ratio) x (1 - Marginal Tax Rate)]

c* = [y x (1 - Debt/Capital)] + [b x (Debt/Capital) x (1 - Marginal Tax Rate)] 

pagebreak

Exhibit B

	
Participant

Classification
	
Target Bonus

Percentage

	

I
	

75%

	
II
	
50%

	
III
	
40%

	
IV
	
35%

	
V
	
30%

	
VI
	
25%

	
VII
	
20%

	
VIII
	
15%

	
IX
	
10%

	
X
	
5%

	
XI
	
2%

Exhibit C

As of January 1, 2002:

	
Participation Groups
	Expected Improvement in EVA

	Leverage Factor

	

MANITOWOC ICE 
	

500,000

	

2,000,000

	
DIVERSIFIED REFRIGERATION
	100,000

	500,000

	
BEVERAGE GROUP
	1,075,000

	3,000,000

	
REFRIGERATION GROUP
	850,000

	2,500,000

	
FOODSERVICE GROUP
	1,000,000

	3,500,000

	 	 	 
	
MANITOWOC CRANES 
	1,000,000

	3,000,000

	
POTAIN
	2,500,000

	7,500,000

	
FEMCO
	200,000

	600,000

	
NCC/MRI
	90,000

	150,000

	
MANITOWOC BOOM TRUCKS
	700,000

	1,750,000

	
CRANE GROUP 
	2,200,000

	5,500,000

	 	 	 
	
MARINE GROUP
	450,000

	1,300,000

	 	 	 
	
CORPORATE
	1,000,000

	7,000,000

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