Document:

EX-10.4 SUPPLEMENTAL EXECUTIVE LONG-TERM INCNT BNS

 

Exhibit 10.4

NACCO INDUSTRIES, INC.

SUPPLEMENTAL EXECUTIVE LONG-TERM INCENTIVE BONUS PLAN

1. Purpose of the Plan

     The purpose of this Supplemental Executive Long-Term Incentive Bonus Plan (the “Plan”) is to
further the long-term profits and growth of NACCO Industries, Inc. (the “Company”) by enabling the
Company to attract, retain and reward key executive officers of the Company by providing an
additional long-term incentive compensation opportunity to those key executive officers who the
Compensation Committee has determined made extraordinary contributions to such profits and growth
during a year. This incentive is in addition to annual compensation and other long-term incentive
compensation and is intended to reward extraordinary individual effort and/or results and encourage
enhancement of the Company’s stockholder value.

2. Definitions

	 	(a)	 	“Average Award Share Price” means the lesser of (i) the average of the closing
price per share of Class A Common Stock on the New York Stock Exchange on the Friday
(or if Friday is not a trading day, the last trading day before such Friday) for each
week during the calendar year preceding the commencement of the Award Year (or such
other previous calendar year as determined in advance by the Committee) or (ii) the
average of the closing price per share of Class A Common Stock on the New York Stock
Exchange on the Friday (or if Friday is not a trading day, the last trading day before
such Friday) for each week of the applicable Award Year.
	 
	 	(b)	 	“Award” means an award paid to a Participant under this Plan for an Award Year
(if any) in an amount determined by the Committee. The Committee shall allocate the
amount of an Award between the cash component, to be paid in cash, and the equity
component, to be paid in Award Shares.
	 
	 	(c)	 	“Award Shares” means shares of Class A Common Stock that are issued pursuant
to, and with such restrictions as are imposed by, the terms of this Plan. Such shares
may be shares of original issuance or treasury shares or a combination of the
foregoing.
	 
	 	(d)	 	”Award Year” means the calendar year on which an Award is based.
	 
	 	(e)	 	“Class A Common Stock” means the Company’s Class A Common Stock, par value
$1.00 per share.
	 
	 	(f)	 	“Committee” means the Compensation Committee of the Company’s Board of
Directors or any other committee appointed by the Company’s Board of Directors to
administer this Plan in accordance with Section 3, so long as any such committee
consists of not less than two directors of the Company and so long as each member of
the Committee (i) is not an employee of the Company or any of

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	 	 	 	its subsidiaries and (ii) is a “disinterested person” within the meaning of Rule
16b-3.
	 
	 	(g)	 	“Participant” means any salaried employee of the Company who is an “executive
officer” of the Company (as such term is defined in Rule 3b-7 promulgated under the
Securities Exchange Act of 1934) and who, in the judgment of the Committee, made an
extraordinary and exceptional contribution to, or achieved extraordinary and
exceptional results with respect to, the profits or growth of the Company during an
Award Year.
	 
	 	(h)	 	“Rule 16b-3” means Rule 16b-3 promulgated under the Securities Exchange Act of
1934 (or any successor rule to the same effect), as in effect from time to time.

3. Administration

     This Plan shall be administered by the Committee. The Committee shall have complete authority
to interpret all provisions of this Plan consistent with law, to prescribe the form of any
instrument evidencing any Award granted under this Plan, to adopt, amend and rescind general and
special rules and regulations for its administration, and to make all other determinations
necessary or advisable for the administration of this Plan. A majority of the Committee shall
constitute a quorum, and the action of members of the Committee present at any meeting at which a
quorum is present, or acts unanimously approved in writing, shall be the act of the Committee. All
acts and decisions of the Committee with respect to any questions arising in connection with the
administration and interpretation of this Plan, including the severability of any or all of the
provisions hereof, shall be conclusive, final and binding upon the Company and all present and
former Participants, all other employees of the Company, and their respective descendants,
successors and assigns. No member of the Committee shall be liable for any such act or decision
made in good faith.

4. Eligibility

     Each Participant (as defined above) may be eligible to participate in this Plan and receive
Awards in accordance with Section 5.

5. Awards

     The Committee may, from time to time and upon such conditions as it may determine in its sole
and absolute discretion, authorize the payment of Awards to Participants, which shall be not
inconsistent with, and shall be subject to all of the requirements of, the following provisions:

	 	(a)	 	No later than March 15th following each Award Year, the Committee
shall determine whether any Awards will be granted hereunder to any Participant and the
amount thereof. When making such determination, the Committee shall take into account
such factors as (i) individual performance and contributions towards various Company
goals, (ii) extraordinary results and (iii) any extraordinary events. The Committee
shall have the power to specify the allocation between the cash portion of the Award
and the equity portion of the Award. Notwithstanding

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	 	 	 	the foregoing, no Award shall be payable under the Plan to any Participant except as
determined by the Committee.
	 
	 	(b)	 	Each Award shall be paid partly in cash and partly in Award Shares. The number
of Award Shares to be issued to a Participant shall be based upon the number of shares
of Class A Common Stock that can be purchased with the equity portion of the Award at
the Average Award Share Price. Awards shall be paid subject to all withholdings and
deductions pursuant to Section 6. Notwithstanding any other provision of the Plan, the
maximum amount paid to a Participant in a single year as a result of Awards under this
Plan shall not exceed $1,000,000.
	 
	 	(c)	 	Award Shares shall entitle such Participant to voting, dividend and other
ownership rights. Each Award shall provide that the transferability of the Award
Shares shall be prohibited or restricted in the manner and to the extent prescribed by
the Committee at the date of payment for a period of ten years, or such other shorter
or longer period as may be determined by the Committee from time to time.
	 
	 	(d)	 	Each payment of Award Shares shall be evidenced by an agreement executed on
behalf of the Company by an executive officer and delivered to and accepted by such
Participant; each such agreement shall contain such terms and provisions, consistent
with this Plan, as the Committee may approve, including, without limitation,
prohibitions and restrictions regarding the transferability of Award Shares (other than
a transfer (i) by will or the laws of descent and distribution, (ii) pursuant to a
domestic relations order meeting the definition of a qualified domestic relations order
under Section 206(d)(3)(B) of the Employee Retirement Income Security Act of 1974, as
amended, or (iii) to a trust for the benefit of a Participant or his spouse, children
or grandchildren (provided that Award Shares transferred to such a trust shall continue
to be Award Shares subject to this Plan)).
	 
	 	(e)	 	Notwithstanding any provision of the Plan to the contrary, Awards payable
hereunder shall be paid within two and one-half months after the end of the first
calendar year in which the Award is no longer subject to a substantial risk of
forfeiture.

6. Withholding Taxes

     To the extent that the Company is required to withhold federal, state or local taxes in
connection with any Award paid to a Participant under this Plan, and the amounts available to the
Company for such withholding are insufficient, it shall be a condition to the receipt of such Award
that the Participant make arrangements satisfactory to the Company for the payment of the balance
of such taxes required to be withheld, which arrangements (in the discretion of the Committee) may
include relinquishment of a portion of such Award. The Company and a Participant may also make
similar arrangements with respect to the payment of any other taxes derived from or related to the
Award with respect to which withholding is not required.

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7. Amendment, Termination and Adjustments

     The Committee may alter or amend this Plan from time to time or terminate it in its entirety;
provided, however, that no such action shall, without the consent of a Participant, affect the
rights in any Award Shares of such Participant; and further provided, however, that, without
further approval by the stockholders of the Company, no such action shall (i) increase the maximum
number of Award Shares to be issued under this Plan specified in Section 8 (except that adjustments
and additions expressly authorized by this Section 7 shall not be limited by this clause (i)) or
(ii) cause Rule 16b-3 to become inapplicable to this Plan. The Committee may make or provide for
such adjustment in the total number of Award Shares to be issued under this Plan specified in
Section 8 as the Committee in its sole discretion, exercised in good faith, may determine is
equitably required to reflect (a) any stock dividend, stock split, combination of shares,
recapitalization or any other change in the capital structure of the Company, (b) any merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of rights or warrants to purchase securities,
or (c) any other corporate transaction or event having an effect similar to any of the foregoing.
All Awards granted prior to any termination of this Plan shall continue to be subject to the terms
of this Plan. In the case of termination of employment by reason of death, permanent disability or
retirement pursuant to the terms of the qualified pension plan applicable to the Participant (or,
for Participants who are not covered by a qualified pension plan, retirement after reaching age 60
with at least 15 years of service), or in the case of other special circumstances, of a Participant
who holds Award Shares as to which the prohibition or restriction on transfer has not lapsed, or in
case of a termination of the Plan pursuant to this Section 7, the Committee may, in its sole
discretion, accelerate the time at which such prohibition or restriction on transfer will lapse.

8. Award Shares Subject to Plan

     Subject to adjustment as provided in this Plan, the total number of shares of Class A Common
Stock which may be issued as Award Shares under this Plan shall be 100,000.

9. Approval by Stockholders

     The Plan shall be submitted for approval by the stockholders of the Company. If such approval
has not been obtained by June 1, 2006, no awards will be made under the Plan.

10. General Provisions

	 	(a)	 	No Right of Employment. Neither the adoption or operation of this Plan, nor
any document describing or referring to this Plan, or any part thereof, shall confer
upon any employee any right to continue in the employ of the Company, or shall in any
way affect the right and power of the Company to terminate the employment of any
employee at any time with or without assigning a reason therefor to the same extent as
the Company might have done if this Plan had not been adopted.
	 
	 	(b)	 	Governing Law. The provisions of this Plan shall be governed by and construed
in accordance with the laws of the State of Delaware.

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	 	(c)	 	Miscellaneous. Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such headings, numbering and paragraphing shall
not in any case be deemed in any way material or relevant to the construction of this
Plan or any provisions thereof. The use of the masculine gender shall also include
within its meaning the feminine. The use of the singular shall also include within its
meaning the plural, and vice versa.
	 
	 	(d)	 	Limitation on Rights of Employees. No Trust. No trust has been created by the
Company for the payment of Awards under this Plan; nor have the employees been granted
any lien on any assets of the Company to secure payment of such benefits. This Plan
represents only an unfunded, unsecured promise to pay by the Company and a Participant
hereunder is a mere unsecured creditor of the Company.

11. Effective Date

     Subject to its approval by the stockholders of the Company, this Plan shall become effective
as of January 1, 2006.

5EX-10.5 FORM OF AWARD AGREEMENT

 

Exhibit 10.5

FORM OF AGREEMENT UNDER NACCO INDUSTRIES, INC.

SUPPLEMENTAL EXECUTIVE LONG-TERM INCENTIVE BONUS PLAN

[date]

NACCO Industries, Inc.

5875 Landerbrook Drive

Mayfield Heights, Ohio 44124-4017

Attention: Secretary

			
	Re:	 	200_ Grants of Award Shares under Supplemental Executive Long-Term Incentive Bonus Plan

     [Name]

     The undersigned is an employee of NACCO Industries, Inc. (the “Company”) to whom grants of an
award (the “Award”) consisting of [insert number] fully paid and nonassessable shares (the “Award
Shares”) of Class A Common Stock, par value $1.00 per share, of the Company’s Class A Common Stock
(“Class A Common”) were made on
_________ __, 200_ by the Compensation Committee (the “Committee”) of
the Board of Directors of the Company pursuant to the NACCO Industries, Inc. Supplemental Executive
Long-Term Incentive Bonus Plan (the “Plan”). I hereby accept the Award and acknowledge to and
agree with the Company as follows:

     1. Award. I acknowledge that the Committee has granted the Award to me subject to the terms
of the Plan for the January 1, 200_ through
December 31, 200_ Award Term, the terms of the
resolutions of the Committee pursuant to which the Award was made and the terms of this Agreement,
and I hereby acknowledge receipt of stock certificate numbered [number] for [number] shares of
Class A Common representing the Award Shares.

     2. Restrictions on Transfer. I represent and covenant that, other than a transfer
(a) by will or the laws of descent and distribution, (b) pursuant to a domestic relations order
meeting the definition of a qualified domestic relations order under Section 206(d)(3)(B) of the
Employee Retirement Income Security Act of 1974, as amended (“QDRO”), or (c) to a trust (a “Trust”)
for my benefit or the benefit of my spouse, my children or my grandchildren (provided that Award
Shares transferred to such a Trust shall continue to remain subject to the transfer restrictions
hereinafter set forth), the Award Shares shall be non-transferable and I shall not make (or attempt
to make) any sale, assignment, transfer, exchange, pledge, hypothecation or encumbrance of the
Award Shares.

     3. Lapse of Restrictions. I acknowledge that the transfer restrictions on the Award
Shares set forth in paragraph 2 above shall lapse for all purposes and shall be of no further force
or effect upon the earliest to occur of: (a) December 31,
20__; (b) the date of my death or
permanent disability; (c) five years after retirement in accordance with the terms of The Combined
Defined Benefit Plan of NACCO Industries, Inc. and

 

 

Its Subsidiaries (or, if I am not a member of
such plan, five years after my termination of employment after reaching age 60 with at least 15
years of service) (or earlier with the approval of the Committee); (d) an extraordinary release of
transfer restrictions as described in paragraph 3A below; (e) the transfer of Award
Shares pursuant to a QDRO, but only as to the shares so transferred; and (f) a lapse of transfer
restrictions as provided in the terms of an instrument of termination adopted under the Plan. As
notice of such transfer restrictions, I acknowledge that there is affixed to the face or back of
each stock certificate representing Award Shares the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH IN THE NACCO INDUSTRIES, INC.
SUPPLEMENTAL EXECUTIVE LONG-TERM INCENTIVE BONUS PLAN (“PLAN”). SUCH
RESTRICTIONS ON TRANSFER UNDER THE PLAN SHALL LAPSE FOR ALL PURPOSES
AND SHALL BE OF NO FURTHER FORCE OR EFFECT AFTER DECEMBER 31, 20__, OR
SUCH EARLIER TIME AS PROVIDED IN THE PLAN.

     3A. Extraordinary Release of Transfer Restrictions. At any time following the third
anniversary of the date Award Shares are issued, a Participant may request in writing that the
Committee authorize the lapse of restrictions on transfer of such Award Shares if the Participant
desires to dispose of such Award Shares for (i) the purchase of a principal residence for the
Participant, (ii) payment of medical expenses for the Participant, his spouse or his dependents,
(iii) payment of expenses for the education of the Participant, his spouse or his dependents or
(iv) any other extraordinary reason which the Committee has previously approved in writing,
provided that the restrictions on no more than 20% of such Award Shares may be released pursuant to
this paragraph 3A. The Committee shall have the sole power to grant or deny any such request.
Upon the granting of any such request, the Company shall cause the release of restrictions pursuant
to paragraph 3 of such number of Award Shares as the Committee shall authorize.

     4. Obligations. I agree that each Trust and I shall fulfill the obligations imposed with
respect to Award Shares by the Plan and this Agreement.

     5. Rights. I understand that, subject to the transfer restrictions set forth herein, I shall
have all of the rights of a holder of Class A Common with respect to the Award Shares, including
the right to vote such shares, to receive any dividends paid thereon and to participate in any of
the matters described in clauses (a), (b) and (c) of Section 7 of the Plan. Any securities that I
receive in respect to Award Shares in connection with any of such matters shall be deemed to be
Award Shares, and shall be subject to the transfer restrictions set forth herein to the same extent
and for the same period as if such securities were the original Award Shares with respect to which
they were issued.

     6. Surrender of Certificates. I understand that: (a) in the case of a transfer under
clause (a) or (b) of paragraph 2 above, on surrender to the Company by my successor or successors
in interest to the Award Shares of the appropriate certificate or certificates reflecting the Award
Shares, or (b) on surrender to the Company of the appropriate certificate or certificates
reflecting Award Shares with respect to which the transfer restrictions have otherwise lapsed in
accordance with paragraph 3 or 3A above, the Company shall cause a new certificate or certificates
to be issued without any legend referring to such restrictions.

     7. Withholding. In order that the Company may satisfy its withholding obligations with
respect to the compensation income resulting from the grant of any Award Shares, I authorize and
direct the Company to withhold from any amounts otherwise payable to me such amounts of taxes with
respect to the income attributable to such shares and at such time or times as may be required to
be withheld, including, without

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limitation, taxes required to be withheld by reason of the
compensation required to be reported for Federal income and employment tax purposes by me, all as
determined in good faith in the sole judgment of the Company. If there are no such amounts
otherwise payable to me, or if such amounts are insufficient, I will reimburse or indemnify the
Company or make provision satisfactory to the Board of Directors or the Committee (or to any
officer authorized for that purpose by the Board of Directors or the Committee) to reimburse or
indemnify the Company for such amounts of taxes at such time and from time to time, as the
Company may make demand for such reimbursement or indemnity. If and to the extent that in the sole
judgment of the Board of Directors or the Committee (or any officer authorized for that purpose by
the Board of Directors or the Committee) it appears advisable to do so, in order to enforce the
Company’s rights under the Plan and this Agreement, the Company shall not issue or cause to be
issued to me (or to my successor in interest), any new stock certificate without any legend
referring to the transfer restrictions with respect to the Award Shares as to which such
restrictions have lapsed, unless and until such amounts of taxes have been withheld from amounts
otherwise payable to me (or any of my successors in interest), or I (or such successor in interest)
reimburse or indemnify the Company for such amounts of such taxes or make other provisions for
reimbursement or indemnification to the Company of such taxes, satisfactory in the sole judgment of
the Board of Directors or the Committee (or such officer) exercised in good faith.

     8. Registration. (a) I hereby acknowledge that I have been advised, and I understand and
agree, that: (i) the issuance of such Award Shares to me has not been registered under the
Securities Act of 1933, as amended (the “Act”); (ii) any routine sale of such Award Shares made in
reliance upon Rule 144 under the Act, if then available, can only be made in limited amounts in
accordance with the terms and conditions of that Rule; (iii) the Company is not under any
obligation at any time to register any of such Award Shares under the Act; (iv) all certificates
for Award Shares shall bear a legend substantially as follows:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNTIL SUCH SHARES HAVE BEEN REGISTERED UNDER SUCH ACT OR UNTIL THE COMPANY
SHALL HAVE RECEIVED AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH SHARES MAY BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT
RESTRICTIONS.

and (v) the Company may instruct any transfer agent for its shares not to permit transfer of any of
the Award Shares unless specifically authorized by the Company.

     (b) I hereby agree that none of such Award Shares shall be sold or otherwise disposed of, nor
shall any of the same be offered for sale, by me except pursuant to a currently effective
registration statement by which such shares are duly registered under the Act, or in accordance
with an opinion of counsel satisfactory to the Company, which opinion shall have been approved by
the Company and be to the effect that the contemplated transaction (which shall be described
therein) may be legally effected, and the shares so transferred may subsequently be resold, without
registration under the Act.

     9. No Right to Employment. I acknowledge that the grant of Award Shares to me does
not in any way entitle me to continued employment with the Company and does not limit or restrict
any right that the Company otherwise may have to terminate my employment.

	 	 	 
	 	 	 
	 	 	 
	 
	 	 

[name]

ACCEPTED                                                             , 20__

NACCO INDUSTRIES, INC.

	 	 	 	 
	 	 
	By:  	 	 
	 	[name and title] 	 
	 	 	 
	 

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