Document:

Exhibit 10.13

 

THE MANITOWOC COMPANY,
INC.

 

SEVERANCE PAY PLAN

 

 

THE MANITOWOC COMPANY, INC.

SEVERANCE PAY PLAN

 

TABLE OF
CONTENTS

 

	
  Introduction

  	
  1

  
	
   

  	
   

  
	
  This document sets forth the
  terms of The Manitowoc Company, Inc. Severance Pay Plan as it applies to
  individuals employed in the United States. You should review this document
  carefully so that you will better understand your rights and benefits under
  the Plan.

  	
   

  
	
   

  	
   

  
	
  Terms and Conditions

  	
  2

  
	
   

  	
   

  
	
  This document uses a number of
  specific legal terms when defining your rights under the Plan. Whenever a
  word begins with a capital letter, you should assume that the word has a
  specific legal meaning and that the word is defined somewhere in this
  document. This section defines many of the key terms and conditions that are
  necessary to your understanding of the Plan.

  	
   

  
	
   

  	
   

  
	
  Severance Benefits

  	
  4

  
	
   

  	
   

  
	
  The Plan will provide selected
  Eligible Employees with severance benefits that are designed to meet the
  specific facts and circumstances of each such termination. Severance benefits
  do not need to be uniform and no Employee shall have any right to any
  benefits or to any form of benefits except to the extent provided in a valid
  written severance offer from an authorized representative of Manitowoc and,
  if applicable, subject to the terms of a required Release Agreement.

  	
   

  
	
   

  	
   

  
	
  Application for Benefits

  	
  6

  
	
   

  	
   

  
	
  In order to receive your
  benefits, you must file an application for such benefits with the Plan
  Administrator. This section describes the application process and your right
  to have a decision regarding your benefits reviewed.

  	
   

  
	
   

  	
   

  
	
  Miscellaneous Information

  	
  8

  
	
   

  	
   

  
	
  The following information is
  important to your understanding of the Plan and is provided to further
  clarify how the Plan operates.

  	
   

  
	
   

  	
   

  
	
  Legal Rights and Obligations

  	
  12

  
	
   

  	
   

  
	
  This section describes your
  rights under the Employee Retirement Income Security Act of 1974 (as amended)
  (“ERISA”).

  	
   

  
	
   

  	
   

  
	
  Plan Administration

  	
  14

  
	
   

  	
   

  
	
  You
  may need to contact Manitowoc or the Plan Administrator if you have any
  questions regarding the Plan. The following information will help you to do
  this.

  	
   

  

 

 

This document sets forth the terms of The Manitowoc
Company, Inc. Severance Pay Plan as it applies to individuals employed in
the United States.  You should review
this document carefully so that you will better understand your rights and
benefits under the Plan.

 

The Manitowoc
Company, Inc. (“Manitowoc”) has amended and restated the Manitowoc Company, Inc.
Severance Pay Plan (the “Plan”), as set forth herein.  The Plan is designed to help employees of
Manitowoc and Related Employers to understand how severance benefits are
determined and administered.  No employee
is guaranteed to receive any benefits under this Plan.

 

The Plan is an unfunded welfare benefit plan for
purposes of ERISA and a severance pay plan within the meaning of United States
Department of Labor regulations Section 2510.3-2(b).  The Plan is also intended to be exempt from
the application of Code Section 409A.

 

This booklet
serves as both the Plan document and summary plan description effective as of January 1,
2009.  This booklet supersedes any prior
version of the Plan and the Plan itself supersedes any other severance plan,
program, policy or other similar arrangement, whether formal or informal, if
any, previously maintained by Manitowoc or any other Related Employer.  To the extent that any provision in this
booklet is ambiguous or to the extent that it is unclear how the terms should
apply in a specific situation, then Manitowoc has the sole discretionary
authority to interpret and apply this Plan.

 

This booklet is
not intended to provide you with tax or legal advice regarding your benefits
under the Plan.

 

1

 

This document uses a number of specific legal terms
when defining your rights under the Plan. 
Whenever a word begins with a capital letter, you should assume that the
word has a specific legal meaning and that the word is defined somewhere in
this document.  This section defines many
of the key terms and conditions that are necessary to your understanding of the
Plan.

 

Unless a different
meaning is clearly required by the context, the following words, when used in
this Plan, shall have the meaning(s) set forth below.

 

(a)           Code.  The Code refers to the Internal Revenue Code
of 1986, as amended from time to time, and as interpreted by applicable
regulations and rulings.

 

(b)           Eligible
Employees.  The Plan is available
only to employees of Manitowoc and other Related Employers. An employee who is
covered under a collective bargaining agreement is not eligible to receive any
benefits under this Plan.

 

(c)           ERISA.  The Employee Retirement Income Security Act
of 1974, as amended from time to time, and as interpreted by applicable
regulations and rulings.

 

(d)           Manitowoc.  Manitowoc refers to The Manitowoc Company, Inc.
and any successor thereto.  Any action or
authority designated to Manitowoc under this Plan may be exercised by Manitowoc’s
Board of Directors or any delegate or designee of the Board of Directors.

 

(e)           Participant.  A Participant shall refer only to an Eligible
Employee who is entitled to receive severance benefits in accordance with a
written communication from an authorized representative of Manitowoc.  That written communication will describe all
benefits that will be provided for an individual Participant in this Plan.  Eligible Employees may also be required to
execute a valid Release Agreement in order to become a Participant in the Plan
and receive severance benefits under the Plan.

 

(g)           Plan.  The Manitowoc Company, Inc. Severance
Pay Plan, as stated herein and as amended from time to time.

 

(h)           Plan
Administrator.  Manitowoc serves as
the Plan Administrator and shall be the named fiduciary that controls and
manages the operation and administration of the Plan.

 

(i)            Plan Year.  The calendar year.

 

(j)            Related Employer.  Any entity that is related to Manitowoc (as
determined under Code Sections 414(b), (c) or (m)) which, consistent with
written authorization of Manitowoc’s 

 

2

 

Board of Directors or its
express delegate(s), has adopted this Plan. 
As of the date of this Plan document, the following entities are Related
Employers under this Plan: All Manitowoc subsidiaries with employees in the
United States.  By its adoption of this
Plan, a Related Employer shall be deemed to appoint Manitowoc as its exclusive
agent to exercise on its behalf all power and authority conferred under this
Plan.  Manitowoc’s authority to act as
such agent shall continue until this Plan is terminated by Manitowoc or as to
that respective Related Employer.

 

(k)           Release Agreement.  A written agreement prepared by an authorized
representative of Manitowoc which sets forth the specific severance benefits
offered to the Eligible Employee and requires a release of any claims that the
Eligible Employee might have against Manitowoc and/or any Related Employer(s) and
employees, agents and officers of Manitowoc and all Related Employers and other
similarly situated individuals.  When
preparing a Release Agreement, Manitowoc shall act in its capacity as an
employer and not in any fiduciary capacity under ERISA.  Manitowoc need not use the same Release
Agreement for each Eligible Employee.

 

3

 

SEVERANCE
BENEFITS

 

The Plan will provide
selected Eligible Employees with severance benefits that are designed to meet
the specific facts and circumstances of each such termination.  Severance benefits do not need to be uniform
and no Employee shall have any right to any benefits or to any form of benefits
except to the extent provided in a valid written severance offer from an
authorized representative of Manitowoc and, if applicable, subject to the terms
of a required Release Agreement.

 

SEVERANCE BENEFITS

 

All severance benefits under this Plan are provided at
Manitowoc’s sole discretion and need not be uniform among all employees.  In deciding whether to offer any benefits
under this Plan, Manitowoc shall act in its capacity as an employer, and not in
any fiduciary capacity under ERISA.  No
employee of Manitowoc or any Related Employer shall receive any severance,
termination or other similar benefits unless offered under this Plan.

 

Notwithstanding the fact that this Plan does not offer
or guarantee any specific benefits for any Eligible Employee, Manitowoc will
generally consider two different types of severance benefits: (a) taxable
Severance Pay; and (b) Reimbursement of COBRA Expenses.  The Board of Directors and the Compensation
Committee of Manitowoc have the exclusive authority to authorize severance
benefits for elected officers of Manitowoc. 
The Board of Directors and the Compensation Committee have also granted
both the Chief Executive Officer and the Senior Vice President of Human
Resources and Administration of Manitowoc the power to individually authorize
Plan benefits to other employees of Manitowoc and each Related Employer.  No one other than the Board of Directors or
the Compensation Committee of Manitowoc, or the individuals designated above
shall have any authority to offer or authorize any severance benefits to any
employee of Manitowoc or any Related Employer.

 

(a)           Severance
Pay. Manitowoc may agree to provide cash severance payments to a
Participant in either a single lump-sum or in a series of ongoing payments.  Ongoing payments may be limited such that
they will end or be reduced to the extent that a Participant secures
alternative employment.  The Plan
Administrator shall be responsible for determining whether Manitowoc has agreed
to provide an Eligible Employee with such benefits and determining whether a
Participant continues to be eligible to receive any ongoing benefits under that
arrangement.

 

(b)           Reimbursement
of COBRA Expenses. Manitowoc may also agree to reimburse a Participant for
some or all of his or her COBRA Expenses for a specified period of time.  In order to be eligible for the Reimbursement
of COBRA Expenses, the Participant must execute a valid election pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) within the
applicable time requirements.  The
Participant must submit proof of COBRA expenditures to the Plan Administrator,
and the Plan Administrator shall issue appropriate reimbursements in a 

 

4

 

timely manner.  Reimbursements
for COBRA Expenses may be provided for any period of time and need not be tied
to the length or duration of severance benefits noted above.

 

(c)           Additional
Benefits or Perquisites.  Manitowoc
shall have the authority to provide additional or alternative benefits in
addition to or in lieu of the Severance Pay and/or Reimbursement of COBRA
Expenses referenced above.

 

Manitowoc intends for the payments under this
Agreement to be exempt from the application of Code Sections 409A and 280G, but
does not guarantee any specific tax results for any individual employee.  With the preceding intent in mind, Manitowoc
shall not knowingly provide any benefit under this Plan unless such benefit,
when considered together with all other compensation and benefits, qualifies
for one or more of the exemptions set forth in Treasury Regulation Sections
1.409A-1(b)(4) (short-term deferrals), 1.409A-1(b)(5) (stock and
equity-based compensation exclusions), 1.409A-1(b)(9) (separation pay
plans) and/or 1.409A-1(b)(10) (legal settlements).  Similarly, Manitowoc shall not knowingly
provide any benefit under this Plan unless, when considered together with all
other compensation and benefits, such benefits will not constitute excess parachute
payments under Code Section 280G.

 

WAIVER AND RELEASE

 

Some or all of any benefits provided under this Plan
may be conditioned upon the Participant’s execution of a valid and binding
Release Agreement.  If Manitowoc does
require a Release Agreement and that Release Agreement allows the Participant
to revoke his or her release after it has been signed, then all benefits that
have been conditioned upon the execution of that Release Agreement shall be
deferred until after that revocation period has expired, and such benefits will
be conditioned upon the individual not revoking that Release Agreement.

 

PAYMENT

 

Severance benefits will be paid in accordance with such
schedule as Manitowoc establishes at the time that severance benefits are
offered under this Plan.  All legally
required taxes and any sums owing to Manitowoc or any other Related Employer
shall be deducted from the severance benefits otherwise paid under this Plan.

 

5

 

In order to receive your benefits, you must file an
application for such benefits with the Plan Administrator.  This section describes the application
process and your right to have a decision regarding your benefits reviewed.

 

FILING AN
APPLICATION

 

If you (or your
beneficiary) believe that you are entitled to a benefit under the Plan, you
should submit an application for benefits (a claim) to the Plan
Administrator.  Your application should
be in writing, and may be required to be on a form provided by the Plan
Administrator.

 

DECISION
ON APPLICATION

 

Unless special
circumstances exist, the Plan Administrator will process an application within
ninety (90) days after the application is filed.  Within that ninety- (90-) day period, you
should receive either a notice of the decision or a notice that: (a) explains
the special circumstances which are causing the delay; and (b) sets a
date, no later than one hundred and eighty (180) days after the
Administrator received your application, by which the Administrator expects to
render the final decision.

 

LACK OF
NOTICE

 

If you do not
receive a notice within the time described above, you can assume that your
claim has been denied, and you may file a request for appeal as described
below.

 

DENIAL OF
CLAIM

 

If the Plan
Administrator partially or wholly denies your application for benefits, you
will receive a written notice which will include: (a) the specific reason or
reasons for the denial; (b) specific references to pertinent provisions of
the Plan document on which the denial is based; 
(c) a description of any additional material or information which
you must provide to prove your claim, and an explanation of why that material
or information is needed; and (d) the steps you must take to appeal the
denial of your claim.  You may file a
request for appeal as described below.

 

6

 

RIGHT TO
APPEAL A DENIED CLAIM

 

You or your duly
authorized representative may file a written appeal of the denial with the Plan
Administrator no later than sixty (60) days after you receive the notice that your
claim has been partially or wholly denied. 
You may include any issues, comments, statements or documents that you
wish to provide with your written appeal. 
You or your duly authorized representative may review all pertinent Plan
documents when preparing your request.

 

FINAL
DECISION ON APPEALED CLAIM

 

In most instances,
the Plan Administrator will issue a final decision on an appeal within sixty
(60) days after the Plan Administrator receives the appeal request.  If the Plan Administrator is unable to
process your appeal within sixty (60) days, you will receive an extension
notice before the sixty- (60-) day period expires.  The extension notice will include: (a) the
special circumstances (such as the need to hold a hearing) which are causing
the delay; and (b) the date, no later than one hundred and twenty
(120) days after the date the Plan Administrator received your written
appeal, by which the Administrator expects to render the final decision.  The Plan Administrator’s decision will
explain the reasons for the decision and will refer to the provisions of the
Plan document on which the decision is based. 
If you do not receive a notice within the time periods described in this
paragraph, you may assume that your appeal has been denied on review.  If you do not follow the claim application
and appeal procedures set forth in this section, you will be precluded from
later bringing any action, in either state or federal court or any other forum,
for benefits under this Plan.

 

7

 

The
following information is important to your understanding of the Plan and is
provided to further clarify how the Plan operates.

 

PLAN
ADMINISTRATOR

 

Manitowoc has the exclusive right to serve as the Plan
Administrator or to appoint another individual, entity, or group of individuals
or entities to serve as the Plan Administrator. 
Any person or entity appointed to serve in lieu of Manitowoc may resign
at any time by filing a written notice of resignation with Manitowoc and may be
removed at any time by Manitowoc.

 

The Plan Administrator shall administer the Plan in
accordance with its terms and shall have all powers necessary to effectuate the
provisions of the Plan.  The Plan
Administrator shall have the exclusive right to interpret the Plan, shall determine
all questions arising in the administration, interpretation and application of
the Plan documents, to resolve ambiguities, inconsistencies and omissions
related thereto, and shall, from time to time, formulate and issue such rules and
regulations as may be necessary for the purpose of administering the Plan.  Any interpretation, determination, rule or
regulation issued by the Plan Administrator shall be conclusive and binding on
all persons.   In any review of such an
interpretation, determination, rule or regulation, the Plan Administrator’s
decision shall be given deference and shall be set aside by a reviewing
tribunal only in the event the Plan Administrator acted in an arbitrary and
capricious manner.

 

The Plan Administrator and all fiduciaries of this
Plan shall discharge their duties with respect to the Plan solely in the
interest of the Eligible Employees, for the exclusive purpose of providing
benefits to Eligible Employees and their beneficiaries and deferring reasonable
expenses of administering the Plan with care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use and in accordance with the
Plan documents and instruments, insofar as such documents and instruments are
consistent with the provisions of ERISA and any acts amendatory thereto.

 

The Plan Administrator shall maintain accounts showing
the fiscal transactions of the Plan and such books and records as may be
necessary to comply with ERISA, governmental regulations issued thereunder and
other applicable law.  The Plan
Administrator shall timely file or cause to be timely filed, all annual
reports, financial and other statements as may be required of the Plan
Administrator by any federal or state statute, agency or authority. The Plan
Administrator shall timely furnish or cause to be furnished, all such reports,
statements and other documents as may be required by any federal or state
statute, agency or authority to be furnished by the Plan Administrator to any
Eligible Employee, beneficiary or interested party.

 

8

 

The Plan Administrator shall have the authority to
accept service of process on behalf of the Plan.

 

To the extent that a fiduciary may be relieved of
liability under Section 410(a) of ERISA for a breach of any
responsibility, obligation or duty imposed by Title 1, Part 4 of ERISA, no
fiduciary shall be liable for any action or failure to act hereunder, except
for bad faith, willful misconduct or gross negligence.  To the extent that a fiduciary may be
relieved of liability under Section 410(a) of ERISA for a breach of another
fiduciary of any responsibility, obligation or duty imposed by Title 1, Part 4
of ERISA, no fiduciary shall be personally liable for a breach committed by any
other fiduciary, unless the fiduciary:  (a) knowingly
participated in or knowingly concealed a breach by such other fiduciary; (b) by
his failure to comply with his fiduciary duties, has enabled such other
fiduciary to commit a breach; or (c) has failed to make reasonable efforts
under the circumstances to remedy the breach of another fiduciary of which he
has knowledge.  To the same extent, no
fiduciary shall be personally liable for the acts or omissions of any attorney
or agent employed by a fiduciary hereunder, if such attorney or agent shall
have been selected with reasonable care.

 

PLAN
PERMANENCY

 

Manitowoc reserves the
right to amend the Plan in every respect at any time, either before or after termination
hereof, or from time to time (and retroactively if deemed necessary or
appropriate to conform to governmental regulations or other policies).   Manitowoc also reserves the right to
terminate this Plan at any time.   Any
action to amend or terminate this Plan may be taken by Manitowoc’s Board of
Directors or its express delegate(s).

 

LIMITATION ON LIABILITY

 

In no event shall the
Plan Administrator or any employee, officer or director of the Plan
Administrator incur any liability for any act or failure to act unless such act
or failure to act constitutes a lack of good faith, willful misconduct or gross
negligence with respect to the Plan.

 

COMPLIANCE
WITH ERISA

 

Notwithstanding any other
provisions of this Plan, a fiduciary or other person shall not be relieved of
any responsibility or liability for any responsibility, obligation or duty
imposed upon such person pursuant to ERISA.

 

NONALIENATION OF
BENEFITS

 

Neither Eligible Employees nor Participants have any
vested right to benefits under this Plan. 
Plan benefits shall not be subject to anticipation, alienation, pledge,
sale, transfer, assignment, garnishment, attachment, execution, encumbrance,
levy, lien or charge.  Any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to Plan benefits shall be void, except to the
extent required by law.

 

9

 

EMPLOYMENT
NOT GUARANTEED

 

The establishment of this Plan, its amendments and the
granting of a benefit pursuant to the Plan shall not give any individual the
right to continued employment with Manitowoc or any Related Employer, or limit
the right of Manitowoc or any Related Employer to dismiss or impose penalties
upon the individual or modify the terms of employment of any individual.

 

ERRONEOUS
OR EXCESSIVE PAYMENTS

 

In the event any payment
is made under this Plan to any individual who is not entitled to such payment
(whether such payment is made as the result of a mistake of fact or law), the individual
shall return such erroneous or excessive payment(s).  The Plan Administrator shall have the right
to bring legal action to recover such amounts and/or reduce future payments due
to such individual by the amount of any such erroneous or excessive
payment(s).  This provision shall not
limit the rights of the Plan Administrator to recover such overpayments in any
other manner.

 

CONTRARY REPRESENTATIONS

 

No
employee, officer, or director of Manitowoc or any Related Employer has the
authority to alter, vary, or modify the terms of the Plan except by means of an
authorized written amendment to the Plan that is approved by Manitowoc’s Board
of Directors or its express delegate(s). 
No verbal representations contrary to the terms of the Plan and its
written amendments shall be binding upon the Plan, the Plan Administrator,
Manitowoc or any Related Employer.

 

NO FUNDING

 

No individual shall
acquire, by reason of this Plan, any right in or title to any assets, funds, or
property of Manitowoc or any Related Employer. 
Any severance pay benefits that become payable under the Plan are
unfunded obligations of Manitowoc and shall be paid from Manitowoc’s general
assets.  No employee, officer, director
or agent of Manitowoc or any Related Employer guarantees in any manner the
payment of benefits under this Plan.

 

APPLICABLE LAW

 

This Plan shall be
governed and construed in accordance with ERISA and in the event that any
references shall be made to state law, the internal laws of the State of
Wisconsin shall apply.

 

10

 

OFFSET

 

The benefits payable
under this Plan, if any, are the maximum amount made available to any employee
of Manitowoc and each Related Employer due to an involuntary termination of
employment.  To the extent that a
federal, state or local law may mandate that Manitowoc or a Related Employer
make a payment to any individual due to his or her involuntary termination of
employment, that individual’s benefit(s) under this Plan, if any, shall be
reduced by such amount.

 

SEVERABILITY

 

If any
provision of the Plan is found, held, or deemed by a court of competent
jurisdiction to be void, unlawful or unenforceable under any applicable statute
or other controlling law, the remainder of the Plan shall continue in full
force and effect.

 

11

 

This
section describes your rights under the Employee Retirement Income Security Act
of 1974 (as amended) (“ERISA”).

 

Eligible Employees
are entitled to certain rights and protections pursuant to the Employee
Retirement Income Security Act of 1974 (“ERISA”).  Each Employer and the Plan Administrator
intends to operate the Plan fairly and to comply fully with ERISA.  If you have a question about the Plan, how it
is run and how it affects you, you should contact the Plan Administrator.  ERISA provides that all Plan participants
shall be entitled to:

 

(a)           Examine without charge at Manitowoc’s
office and at each Related Employer location, all Plan documents, including
insurance contracts and copies of all documents filed by the Plan with the U.S.
Department of Labor, such as detailed annual reports and Plan descriptions.

 

(b)           Obtain copies of all Plan documents
and other Plan information upon written request to the Plan Administrator; the
Plan Administrator may make a reasonable charge for the copies.

 

(c)           Receive a summary of the Plan’s
annual financial report.  The Plan
Administrator is required by law to furnish each participant with a copy of
this summary annual report.

 

In addition to
creating rights for Plan participants, ERISA imposes duties on the people who
are responsible for the operation of the Plan. 
The people who operate the Plan, the Plan Administrator and other
appointed advisors, called “fiduciaries” of the Plan, have a duty to operate
the Plan prudently and in the interest of you and other Eligible
Employees.  No one, including your
employer or any other person, may fire you or otherwise discriminate against
you in any way to prevent you from obtaining a payment or exercising your
rights under ERISA.  If your claim for
payment is denied in whole or in part, you must receive a written explanation
of the reason for the denial.  You have
the right to have the Plan review and reconsider your claim.  Under ERISA, there are steps you can take to
enforce the above rights.  For instance,
if you request materials from the Plan and do not receive them within 30 days,
you may file suit in a federal court.  In
such a case, the court may require the Plan Administrator to provide the materials
and pay you up to $110 a day until you receive the materials, unless the
materials were not sent because of reasons beyond the control of the Plan
Administrator.  If you have a claim for
benefits which is denied or ignored, in whole or in part, you may file suit in
a state or federal court.  If it should
happen you are discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in a federal
court.  The court will decide who should
pay court costs and legal fees.  If you
are successful, the court may order the person you have sued to pay these costs
and fees. If you lose, the court may order you to pay these costs and fees.  (For example, if it finds your claim is
frivolous.)

 

12

 

If you have any
questions about your Plan, you should contact the Plan Administrator.  If you have any questions about this
statement or about your rights pursuant to ERISA, you should contact the
nearest office of the Employee Benefits Security Administration, U.S.
Department of Labor.

 

13

 

You may
need to contact Manitowoc or the Plan Administrator if you have any questions
regarding the Plan.  The following information
will help you to do this.

 

	
  Plan Sponsor

  	
   

  	
  The Manitowoc Company, Inc.

  
	
   

  	
   

  	
  2400 South 44th Street

  
	
   

  	
   

  	
  Manitowoc, WI 54221-0066

  
	
   

  	
   

  	
   

  
	
  Plan Administrator and Agent For Service of Legal
  Process

  	
   

  	
  The Manitowoc Company, Inc.

  
	
   

  	
   

  	
  2400 South 44th Street

  
	
   

  	
   

  	
  Manitowoc, WI 54221-0066

  
	
   

  	
   

  	
   

  
	
  Employer Identification Number

  	
   

  	
  39-0448110

  
	
   

  	
   

  	
   

  
	
  Plan Identification Number

  	
   

  	
  528

  
	
   

  	
   

  	
   

  
	
  Plan Year

  	
   

  	
  January 1 through December 31

  

 

14Exhibit
10.1

 

AS ADOPTED

BY THE BOARD OF DIRECTORS OF

PZENA INVESTMENT MANAGEMENT, INC.

ON JULY 21, 2009

 

PZENA INVESTMENT MANAGEMENT, INC.

NON-EMPLOYEE DIRECTOR
DEFERRED COMPENSATION PLAN

 

SECTION 1.      PURPOSE;
BACKGROUND.  This plan shall be known as
the Pzena Investment Management, Inc. Nonemployee Director Deferred
Compensation Plan and is herein referred to as the “Plan.”  The Plan is an “unfunded” deferred
compensation arrangement designed to attract and retain individuals to serve as
Nonemployee Directors of Pzena Investment Management, Inc. (the “Company”)
by allowing such individuals to defer payment of all or a portion of their
director fees into deferred stock units, the value of which is based on the
value of shares of Stock (as defined below).

 

SECTION 2.      DEFINITIONS.  The following definitions shall apply in
interpreting the Plan:

 

2.1                                 “Account” shall mean a Participant’s book account established
by the Company under the Plan to which Units shall be allocated with respect to
deferred Compensation.

 

2.2                                 “Administrator” shall mean the Compensation Committee of the
Board.

 

2.3                                 “Beneficiary” shall mean such individual or the trustee or
trustees of a trust as may be designated by a Participant pursuant to such
Participant’s deferral election.

 

2.4                                 “Board” shall mean the Board of Directors of the Company.

 

2.5                                 “Change in Control” (1) shall have the meaning ascribed
to such term in the Equity Plan or (2) if the Equity Plan does not include
such a definition, “Change in Control” shall mean an event constituting a
change in the ownership or effective control of a corporation, or a change in
the ownership of a substantial portion of the assets of a corporation, in
either case, within the meaning of Section 409A of the Code.

 

 

2.6                                 “Code” shall mean the Internal Revenue Code of 1986, as
amended, and all regulations promulgated thereunder, both as amended from time
to time.

 

2.7                                 “Company” shall mean Pzena Investment Management, Inc.,
a Delaware corporation.

 

2.8                                 “Compensation” shall mean all amounts to be paid to a
Nonemployee Director in respect of the individual’s service on the Board,
including annual retainer fees (but excluding any payment or reimbursement with
respect to any expenses arising from the individual’s service as a member of
the Board) that would otherwise be payable in accordance with the Company’s
policies as in effect from time to time.

 

2.9                                 “Equity Plan” shall mean the Company’s 2007 Equity Incentive
Plan or any other successor plan or similar, stockholder-approved Company plan
providing for the grant of awards relating to the value of the Company’s Stock.

 

2.10                           “Fair Market Value” of a share of Stock shall have the
meaning ascribed to such term in the Equity Plan under which Units are being
issued for purposes of the Plan.

 

2.11                           “Nonemployee Director” shall mean a member of the Board who
is not an employee of the Company.

 

2.12                           “Participant” shall mean a Nonemployee Director who makes a
deferral of Compensation under the terms of the Plan.

 

2.13                           “Plan Year” shall mean the calendar year commencing on January 1.

 

2.14                           “Separation from Service” shall mean the termination of a
Participant’s service with the Company, within the meaning of Section 409A(a)(2)(A)(i) of
the Code.

 

2.15                           “Stock” shall mean the Class A common stock of the
Company, par value $0.01 per share.

 

2.16                           “Unforeseeable Emergency” shall have the meaning ascribed to
such term under Section 409A(a)(2)(B)(ii) of the Code.

 

2

 

2.17                           “Unit” shall mean a stock unit allocated to a Participant’s
Account, which shall at all times be equal in value to the Fair Market Value of
one share of Stock and which shall be issuable under the Equity Plan.

 

SECTION 3.      PARTICIPATION.

 

3.1                                 General.  Any Nonemployee Director may elect to have
all or part of the Compensation otherwise payable to the director deferred and
paid at the time and in the manner prescribed herein.

 

3.2                                 Deferrals of Compensation.  A Nonemployee Director wishing to participate
in the Plan shall make deferrals of Compensation no later than December 31
of the Plan Year immediately preceding the Plan Year in respect of which such
Compensation may be earned.  Deferrals
may be denominated in an aggregate dollar amount or as a percentage of
Compensation and shall be allocated to the Account.  Notwithstanding the foregoing, the
Administrator may allow a Nonemployee Director whose service on the Board
begins during any Plan Year to make a deferral election prior to or within 30 days after the commencement
of such Nonemployee Director’s service on the Board with respect to
Compensation to be earned following the date on which such election is made.

 

3.3                                 Election to Defer to be Made Annually.  Elections to defer
Compensation under the Plan shall be made on a Plan Year-to-Plan Year
basis.   The amount accumulated under the
Plan prior to a Participant’s decision not to defer Compensation with respect
to any Plan Year will continue to be subject to the provisions of the Plan.

 

3.4                                 Timing of Distribution.  Distributions under the Plan shall be made in
a single distribution of shares of Stock at such time as elected by the
Participant at the time such deferral was elected.  At the time the deferral election is made, a
Nonemployee Director may elect to receive such Participant’s Account upon the
earlier to occur of:

 

(a)                      the date of the Participant’s death;

 

(b)                     the date the Participant becomes
Disabled (as defined in Section 409A(a)(2)(C) of the Code);

 

(c)                      the date of the Participant’s Separation from Service with
the Company for any reason other than death;

 

3

 

(d)                     a
date specified by the Participant, provided that the date is not less than five
years following the end of the calendar year to which the deferral relates.

 

3.5                                 No Further Deferrals Following Separation from Service.  Notwithstanding any
other provision of the Plan to the contrary, in the event of a Separation from
Service during any Plan Year, no Compensation as yet unpaid with respect to
such Plan Year (or any future Plan Year) may be deferred under the Plan.

 

SECTION 4.      METHOD OF
DEFERRAL OF COMPENSATION.

 

4.1                                 The Company shall establish a separate Account on its books
in the name of each Participant.  There
shall be allocated to each Participant’s Account all deferred Compensation at
such times and in such amounts as such Compensation would have been available
to the Participant had the Participant not deferred the receipt of such
Compensation pursuant to Section 3.

 

4.2                                 Compensation deferred under the Plan shall be deferred in the
form of Units equal to the number of shares of Stock hypothetically purchased
with deferred Compensation.  Compensation
deferred under the Plan for any Plan Year shall be recorded on the first day of
the Plan Year, subject to forfeiture as set forth in Section 4.3.  The number of Units to be recorded with
respect to each amount of deferred Compensation allocated to the Account shall
be equal to (i) in the case of Compensation that otherwise would have been
paid in cash, the quotient obtained by dividing the amount of deferred cash by
the Fair Market Value of one share of Stock on the first day of the Plan Year
with respect to which the deferred Compensation relates and (ii) in the
case of Compensation that otherwise would have been paid in shares of Stock,
the number of shares of Stock that would have been issued to the Participant
during such Plan Year absent deferral under the Plan.  The Administrator’s determination of the
value of a Unit shall be binding on the Company and its successors, the
Participants and their Beneficiaries.

 

4.3                                 Forfeiture of Recently Deferred Amounts.  In the event of a
Separation from Service, any amount deferred under the Plan with respect to the
calendar quarter in which occurs the effective date of such Separation from
Service and with respect to the remainder of the applicable Plan Year
(including any dividend equivalents credited thereto) shall be immediately 

 

4

 

cancelled and forfeited.  On the last 
day of each calendar quarter, amounts deferred under Section 4.2 on
the first day of the applicable Plan Year shall become nonforfeitable and shall
be distributed in accordance with the terms of the Plan.

 

Accordingly, in the event of Separation from
Service:  (i) before March 31
of a Plan Year, 100% of the Units recorded on the first day of such Plan Year
shall be cancelled and forfeited; (ii) on or after March 31 but
before June 30 of a Plan Year, 75% of the Units recorded on the first day
of such Plan Year shall be cancelled and forfeited; (iii) on or after June 30
but before September 30 of a Plan Year, 50% of the Units recorded on the
first day of such Plan Year shall be cancelled and forfeited; and (iv) on
or after September 30 but before December 31, of a Plan Year, 25% of
the units recorded on the first day of such Plan Year shall be cancelled and
forfeited.

 

4.4                                 Additional Units shall be credited to a Participant’s account
as of each date (a “Dividend Date”) on which cash dividends and/or special
dividends and distributions are paid with respect to Stock, provided that at
least one Unit is credited to such Participant’s account as of the record date
for such dividend or distribution.  The
number of Units to be credited to a Participant’s account under the Plan as of
any Dividend Date shall equal the quotient obtained by dividing (1) the
product of (a) the number of the Units credited to such account on the
record date for such dividend or distribution and (b) the per share
dividend (or distribution value) payable on such Dividend Date by (2) the
Fair Market Value of a share of Stock as of such Dividend Date.

 

4.5                                 Modification of Prior Deferral.  Once an election to defer Compensation has
become irrevocable, a Participant may, with the prior consent of the
Administrator, modify the time and form of payment of an amount previously
deferred under the Plan (such modification, a “Subsequent Change”), subject to
the following conditions:  (1) such
Subsequent Change shall not take effect until as least 12 months after the date
on which the Subsequent Change is made; (2) except with respect to a
Subsequent Change relating to the form of distribution to be made upon the
Participant’s death or Disability, the payment must be deferred for an
additional period of not less than five years from the date such payment would
otherwise have been paid; and (3) a Subsequent Change made with respect to
payments elected under Section 3.4(e) (upon a specified date or
dates) must be made not less than 12 months before the date the payment 

 

5

 

is
scheduled to be made.

 

SECTION 5.      DISTRIBUTION OF
DEFERRED COMPENSATION.

 

5.1                                 The Company shall pay to the Participant (or the Participant’s
Beneficiary or estate, as applicable) the nonforfeitable balance credited to
such Participant’s Account in a single distribution of shares on the first date
of the calendar month following the date or event specified for such
distribution by the Participant. 
Distributions shall be made in the form of shares of Stock.

 

5.2                                 Notwithstanding any other provision of the Plan to the
contrary, the Administrator in its sole discretion may at any time authorize
the distribution of shares of Stock of part or all of the Participant’s Account
to such Participant prior to the time such amount would otherwise be payable
pursuant to the provisions of the Plan, in any case where the Administrator
determines that the Participant has proved an Unforeseeable Emergency.  The value of any shares of Stock distributed
under this section shall not exceed the amount necessary to satisfy such
Unforeseeable Emergency plus the value of any shares of Stock to pay taxes
reasonably anticipated as a result of the distribution, after taking into
account the extent to which the Unforeseeable Emergency is or may be relieved
through reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause several financial hardship) as specified in Section 409A(a)(2)(B)(ii)(II) of
the Code.  The determination of the
Administrator shall be final, conclusive and binding upon all persons affected
thereby.

 

5.3                                 Change in Control.  Notwithstanding anything in the Plan to the
contrary, each participant’s Account shall be distributed in shares of Stock,
immediately prior to a Change in Control, subject to the actual occurrence of
the Change in Control, provided that the event constituting such Change in
Control constitutes a change in the ownership or effective control of a
corporation, or a change in the ownership of a substantial portion of the
assets of a corporation, in either case, within the meaning of Section 409A
of the Code.

 

5.4                                 Notwithstanding anything in the Plan to the contrary, to the
extent necessary to avoid the application of an accelerated or additional tax
under Section 409A of the Code, amounts that would otherwise be payable 

 

6

 

pursuant to the Plan during the
six-month period immediately following the Participant’s Separation from
Service shall instead be paid on the first business day after the date that is
six months following the Participant’s Separation from Service (or upon the
Participant’s death, if earlier).

 

SECTION 6.      ADMINISTRATION.

 

6.1                                 The Plan shall be administered by the Administrator.  The Administrator may delegate such duties as
it determines in its discretion to be necessary or desirable for the
administration of the Plan.

 

6.2                                 All determinations made by the Administrator with respect to
the Plan shall be conclusive and binding on the Company and its successors, the
Participants and their Beneficiaries. 
Neither the Company, the Administrator, the Fund nor any officer or
employee thereof shall be liable to any person for any action taken or omitted
in connection with the interpretation and administration of this Plan unless
attributable to its or his own willful misconduct or lack of good faith.

 

6.3                                 The Company intends the following with respect to this
Plan:  (1) that Participants will
not recognize gross income as a result of participation in the Plan unless and
until and then only to the extent that distributions are received; (2) that
the Plan shall be an “unfunded” plan for purposes of the Employee Retirement
Income Security Act of 1974, as amended, and (3) the design and
administration of the Plan should comply with the requirements of Section 409A
of the Code.  Notwithstanding the
foregoing, no Nonemployee Director, Participant, former Participant,
Beneficiary or any other person shall have any recourse against the Company,
the Administrator or any of their affiliates, employees, agents, successors,
assigns or other representatives if any of those conditions are determined not
to be satisfied.

 

SECTION 7.      GENERAL
PROVISIONS.

 

7.1                                 The number of Units allocated to Accounts shall be adjusted
by the Administrator, as it deems appropriate, in the event that the
Administrator shall determine that any dividend or other distribution (whether
in the form of cash, Stock, or other property), recapitalization, stock split, reverse
split, reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction or event,
affects the Units such that an adjustment is appropriate in order to 

 

7

 

prevent dilution or enlargement of the rights of Participants
under the Plan.

 

7.2                                 The right of any Participant to receive future distributions
under the Plan shall be an unsecured claim against the general assets of the
Company.

 

7.3                                 Notwithstanding any provision of the Plan to the contrary, no
provision in the Plan shall create or be construed to create any claim, right
or cause of action against either the Company or any of its subsidiaries or
affiliates arising from any diminution in the value of the Units in connection
with the deemed investments in Stock through the Accounts.

 

7.4                                 A Participant may change the Participant’s Beneficiary at any
time by notifying the Administrator in such form as the Administrator shall
from time to time designate.

 

7.5                                 No Participant or Beneficiary shall have any power to
commute, encumber, sell, or otherwise dispose of the rights provided herein,
and such rights shall be non-assignable and non-transferable.

 

SECTION 8.      EFFECTIVE DATE
OF THE PLAN; TERMINATION AND AMENDMENT OF THE PLAN.

 

8.1                                 The Plan shall be effective as of July 21, 2009, the
date it was adopted by the Company.  The
Plan shall remain in effect until such time as it is terminated by the Company
in accordance with the terms of the Plan and applicable law.

 

8.2                                 No Participant nor the Administrator shall have the power to
terminate the Plan except as provided in Section 409A of the Code.  Upon termination of the Plan, all Accounts
shall be paid in shares of Stock to each Participant or, if applicable, such
Participant’s Beneficiary or estate.  The
Company shall use its commercially reasonable best efforts to comply with the
provisions of Section 409A of the Code with respect to termination of the
Plan in order to ensure that amounts payable in connection with termination of
the Plan shall not be subject to tax under Section 409A of the Code.

 

8.3                                 The Plan may be amended from time to time by the
Administrator, provided that no amendment of the Plan shall have a material
adverse effect on any Participant’s Account under the Plan without the prior
written consent of such Participant.

 

8

 

EXHIBIT
A

Deferral Form

 

Pzena Investment Management, Inc.

120 West 45th Street

New York, New York  10036

 

Attention:  [                  ]

 

Dear Sir or Madam:

 

Pursuant to the provisions of Section 3 of the
Pzena Investment Management, Inc. Nonemployee Director Deferred
Compensation Plan (hereinafter called the “Plan”), I hereby irrevocably make a
deferral with respect to the following percentage of Compensation, which amount
will be deferred in the manner provided in the Plan:

 

Total
Amount to be Deferred

 

	
  Annual Retainer:

  	
                 %

  

 

This
direction shall be effective for the Plan Year [        ]
only.

 

I specifically and irrevocably designate that the amounts due me from
my Account under the Plan shall be distributed to me, as specified in Section 5
of the Plan, upon the earlier to occur of:

 

·                  the date of my
death;

·                  the date I become Disabled;

·                  my separation
from service with the Company other than by reason of my death;

·                                   (no
less than 5) years following the end of the calendar year to which this
deferral relates (for example, under a 5-year deferral, a deferral made on
12/31/09 with respect to the year 2010 would end on 12/31/15)(1)

 

(1)                              A date need not
be specified in order to participate in the Plan.  Participants who do not specify a date will
be paid their deferred compensation on the earliest to occur of the three
events listed above, subject to the terms of the Plan.

 

 

I acknowledge and agree that my Account will be paid to me (or my
Beneficiary, if applicable) on the first day of the calendar month following
the month in which occurs the first date or event specified above.  I understand and agree that all distributions
from my Account shall be made in the form of 
shares of Stock.

 

I hereby relinquish and release any and all rights to receive payment
of the deferred amounts except in accordance with the Plan.

 

(continued on next page)

 

 

In the event that I should die while I am serving on
the Board as a Nonemployee Director, I hereby direct that, pursuant to Section 5
thereof, all amounts distributable to me under the Plan be distributed as
follows:

 

	
  In a single distribution
  of shares of Stock to

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Insert Name of Beneficiary)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (If more than one Beneficiary is named,

  
	
   

  	
   

  	
  indicate percentages to be paid to each Beneficiary)

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [PARTICIPANT NAME]

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