EXHIBIT 10(b)(3)
AGREEMENT REGARDING
CHANGE IN CONTROL
-------------------
This Agreement entered into as of the 8th day of April, 1996 by and
between Case Corporation, a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇ (the "Executive"),
WITNESSETH THAT:
---------------
WHEREAS, the Company wishes to assure itself of the continuity of the
Executive's services in the event of any actual or threatened change in control
of the Company; and
WHEREAS, the Company and the Executive accordingly desire to enter into
this Agreement on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, it is hereby agreed by and between the parties as follows:
1. Term of Agreement. The "Term" of this Agreement shall commence on the
date hereof and shall continue through December 31, 1999; provided, however,
that on such date and on each December 31 thereafter, the Term of this Agreement
shall automatically be extended for one additional year unless, not later than
the second preceding January 1 either party shall have given notice that such
party does not wish to extend the Term; and provided, further, that if a Change
in Control (as defined in paragraph 3 below) shall have occurred during the
original or any extended Term of this Agreement, the Term of this Agreement
shall continue for a period of thirty-six calendar months beyond the calendar
month in which such Change in Control occurs.
2. Employment After a Change or Potential Change in Control. If the
Executive is in the employ of the Company on the date of a Change in Control,
the Company hereby agrees to continue the Executive in its employ for the period
commencing on the date of the Change in Control and ending on the last day of
the Term of this Agreement. If the Executive is in the employ of the Company on
the first day of a Potential Change in Control (as defined in paragraph 4
below), the Company hereby agrees to continue the Executive in its employ for
the twelve-month period commencing on such date and, if a Change in Control
occurs during such period agrees to continue the Executive in its employ until
the last day of the Term of this Agreement. During the period of employment
described in the foregoing provisions of this paragraph 2 (the "Employment
Period"), the Executive shall hold such position with the Company and exercise
such authority and perform such executive duties as are commensurate with his
position, authority and duties immediately prior to the Change in Control or
Potential Change in Control, as the case may be. The Executive agrees that
during the Employment Period he shall devote his full business time exclusively
to the executive duties described herein and perform such duties faithfully and
efficiently; provided, however, that nothing in this Agreement shall prevent the
Executive from voluntarily resigning from employment upon 90 days' written
notice to the Company under circumstances which do not constitute a Termination
(as defined below in paragraph 6); provided, further, however, that the
Executive agrees to remain in the employ of the Company from the date on which a
Potential Change in Control (as defined in paragraph 4 below) occurs through the
earlier of six months thereafter, or the last day of the Term of this Agreement.
3. Change in Control. For purposes of this Agreement, the term "Change in
Control" means a change in the beneficial ownership of the Company's voting
stock or a change in the composition of the Company's Board of Directors which
occurs as follows:
(a) any "person" (as such term is used in Section 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) other than:
(i) a trustee or other fiduciary of securities held under an
employee benefit plan of the Company;
(ii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of the Company; or
(iii) any person in which the Executive has a substantial equity
interest
is or becomes a beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of stock of
the Company representing 25% or more of the total voting power of the
Company's then outstanding stock;
(b) a tender offer is made for the stock of the Company by a person other
than a person described in subparagraph (a) (i), (ii) or (iii), and
one of the following occurs:
(i) the person making the offer owns or has accepted for payment
stock of the Company representing 25%
-2-
or more of the total voting power of the Company's stock; or
(ii) three business days before the offer is to terminate (unless the
offer is withdrawn first) such person could own, by the terms of
the offer plus any shares owned by such person, stock
representing 50% or more of the total voting power of the
Company's outstanding stock when the offer terminates;
(c) during any period of two consecutive years there shall cease to be a
majority of the Company's Board of Directors comprised as follows:
individuals who at the beginning of such period constitute the Board
of Directors and any new director(s) whose election by the Board of
Directors or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose selection or nomination for election was previously so
approved; or
(d) the stockholders of the Company approve a merger or consolidation of
the Company with any other company other than:
(i) such a merger or consolidation which would result in the
Company's voting stock outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting stock of the surviving entity) more
than 70% of the combined voting power of the Company's or such
surviving entity's outstanding voting stock immediately after
such merger or consolidation; or
(ii) such a merger or consolidation which would result in the
directors of the Company who were directors immediately prior
thereto continuing to constitute at least 50% of the directors
of the surviving entity immediately after such merger or
consolidation.
For purposes of this paragraph (d), "surviving entity" shall mean only
an entity in which all of the Company's stockholders become
stockholders by the terms of such merger or consolidation, and the
phrase "directors of the Company who were directors immediately prior
thereto" shall not include:
-3-
(A) any director of the Company who was designated by a person who
has entered into an agreement with the Company to effect a
transaction described in this paragraph or in paragraph (a)
above; or
(B) any director who was not a director at the beginning of the 24-
consecutive-month period preceding the date of such merger or
consolidation
unless his election by the Board of Directors or nomination for
election by the Company's stockholders, was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who were
directors before the beginning of such period.
4. Potential Change in Control. For purposes of this Agreement, a
"Potential Change in Control" shall be deemed to occur if (i) any person who is
or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 9.5% or more of the combined voting power of the Company's
then outstanding securities increases his beneficial ownership of such
securities by 5% or more of the combined voting power of the Company's then
outstanding securities over the percentage so owned by such person on the date
hereof; (ii) a tender offer is made for stock of the Company representing 25% or
more of the total voting power of the Company's stock; (iii) any person makes a
solicitation of proxies for the election of directors who have not been
recommended by the Company; (iv) the Company enters into negotiations with
respect to a transaction which would upon consummation constitute a Change in
Control; or (v) the Board adopts a resolution to the effect that, for the
purposes of this Agreement, a Potential Change in Control has occurred.
5. Compensation During the Employment Period. During the Employment
Period, the Executive shall be compensated as follows:
(a) he shall receive an annual salary which is not less than his annual
salary immediately prior to the Employment Period, with an increase as
of each January 1 which is not less than the increase, if any, in the
cost of living, as measured by the Consumer Price Index for All Urban
Consumers (CPI-U), for the 12-month period ending on the preceding
December 31;
(b) he shall be entitled to participate in short-term and long-term cash-
based incentive compensation plans which, in the aggregate, provide
bonus opportunities which are not materially less favorable to the
Executive than the greater of (i) the opportunities provided by the
Company for executive with comparable duties; and (ii) the
opportunities provided to the Executive under all such
-4-
plans in which he was participating prior to the Employment Period;
(c) he shall be eligible to participate in stock option, stock
appreciation rights, performance awards, restricted stock and other
equity-based incentive compensation plans on a basis not materially
less favorable to the Executive than that applicable (i) to the
Executive immediately prior to the Employment Period or (ii) to other
executives of the Company with comparable duties; and
(d) he shall be entitled to receive employee benefits (including, but not
limited to, tax-qualified and nonqualified pension and savings plan
benefits, medical insurance, disability income protection, life
insurance coverage and death benefits) and perquisites which are not
materially less favorable to the Executive than (i) the employee
benefits and perquisites provided by the Company to executives with
comparable duties or (ii) the employee benefits and perquisites to
which the Executive would be entitled under the Company's employee
benefit plans and perquisites as in effect immediately prior to the
Employment Period.
In the event of a termination of the Executive's employment for any reason
during the Employment Period, he shall be entitled to his accrued vacation as of
the date of termination, plus long-term and short-term bonuses based on the
targeted bonus amounts for the bonus period which includes his date of
termination pro rated based on the number of days elapsed in the bonus period.
6. Termination. For purposes of this Agreement, the term "Termination"
shall mean:
(a) Termination of the employment of the Executive during the Employment
Period by the Company, for any reason other than death, Disability (as
defined below), or Cause (as described below).
(b) Termination of employment of the Executive during the Employment
Period by reason of the Executive's resignation upon the occurrence of
one of the following events:
(i) a significant change in the nature or scope of the Executive's
authorities or duties from those described in paragraph 2 above,
a breach of any of the subparagraphs of paragraph 5 above, or
the breach by the Company of any other provision of this
Agreement;
-5-
(ii) the relocation of the Executive's office to a location more
than fifty miles from the location of his office immediately
prior to the Employment Period;
(iii) a reasonable determination by the Executive that, as a result
of a Change in Control and a change in circumstances thereafter
significantly affecting his position, he is unable to exercise
the authorities, powers, functions or duties associated with
his position and contemplated by paragraph 2 above; or
(iv) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this
Agreement as contemplated in paragraph 17 below.
(c) Termination of employment of the Executive during the 90-day period
commencing on the first anniversary of the date of a Change in Control
due to the Executive's resignation for any reason.
The date of the Executive's Termination under this paragraph 6 shall be the date
specified by the Executive or the Company, as the case may be, in a written
notice to the other party complying with the requirements of paragraph 13 below.
For purposes of this Agreement, the term "Disability" means an incapacity, due
to physical injury or illness or mental illness, causing the Executive to be
unable to perform his duties with the Company on a full-time basis for a period
of at least six consecutive calendar months. For purposes of this Agreement, the
term "Cause" means a willful and material breach of this Agreement by the
Executive resulting in material injury to the Company or a willful and continued
failure of the Executive to substantially perform his duties (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness) which failure has not been corrected by the Executive within 30 days
after the Board of Directors of the Company has given the Executive written
notice of such failure. No act, or failure to act, on the Executive's part shall
be deemed "willful" unless done, or omitted to be done, by him not in good faith
and without reasonable belief that the action or omission was in the best
interest of the Company.
7. Severance Payments. Subject to the provisions of paragraphs 8 and 9
below, in the event of a Termination described in paragraph 6 above, in lieu of
the amount otherwise payable under paragraph 5, the Executive shall continue to
receive medical insurance, disability income protection, life insurance coverage
and death benefits and perquisites in accordance with subparagraph 5(d) above
for a period of 36 months after the date of Termination,
-6-
and shall be entitled to a lump sum payment in cash no later than ten business
days after the date of Termination equal to the sum of:
(a) an amount equal to three times the Executive's annual salary rate in
effect under subparagraph 5(a) above immediately prior to the date of
Termination;
(b) an amount equal to three times the greatest of (i) the Executive's
short term incentive award and other bonuses payable for the calendar
year preceding the date of Termination, or (ii) the estimated amount
of the short term incentive award and other bonuses which would
otherwise be payable to the Executive in accordance with subparagraph
5(b) above for the year of Termination, or (iii) the targeted bonus
amounts under the short term incentive award and other bonuses which
would otherwise be payable to the Executive in accordance with
subparagraph 5(b) above for the year of Termination;
(c) an amount equal to three times the amount of the Company's
contribution to the Case Corporation Savings Plan allocated to the
Executive's account under that plan for the calendar year preceding
the year of Termination.
8. Make-Whole Payments. If any amount payable to the Executive by the
Company or any subsidiary or affiliate thereof, whether under this Agreement or
otherwise (a "Payment"), is subject to any tax under section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any similar federal
or state law (an "Excise Tax"), the Company shall pay to the Executive an
additional amount (the "Make Whole-Amount") which is equal to (i) the amount of
the Excise Tax, plus (ii) the aggregate amount of any interest, penalties, fines
or additions to any tax which are imposed in connection with the imposition of
such Excise Tax, plus (iii) all income, excise and other applicable taxes
imposed on the Executive under the laws of any Federal, state or local
government or taxing authority by reason of the payments required under clause
(i) and clause (ii) and this clause (iii).
(a) For purposes of determining the Make-Whole Amount, the Executive shall
be deemed to be taxed at the highest marginal rate under all
applicable local, state, federal and foreign income tax laws for the
year in which the Make-Whole Amount is paid. The Make-Whole Amount
payable with respect to an Excise Tax shall be paid by the Company
conincident with the Payment with respect to which such Excise Tax
relates.
(b) All calculations under this paragraph 8 shall be made initially by the
Company and the Company shall provide
-7-
prompt written notice thereof to the Executive to enable the Executive
to timely file all applicable tax returns. Upon request of the
Executive, the Company shall provide the Executive with sufficient tax
and compensation data to enable the Executive or his tax advisor to
independently make the calculations described in subparagraph (a)
above and the Company shall reimburse the Executive for reasonable
fees and expenses incurred for any such verification.
(c) If the Executive gives written notice to the Company of any objection
to the results of the Company's calculations within 60 days of the
Executive's receipt of written notice thereof, the dispute shall be
referred for determination to tax counsel selected by the independent
auditors of the Company ("Tax Counsel"). The Company shall pay all
fees and expenses of such Tax Counsel. Pending such determination by
Tax Counsel, the Company shall pay the Executive the Make-Whole Amount
as determined by it in good faith. The Company shall pay the Executive
any additional amount determined by Tax Counsel to be due under this
paragraph 8 (together with interest thereon at a rate equal to 120% of
the Federal short-term rate determined under section 1274(d) of the
Code) promptly after such determination.
(d) The determination by Tax Counsel shall be conclusive and binding upon
all parties unless the Internal Revenue Service, a court of competent
jurisdiction, or such other duly empowered governmental body or agency
(a "Tax Authority") determines that the Executive owes a greater or
lesser amount of Excise Tax with respect to any Payment than the
amount determined by Tax Counsel.
(e) If a Taxing Authority make a claim against the Executive which, if
successful, would require the Company to make a payment under this
paragraph 8, the Executive agrees to contest the claim on request of
the Company subject to the following conditions:
(i) The Executive shall notify the Company of any such claim within
10 days of becoming aware thereof. In the event that the Company
desires the claim to be contested, it shall promptly (but in no
event more than 30 days after the notice from the Executive or
such shorter time as the Taxing Authority may specify for
responding to such claim) request the Executive to contest the
claim. The Executive shall not make any payment of any tax which
is the subject of the claim before the Executive has given the
notice or during the 30-day period thereafter
-8-
unless the Executive receives written instructions from the
Company to make such payment together with an advance of funds
sufficient to make the requested payment plus any amounts
payable under this paragraph 8 determined as if such advance
were an Excise Tax, in which case the Executive will act
promptly in accordance with such instructions.
(ii) If the Company so requests, the Executive will contest the claim
by either paying the tax claimed and suing for a refund in the
appropriate court or contesting the claim in the United States
Tax Court or other appropriate court, as directed by the
Company; provided, however, that any request by the Company for
the Executive to pay the tax shall be accompanied by an advance
from the Company to the Executive of funds sufficient to make
the requested payment plus any amounts payable under this
paragraph 8 determined as if such advance were an Excise Tax. If
directed by the Company in writing the Executive will take all
action necessary to compromise or settle the claim, but in no
event will the Executive compromise or settle the claim or cease
to contest the claim without the written consent of the Company;
provided, however, that the Executive may take any such action
if the Executive waives in writing his right to a payment under
this paragraph 8 for any amounts payable in connection with such
claim. The Executive agrees to cooperate in good faith with the
Company in contesting the claim and to comply with any
reasonable request from the Company concerning the contest of
the claim, including the pursuit of administrative remedies, the
appropriate forum for any judicial proceedings, and the legal
basis for contesting the claim. Upon request of the Company, the
Executive shall take appropriate appeals of any judgment or
decision that would require the Company to make a payment under
this paragraph 8. Provided that the Executive is in compliance
with the provisions of this section, the Company shall be liable
for and indemnify the Executive against any loss in connection
with, and all costs and expenses, including attorneys' fees,
which may be incurred as a result of, contesting the claim, and
shall provide to the Executive within 30 days after each written
request therefor by the Executive cash advances or reimbursement
for all such costs and expenses actually incurred or reasonably
expected to be incurred by the Executive as a result of
contesting the claim.
-9-
(f) Should a Tax Authority finally determine that an additional Excise Tax
is owed, then the Company shall pay an additional Make-Up Amount to
the Executive in a manner consistent with this paragraph 8 with
respect to any additional Excise Tax and any assessed interest, fines,
or penalties. If any Excise Tax as calculated by the Company or Tax
Counsel, as the case may be, is finally determined by a Tax Authority
to exceed the amount required to be paid under applicable law, then
the Executive shall repay such excess to the Company within 30 days of
such determination; provided that such repayment shall be reduced by
the amount of any taxes paid by the Executive on such excess which is
not offset by the tax benefit attributable to the repayment.
9. Accelerated Vesting of Stock Awards. As of the date of a Change in
Control, all stock option and restricted stock awards held by the Executive
shall become vested and nonforfeitable, to the extent that such vesting is
permitted under the terms of the plans pursuant to which such awards were
granted. If such vesting is not permitted under the terms of the plans, and on
or after the date of the Change in Control the Executive forfeits unvested
options or restricted stock awarded prior to the date of the Change in Control,
the Executive shall be entitled to a cash payment equal to (i) in the case of
options, the excess of the fair market value of the option shares forfeited over
the exercise price thereof, and (ii) in the case of restricted stock, the fair
market value of such stock, with fair market value in either case determined as
of the forfeiture date in accordance with the terms of the plan pursuant to
which the award was made. Such cash payment shall be made as soon as practicable
after the date of forfeiture.
10. Withholding. All payments to the Executive under this Agreement will
be subject to all applicable withholding of state and federal taxes.
11. Non-Competition and Confidentiality. The Executive agrees that:
(a) for a period of one year after the termination of the Executive's
employment with the Company, the Executive shall not be employed by,
or otherwise engage or be interested in, any business which is
competitive with any business of the Company or of any of its
subsidiaries in which the Executive was engaged during his employment
prior to his termination, but this restriction shall apply only if
such employment or activity is likely to cause, or causes, serious
damage to the Company or any of its subsidiaries; and
-10-
(b) during and after the Executive's employment by the Company, he will
not divulge or appropriate to his own use, or the use of others, any
secret or confidential information or knowledge pertaining to the
business of the Company, or any of its subsidiaries, obtained during
his employment by the Company, or any of its subsidiaries.
12. Arbitration of All Disputes. Any controversy or claim arising out of
or relating to this Agreement or the breach thereof shall be settled by
arbitration in the City of Chicago, in accordance with the laws of the State of
Illinois, by three arbitrators appointed by the parties. If the parties cannot
agree on the appointment of the arbitrators, one shall be appointed by the
Company and one by the Executive and the third shall be appointed by the first
two arbitrators. If the first two arbitrators cannot agree on the appointment of
a third arbitrator, then the third arbitrator shall be appointed by the Chief
Judge of the United States Court of Appeals for the Seventh Circuit. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this paragraph 11. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. In the event that it shall be necessary or desirable for the Executive
to retain legal counsel or incur other costs and expenses in connection with
enforcement of his rights under this Agreement, the Company shall pay (or the
Executive shall be entitled to recover from the Company, as the case may be) his
reasonable attorneys' fees and costs and expenses in connection with enforcement
of his rights (including the enforcement of any arbitration award in court).
Payments shall be made to the Executive at the time such fees, costs and
expenses are incurred. If, however, the arbitrators shall determine that, under
the circumstances, payment by the Company of all or a part of any such fees and
costs and expenses would be unjust, the Executive shall repay such amounts to
the Company in accordance with the order of the arbitrators.
13. Mitigation and Set-Off. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amounts
owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any
amounts which might have been earned by the Executive in other employment had he
sought such other employment.
14. Notices. Any notice of Termination of the Executive's employment by
the Company or the Executive for any reason shall be upon no less than 15 days'
and no greater than 45 days' advance written notice to the other party. Any
notices, requests, demand
-11-
and other communications provided for by this Agreement shall be sufficient if
in writing and if sent by registered or certified mail to the Executive at the
last address he has filed in writing with the Company or, in the case of the
Company, to the attention of the Secretary of the Company, at its principal
executive offices.
15. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by operation
of law. Nothing in this paragraph shall limit the Executive's rights or powers
to dispose of his property by will or limit any rights or powers which his
executor or administrator would otherwise have.
16. Governing Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Illinois, without application of
conflict of laws provisions thereunder.
17. Amendment. This Agreement may be amended or canceled by mutual
agreement of the parties in writing without the consent of any other person and,
so long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
18. Successors to the Company. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no succession had taken place.
19. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
20. Counterparts. This Agreement may be executed in two or more
counterparts, any one of which shall be deemed the original without reference to
the others.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name and on its behalf, and its corporate seal to
be hereunto affixed and
-12-
attested by its Secretary, all as of the day and year first above written.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
CASE CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Its VP Human Resources
----------------------------
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Secretary