CHANGE OF CONTROL AGREEMENT AMENDMENT
Exhibit 10.1
CHANGE OF CONTROL AGREEMENT AMENDMENT
This Amendment (“Amendment”) is made and entered into as of this 25th day of
August, 2006, to amend that certain Change of Control Agreement made and entered into as of the
eighth day of December, 2003, by and between THE OILGEAR COMPANY, a Wisconsin corporation (the
“Company”) and Xxxxx X. Xxxxx (the “Executive”).
WHEREAS, the Company and Executive entered into a Change of Control Agreement as of December
8, 2003 (the “Agreement”) that provides for payments to Executive in the event of Executive’s
termination of employment following a change in control; and
WHEREAS, the Company and Lincoln Acquisition Corp., a Wisconsin corporation (“Lincoln”), have
entered into an agreement and plan of merger dated August 25, 2006 pursuant to which Lincoln will
merge with and into the Company (the “Merger”); and
WHEREAS, the Merger will be considered a change of control under the Agreement;
WHEREAS, some of the provisions of the Agreement are ambiguous as to the amounts to be paid to
the Executive; and
WHEREAS, the Company and Executive wish to amend the Agreement, and all other plans,
agreements and arrangements with similar provisions, to limit the payments to Executive in certain
circumstances in the event of Executive’s termination of employment following the Merger.
NOW THEREFORE, for good and valuable consideration which is hereby acknowledged by Executive
and Company, the parties hereto agree as follows:
1. A new Section 6(e) is added to the Agreement to read as follows:
(e) Limitation on Compensation.
(i) In the event that Executive becomes entitled to benefits under
this Section 6 as a result of the merger of Lincoln Acquisition
Corp. with and into the Company and the payments or benefits payable
to Executive under this Section 6 or any other payments or benefits
received or to be received by the Executive from the Company
(whether payable pursuant to the terms of this Agreement, or any
other plan, agreement or arrangement with theCompany) or any
corporation (“Affiliate”) affiliated with the Company within the
meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended (the “Code”), in the opinion of the surviving Company,
constitute “parachute payments” within the meaning of Section
280G(b)(2) of the Code, and the present value of such “parachute
payments” equals or exceeds three times the Executive’s “base
amount” within the meaning of Section 280G(b)(3) of the Code, then
the lump sum cash payment payable to Executive under this Section 6
shall be reduced to an amount,
the present value of which (when combined with the present value of
any other payments or benefits otherwise received or to be received
by the Executive from the Company (or an Affiliate) that are deemed
“parachute payments”) is equal to 2.99 times the “base amount.”
(ii) All determinations made by the surviving Company shall be
consistent with the methods used to calculate the Executive’s
parachute payments as shown in Exhibit 1 attached to this Amendment.
In the event the Company’s determination of the reduction of the
lump sum payment equals or exceeds $50,000, then, at the Executive’s
request, the amount of the reduction shall be determined by the
Accounting Firm in accordance with the provisions of Section 9(b) of
the Agreement, without regard to the methods set forth in Exhibit 1.
2. In order to resolve any ambiguity in the application of Section 6 of the Agreement, the
Executive and the Company agree that the lump sum cash payment pursuant to Section 6(a)(ii) will be
$492,697 (regardless of the year of the actual termination of employment but subject to reduction
pursuant to Section 1).
3. The Executive irrevocably waives any right to payment or benefits provided pursuant to the
following sections of the Agreement: Sections 6(a)(iii) (medical, dental and vision benefits, other
than health benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 and
retiree health benefits provided by the Company) and Section 6(a)(iv) (outplacement services).
4. Other than the payment of the Accrued Compensation, payment of accrued but unused vacation
benefits (in a manner and amount consistent with Company policy in place as of the date of this
Amendment which includes the 1992 accrual), payments with respect to outstanding stock and stock
options held by the Executive in accordance with the terms of the Merger, payment of the amount
described in Section 2 of this Amendment (as such payment may be reduced pursuant to Section 1 of
this Amendment), payment of the benefits under the Retirement Benefits Equalization Plan and
Deferred Directors Fee Plan, payment of the Executive’s bonus under the Company’s Variable
Compensation Plan, payment of retirement and welfare benefits in accordance with the terms of the
Company’s employee benefit plans (including the retiree health care credit awarded by the Company),
the forgiveness of the Executive’s indebtedness to the Company in the amount of $5,280 and the
Gross-Up Payment (if applicable), the Executive agrees and acknowledges that the Company will owe
him no other benefits or amounts and hereby releases the Company from any and all payments pursuant
to this Agreement or any other plan, agreement or arrangement.
5. In the event it is determined by a court or pursuant to final determination by the Internal
Revenue Service that any portion of deemed parachute payments will cause the Executive to be
subject to the Excise Tax (but for the application of this Section 5), then the amount of such
parachute payments in excess of the maximum amount of parachute payments that the Executive may
receive without being subject to the Excise Tax shall be treated as a loan
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from the Company to the Executive which the Executive shall repay to the Company, together
with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no amount shall be payable by the Executive to the Company if and
to the extent such payment would not reduce the amount subject to the Excise Tax, and further
provided that the total amount of repayment pursuant to this Section 5 shall not exceed 10% of the
amount provided in Section 1 of this Amendment. For the avoidance of doubt, in the event the
Executive remains subject to the Excise Tax after the application of forgoing provisions of this
Section 5, then the Executive will be entitled to the Gross-Up Payment provided in Section 9 of the
Agreement.
6. The first sentence of Section 9(a) of the Agreement shall be modified to read
as follows:
“Subject to Section 6(e) of this Agreement, in the event it shall be
determined...”
7. Except as expressly amended herein, the Agreement remains unchanged and continues in full
force and effect. Except as provided in the Agreement, as amended, the Executive irrevocably
waives the right to receive payments in excess of the limits contemplated in Section 1 of this
Amendment.
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IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement as of the day
and year first above written.
| /s/ Xxxxx X. Xxxxx | ||||
| Xxxxx X. Xxxxx (Executive) | ||||
| THE OILGEAR COMPANY |
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| By: | /s/ Xxxxx X. Xxxxx | |||
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