EXHIBIT 10(a)
CASE CORPORATION
000 XXXXX XXXXXX
XXXXXX, XX 00000
TEL: (000) 000-0000
March 20, 1997
Private and Confidential
Xx. Xxxx-Xxxxxx Xxxxx
Case Corporation
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Dear Xxxx-Xxxxxx:
The purpose of this letter (the "Letter Agreement") is to restate the terms and
conditions by which you are and have been employed as President, Chief Executive
Officer and, in addition, effective March 15, 1996, Chairman of Case Corporation
(the "Company"). Certain items of compensation, that you have already received,
are set forth in Exhibit A, which is expressly incorporated herein. You hereby
acknowledge that you have received those items set forth in Exhibit A and that
the Company and Tenneco Inc. ("Tenneco") have performed all of the obligations
imposed upon them by the agreements referenced in Section 12 hereof, except for
items which by their terms have not become due either through the passage of
time or the occurrence of specified events.
1. Your employment commenced on April 1, 1994. You are reporting to the
Board of Directors.
2. Your base salary will be at least $600,000 a year through December 31,
1995, $700,000 per year effective January 1, 1996 and, effective January
1, 1997, your base salary will be increased to $800,000 per year, which
shall be subject to such increase as may from time to time be approved by
the Compensation Committee of the Company's Board of Directors (which
increased salary shall not thereafter be decreased).
3. Beginning in 1995, the annual target value of your long-term stock awards,
whether in the form of restricted stock, stock options, other forms of
stock-based grants or a combination thereof, in the aggregate for each
year, shall be not less than $1,000,000.
4. Effective for bonuses which relate to 1996 and later years, the annual
target of your bonus will be no less than $400,000. Effective January 1,
1996, your bonus target will be no less than your base salary.
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March 20, 1997
5. You will receive non-cash compensation (e.g., Company car) and
qualified/welfare benefits provided to the Company's senior executives.
The Company will also reimburse you for the costs of financial and estate
planning up to $20,000 per year.
6. You will have four weeks vacation per year. If you choose to spend your
vacation in your home country, the Company will pay round trip air travel
for you and your family once a year. The Company's normal policy regarding
accrued but unused vacation time will apply to you.
7. You will receive a pension benefit from the Company and its pension plans
which, in the aggregate, will not be less than the amount which you would
have been entitled to receive if your coverage under the Honeywell, Inc.,
defined benefit plans in effect at March 18, 1994 had continued until your
separation of service from the Company, less any benefits from such
Honeywell, Inc. plans. If, within four years of the date specified in
Section 1 hereof, the Company terminates your employment other than for
death, disability or the gross neglect of your duties or if you
voluntarily terminate your employment with the Company and are entitled to
severance benefits under Section 8 below, you will, nevertheless be
treated as having received four years credit for service with the Company.
The benefits guaranteed hereunder includes an age 57 subsidized early
retirement benefit.
8. If your employment with the Company is terminated within four years of the
date specified in Section 1 hereof, other than for death, disability, or
the gross neglect of your duties, the Company will pay you a severance
benefit in an amount equal to three times your base salary then in effect.
If your employment is terminated thereafter other than for death,
disability, or the gross neglect of your duties, the Company will pay you
a severance benefit in an amount equal to two times your base salary then
in effect. If you resign voluntarily or retire, you will not be entitled
to this severance benefit.
In addition, notwithstanding the foregoing, you may elect to voluntarily
terminate your employment with the Company and still be entitled to
receive the above indicated severance benefit if: (a) there is a material
reduction or material adverse alteration in the nature of your position,
responsibilities or authorities (including the failure to elect and
continue to elect you to the Board of the Company); (b) there is a
material reduction of your compensation or benefits hereunder; (c) you
become the holder of a lesser office or title than Chairman, President and
Chief Executive Officer of the Company; or (d) your job is relocated to a
Letter Agreement; provided that if the event is not due to intentional or
repeated action, you will provide the company with written notice of the
event and the opportunity to cure the event within 15 days from the date
of the notice. If the written notice is not required, you will have 30
days from the date of the event to elect to voluntarily terminate your
employment with the Company and still be entitled to receive the above
indicated severance. If you give the required notice and the Company fails
to cure the event within the 15 day period, you
Xx. Xxxx-Xxxxxx Xxxxx
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March 20, 1997
may elect within 30 days after such period to voluntarily terminate your
employment with the Company and still be entitled to receive the above
indicated severance.
For purposes of this Letter Agreement, errors in your judgment or any act
or omission believed by you in good faith to have been in or not opposed
to the interests of the Company will not be considered "gross neglect of
your duties."
You will not receive the severance benefits described in this Section 8 if
you receive severance benefits under the Agreement Regarding Change in
Control between yourself and the Company dated April 8, 1996.
9. The Company will reimburse you for the tuition and fees for secondary
private school for your eligible children.
10. If you are entitled to receive severance under Section 8 above, (a) the
Company will continue to provide you with all the same benefits as in
effect immediately prior to your termination for a period of two years
following your termination (if your severance equals two times your base
salary) or three years following your termination (if your severance
equals three times your base salary), and (b) all of your Tenneco stock
options will vest on the date of your termination and will remain
exercisable for a period of not less than 90 days from such termination;
all of your Company stock options will vest on the date of your
termination and will remain exercisable for a period of not less than 12
months from such termination, and (c) the Company will make a payment to
you in cash in an amount equal to the value of all of your Tenneco
restricted stock, Company restricted stock and Company convertible second
preferred stock, which you forfeit. In addition, the minimum pension under
Section 7 above, will be determined by treating the severance benefit as
compensation and service to the same extent as if you remained employed by
the Company and earned the amount of severance ratably over the two or
three year period, as applicable, in addition to the four years specified
in Section 7 above. If, under the terms of the Company's stock option
plans, any stock options which have been granted to you are forfeited on
the date of your termination, notwithstanding the foregoing provisions of
this Section 10, the Company shall make a payment to you with respect to
such options in an amount equal to the amount by which the fair market
value of the Company stock on the date of such forfeiture exceed the
option exercise price of such forfeited options. For all purposes hereof,
the value of the Company's convertible second preferred stock shall be
equal to the greater of (a) the number of shares of common stock of the
Company into which such convertible second preferred shares could have
been converted, multiplied by the closing price of a share of Company
common stock on the date of your termination of employment plus the
discounted present value (using First National Bank of Chicago prime or
reference rate in effect on the date of your termination of employment) of
the dividends payable with respect to such convertible second preferred
shares from the date of termination through July 1, 2000 or if higher (b)
the liquidation preference
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Xx. Xxxx-Xxxxxx Xxxxx
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March 20, 1997
that would have been payable with respect to such forfeited convertible
second preferred shares, including any accrued and unpaid dividends
thereon.
11. If you incur legal or other fees and expenses in an effort to establish
entitlement to benefits under this Letter Agreement, the Company will
reimburse you for such fees and expenses unless a court determines that
such effort was conducted in bad faith. The Company will reimburse you on
a monthly basis upon your written request for reimbursement together with
proof that the fees and expenses were incurred.
12. This Letter Agreement supersedes any and all prior agreements, whether
oral or written, regarding your employment by the Company. Without
limiting the generality of the foregoing, this Letter Agreement supersedes
the letter agreements dated June 13, 1996 and May 4, 1995 between you and
the Company, the two letter agreements dated March 18, 1994 between you
and Case Equipment Corporation and you and Tenneco, Inc. and Xxxxx
Xxxxxxx'x June 3, 1994 memorandum to you, but this is without prejudice to
amounts or awards already paid or awarded to you.
13. None of the awards specified hereunder will prejudice your eligibility for
additional awards.
14. The Company will provide you with a membership in a country club of your
choice.
15. The provisions of this Letter Agreement shall apply notwithstanding any
inconsistent provisions contained in any current or future plan or
agreement of the Company or Tenneco. The Company and Tenneco agree to
amend all current and future plans and agreements to be consistent with
the provisions herein. Any failure of the Company or Tenneco to conform
any present or future plan or agreement to the provisions of this Letter
Agreement shall not be deemed to waive the provisions of this Letter
Agreement unless there is an agreement in writing between the Company,
Tenneco and you which expressly provides that it is the parties intent to
waive or modify such provisions of the Letter Agreement.
16. If you forfeit any Tenneco stock options, the Company shall pay you an
amount of cash with respect to each such option equal to the amount by
which the market value of Tenneco shares subject to such options exceeds
the option exercise price on the date of your election to receive such
benefits (determined under the terms and conditions of the Tenneco stock
option plans and agreements, as though your employment with the Company
were employment with Tenneco and the your right to elect this payment was
a right to elect to exercise such forfeited Tenneco stock option). If you
should forfeit any Tenneco restricted stock, the Company shall make a
payment to you in cash in an amount equal to the value of all of your
Tenneco restricted stock so forfeited at the date you would have become
vested in such Tenneco restricted stock had your employment with the
Company been treated for all purposes under the Tenneco restricted stock
grant to be employment with Tenneco.
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Xx. Xxxx-Xxxxxx Xxxxx
Page 5
March 20, 1997
Please acknowledge your agreement of these terms by executing a copy of this
letter in the space provided below and returning it to me.
Sincerely,
CASE CORPORATION
/s/ Xxxx X. Xxxxxx
ACKNOWLEDGED AND ACCEPTED:
/s/ Xxxx-Xxxxxx Xxxxx
--------------------------
On this 30th day of March, 1997.
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EXHIBIT A
1. You have become a participant in the Case Non-Qualified Deferred
Compensation Plan ("DCP"). You have been credited with $25,000, as a
discretionary Company credit with respect to 1994. This credit is in lieu
of any credit previously awarded under the Tenneco Deferred Compensation
Plan.
2. You were previously awarded 20,000 restricted shares of Tenneco Inc.
Common Stock under the 1994 Tenneco Inc. Stock Ownership Plan (the
"Tenneco Stock Plan") which are subject to the Restricted Stock Award
Agreement attached hereto as Exhibit A-1. You were previously awarded a
non-qualified stock option under the Tenneco Stock Plan to purchase 20,000
shares of Tenneco Common Stock, which are subject to the Non-Qualified
Stock Options Award Agreement attached hereto as Exhibit A-2, except to
the extent that Section 10 of the Letter Agreement may provide you with
greater rights with respect thereto.
3. On June 23, 1994, you were issued 20,500 shares of the Company's
convertible second preferred stock. On August 17, 1994, you were granted
a non-qualified option to purchase 200,000 shares of Company Common Stock
under the Case Equity Incentive Plan (the "CEIP"). On December 7, 1994,
you were granted a non-qualified stock option to purchase an additional
200,000 shares of Company Common Stock under the CEIP. These grants are
subject to the Non-Qualified Stock Options Award Agreements, as amended
and restated in the form attached hereto as Exhibits A-3 and A-4,
respectively, (which agreements are in substitution of the prior
agreements executed with respect to the August 17, 1994 and December 7,
1994 non-qualified stock option grants) except to the extent that Section
10 of the Letter Agreement may provide you with greater rights with
respect thereto.
4. In December 1995, the Company paid you a bonus of $699,900, consisting of
a $300,000 cash payment and shares of stock (net of shares withheld to
satisfy tax withholding) with a value of $399,900. In January 1997, the
Company paid you a bonus of $1,283,333, consisting of a $550,000 cash
payment and shares of stock (net of shares withheld to satisfy tax
withholding) with a value of $733,333.
5. On each of December 7, 1995 and December 11, 1996, you were granted a
non-qualified option to purchase 75,000 shares of Company Common Stock
under the CEIP. On December 7, 1995 and December 11, 1996, you were
awarded 20,000 and 25,000 shares, respectively, of restricted Common Stock
under the CEIP.
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