Exhibit 10(b)
15 February 1995
Mr. Frank M. Sims
Clark Equipment Company
100 North Michigan Street
P. O. Box 7008
South Bend, Indiana 46634
Dear Mr. Sims:
The terms and conditions of your employment with Clark Equipment Company
(CLARK) are contained in a letter dated 12 November 1992 (the 1992
Agreement). The purpose of this letter (herein "this Agreement") is to
amend and restate our agreement.
Specifically, CLARK proposes the following:
1. STATEMENT OF PURPOSE.
You have deferred $113,500 of your base salary. Those deferred amounts
have been used by CLARK to purchase insurance policies on your life with
the proceeds of those policies payable to CLARK on your death. CLARK
expects that those proceeds are sufficient to fund the benefits set forth
in this Agreement.
The purpose of this Agreement is to describe the benefits to which you or
your surviving spouse or estate will become entitled if you die, retire or
otherwise cease to be an employee of CLARK.
2. EMPLOYMENT.
2.1 Duties. CLARK will continue to employ you and you will continue to
serve CLARK either as a Senior Vice President at CLARK's Principal Offices,
with duties and responsibilities appropriate to such a position, or, in
such other capacity and location with duties and responsibilities as the
Chief Executive Officer may from time to time determine.
2.2 Compensation. For your services as a full-time employee of CLARK,
your salary shall be fixed from time to time by the Chief Executive
Officer, but shall not be less than a rate which is 88.75% of the average
of the Hay Management Consultants Industrial Salary Survey, as determined
from year to year, for the number of Hay Client Points of your position as
of the date of this Agreement. In no event will your salary be reduced to
a rate below its then current rate unless reductions of the same percentage
are being made at the same time to the salaries of all other CLARK officers
in the Corporate Offices at or above the vice president level, and your
salary would then be restored to its prior level when, and to the same
extent, that occurs for the other officers. As a full-time employee you
will be afforded the opportunity to earn a bonus or other non-salary
compensation and to participate in all employee benefits or perquisites as
may be made applicable to employees of like rank and position.
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3. BENEFITS UPON YOUR DEATH, RETIREMENT OR TERMINATION OF EMPLOYMENT.
3.1 Retirement. If you elect to retire from the employ of CLARK for any
reason, CLARK agrees to make monthly payments to you for the rest of your
life in an amount determined from Exhibit A to this Agreement reduced by
the amount of any payments received by you pursuant to the Deferred
Compensation Agreements awarded to you on 1 May 1974 and 14 January 1980.
3.2 Death After Retirement. If, after being retired from the employ of
CLARK pursuant to Section 3.1, you die, CLARK agrees to make monthly
payments to your widow, Jo Anne Sims, for the rest of her life, in an
amount equal to 60% of the monthly sum guaranteed to you in Section 3.1
reduced by the amount of any payments received by her or any other
beneficiary pursuant to the Deferred Compensation Agreements awarded to you
on 1 May 1974 and 14 January 1980.
3.3 Death Before Retirement. If you die while still an employee of CLARK,
CLARK will pay to your widow, Jo Anne Sims, for the rest of her life, the
amounts which would have been payable to her pursuant to Section 3.2 if you
had retired from the employ of CLARK on the first day of the month in which
you died.
3.4 Supplemental Payments. CLARK will also make monthly payments to you
(or to your widow) in an amount equal to the additional amounts of pension
benefits that would have been payable to you (or to her) from the CLARK
Retirement Program for Salaried Employees if the amount of such pension
benefits were not limited either by Section 415 of the Internal Revenue
Code or by any other law or regulation that limits either the amount of
pension benefits or the amount of salary that can be used to determine
pension benefits.
3.5 Termination Of Your Employment Other Than For Cause. If your
employment is terminated by CLARK other than for cause (as defined in
Section 3.6), you will be entitled to a one time payment equal to 1.5 times
your then annual salary, excluding bonus. In addition, you would be
entitled to elect to retire at the time of such termination and thereby
qualify for the payments provided for in Section 3.1.
3.6 Termination Of Your Employment For Cause. CLARK may terminate this
Agreement and your employment for cause immediately upon notice to you if
it is established that there has been either continued neglect or a
material breach of your duties and obligations hereunder. If your
employment is terminated by CLARK for cause, you will have the option to
retire pursuant to Section 3.1 at that time in lieu of such termination.
4. CHANGE IN CONTROL OF CLARK.
If at a time when you are no longer an active employee at CLARK and you or
your widow, Jo Anne Sims, are entitled to monthly payments pursuant to
Sections 3.1, 3.2, 3.3 or 3.4 of this Agreement, a change in control of
CLARK occurs as defined in Section 9 hereof, then CLARK shall pay or cause
to be paid to you (or to her), within 30 days thereafter, a one-time lump
sum payment in lieu of the monthly payments that would otherwise be payable
to you or to her pursuant to such sections. The amount of such lump sum
payment shall be an amount sufficient that, after your payment of all
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income taxes thereon, the amount remaining will be the present value of all
future payments to which you or your surviving spouse would otherwise be
entitled under this Agreement, calculated as described in Section 9.5.
5. YOUR DEFERRAL OBLIGATION.
You agree to forego the receipt of salary and salary increases awarded to
you after 1 June 1984 in amounts sufficient to satisfy the salary deferral
schedule incorporated herein as Exhibit B. Since the cumulative total of
such salary amounts so foregone now equals the amounts shown in Exhibit B,
you have no further obligation to forego salary or salary increases.
6. NON-COMPETITION.
While employed by CLARK, your duties have related to all of the business
operations of CLARK, both in the United States and elsewhere in the world.
For such time as you are employed by CLARK, and thereafter for a period of
(i) five years if your employment terminates at a time and for a reason
that entitles you to lifetime monthly payments pursuant to this Agreement
or (ii) two years if the termination of your employment does not entitle
you to such lifetime monthly payments, but in any event only for so long as
CLARK satisfies its obligations under this Agreement, you agree to refrain
from competing with CLARK or any of its subsidiaries or affiliates in the
United States or elsewhere in the world with respect to any aspect of the
business conducted by CLARK or its subsidiaries or affiliates (collectively
"the Business"), including without limitation, the design, manufacture,
sale or distribution of products which are competitive with those of CLARK,
or becoming an employee or representative of any person, firm or company
which competes with CLARK or any of its subsidiaries or affiliates in the
United States or elsewhere in the world with respect to the Business. If a
court shall finally hold that the time or territory or any other provisions
stated in this Section 6 constitutes an unreasonable restriction upon you,
the provisions of this Agreement shall not be rendered void, but shall
instead apply as to time for a period of two years and as to territory in
the continental United States or to such lesser extent as such court may
judicially determine constitutes a reasonable restriction under the
circumstances involved. If you request and obtain from the Human
Effectiveness Committee of the Board of Directors of CLARK (or a successor
committee) a written approval that an employment opportunity or other
activity that you are considering would not be in violation of this Section
6, then CLARK will abide by such determination and will not seek to enforce
this Section with respect to such employment or activity.
7. CONFIDENTIAL INFORMATION.
During the course of your employment with CLARK, you have received,
developed or otherwise become aware of confidential information of CLARK,
VME Group N.V., and their subsidiaries and affiliates. For a period of
five years following the cessation of your employment with CLARK for any
reason (but only for so long as CLARK satisfies its obligations under this
Agreement), you will not use, disclose, give, sell or otherwise divulge to
any person, firm or corporation any confidential information regarding
CLARK or VME Group N.V. or any of their subsidiaries or affiliates. The
term "confidential information" shall include but not be limited to any
aspect of CLARK's or VME Group N.V.'s (or their subsidiaries' or
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affiliates') business, trade secrets, strategies, potential acquisitions or
divestitures, discussions relating to acquisitions or divestitures,
financial statements or other financial information, forecasts, operations,
business plans, prices, discounts, products, product specifications,
designs, plans, processes, data and know-how, ideas, technical information
and intellectual property, except such information as is otherwise made
publicly available by CLARK or VME Group N.V., or their subsidiaries or
affiliates. You will not remove from CLARK's possession any confidential
information, and shall return to CLARK on or before the termination of your
employment any confidential information which may have previously been in
your possession. The provisions of this Section 7 shall survive any
termination of this Agreement. Any other agreements between CLARK and you
relating to confidentiality shall, to the extent not inconsistent herewith,
remain in effect.
8. EMPLOYEES.
For a period of three years from the date of the cessation of your
employment with CLARK (but only for so long as CLARK satisfies its
obligations under this Agreement), you agree to refrain from suggesting,
persuading, or inducing any key employees of CLARK or its subsidiaries or
affiliates to leave their employ at CLARK to be employed elsewhere.
9. CHANGE IN CONTROL OF CLARK.
9.1 This Section Governs. If following a change in control of CLARK as
hereinafter defined your employment terminates, the provisions of this
Section 9 shall govern your rights and shall, to the extent inconsistent
with the other provisions of this Agreement or other agreements between you
and CLARK, supersede such other provisions and agreements.
9.2 Resignation Within One Year. If within one year after a change in
control of CLARK you terminate your employment with CLARK, such termination
will be treated as a termination by CLARK other than for cause.
9.3 Resignation After Change In Location, Duties, Compensation. If any
time subsequent to a change in control of CLARK, you terminate your
employment with CLARK within six months after the occurrence of one or more
of the following events: (i) a change in the location of your employment;
(ii) a significant change in the nature and scope of your employment
responsibilities or duties including but not limited to a change in title
or reporting responsibility; or (iii) any reduction in your compensation,
benefits or perquisites, either separately or in the aggregate, such
termination will be treated as a termination by CLARK other than for cause.
9.4 Termination By Clark. If after a change in control of CLARK you are
terminated by CLARK other than for cause (as defined in Section 9.6), CLARK
shall pay or cause to be paid to you within 30 days thereafter:
(a) An amount sufficient that, after your payment of all income taxes
thereon, the amount remaining will be the present value of all future
payments to which you or your surviving spouse would otherwise be entitled
under all of the other provisions of this Agreement except for those
included in this Section 9;
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(b) An amount sufficient that, after your payment of all income taxes
thereon, the amount remaining will be the present value of any lump sum
payments payable to you at a future date or dates under the provisions of
this Agreement that are not included in this Section 9, regardless of
whether such future payments are conditioned on your still being an active
employee at such future date or dates (any such condition being hereby
waived); and
(c) A severance payment equal to two times "base income" as
hereinafter defined. Notwithstanding the foregoing, if the aggregate
payments to which you are entitled as a result of a termination by CLARK
other than for cause would constitute an "excess parachute payment" under
Internal Revenue Code Section 280 G(b), then the severance payment set
forth in this paragraph (c) shall be reduced to the extent necessary so
that when it is added to all other payments constituting "parachute
payments", the total "parachute payments" are not more than 2.99 times
"base income". No amount will be payable under this paragraph (c) if the
total of the other "parachute payments" exceeds 2.99 times "base income".
For the purpose of this paragraph (c), the term "base income" shall mean
your average annual total taxable compensation received from CLARK over the
last five years ending before the change in control of CLARK occurs.
9.5 Present Value Calculation. For the purposes of paragraphs (a) and (b)
of Section 9.4, "present value" will be calculated using the interest rate
specified in Section 411(a)11(B)(ii) of the Internal Revenue Code of 1986,
or any successor section thereto, as of the date of such termination and
the 1983 Group Annuitants Mortality Table, or the mortality table (if it is
different) then being used by CLARK's actuaries for valuation purposes with
respect to CLARK's qualified pension plans. All calculations for the
purposes of Sections 9.4 and 9.7 shall be made, at the expense of CLARK, by
the independent auditors of CLARK. As soon as practicable after the need
for such calculation arises, CLARK shall provide to its auditors all
information needed to perform such calculations.
9.6 Other Than For Cause - Defined. For the purposes of this Section 9, a
termination of your employment by CLARK shall be "other than for cause" if
it is either (i) treated as such pursuant to Sections 9.2 or 9.3 hereof or
(ii) if such termination by CLARK occurs after a change in control of
CLARK, for any reason other than either continued neglect or a material
breach of your duties and obligations under this agreement.
9.7 Tax Protection. In the event that you become entitled to payments
under Section 9.4 and the aggregate payments to which you are entitled
(disregarding paragraph (c) of Section 9.4) constitutes an "excess
parachute payment" under Internal Revenue Code Section 280 G(b), then CLARK
will pay to you at the time of the payments under Section 9.4 an amount
sufficient that, after your payment of income taxes and any excise taxes
thereon, the amount remaining will be sufficient to pay any excise tax
imposed on you by the Internal Revenue Code because of such "excess
parachute payment".
9.8 Expenses. In the event of a change in control of CLARK, all
subsequent legal and accounting fees and expenses incurred by you in
connection with, or in prosecuting or defending, any dispute arising out of
or relating to this Agreement shall be paid by CLARK provided you prevail
in whole or in part in any such dispute.
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9.9 Change In Control - Defined. For the purpose of this Agreement, a
change in control of CLARK shall mean any of the following events:
(1) the acquisition of beneficial ownership of 25% or more of
the shares of the Common Stock of CLARK by or for any person (as such term
is defined in Section 14(d)(2) of the Securities Exchange Act of 1934),
including for purposes of calculating such person's ownership, all shares
beneficially owned by the affiliates and associates (as such terms are
defined in Rule 12b-2 of the Securities Exchange Act of 1934) of such
person, provided, however, that the term "person" shall not include any of
the following: CLARK, any subsidiary of CLARK, any employee benefit plan
or employee stock plan of CLARK or of any subsidiary of CLARK, any dividend
reinvestment plan of CLARK, any person or entity organized, appointed or
established by CLARK for or pursuant to the terms of any such plan, or any
person which becomes the beneficial owner of 25% or more of such shares
then outstanding solely as a result of the acquisition by CLARK or any
employee benefit plan of CLARK of shares of the Common Stock of CLARK,
provided that such person does not thereafter acquire any shares of the
Common Stock of CLARK, or
(2) during any period of 24 consecutive months, individuals who
at the beginning of such period constitute the Board of Directors of CLARK
cease for any reason to constitute a majority thereof, unless the election,
or nomination for election by CLARK's stockholders, of each new director
was approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such period, or
(3) CLARK's stockholders shall approve (a) the merger or
consolidation of CLARK with or into another corporation and CLARK shall not
be the surviving corporation, or (b) an agreement to sell or otherwise
dispose of all or substantially all of CLARK's assets (including a plan of
liquidation).
10. TERMINATION OF SURVIVOR BENEFITS.
In the event that, (i) while you are employed pursuant to this Agreement,
your spouse predeceases you, or (ii) while you are either so employed or
retired and eligible for payments pursuant to Section 3.1, either your
marriage ends by divorce or you wish to delete from this Agreement the
provisions providing for benefits to your surviving spouse for a reason
other than her death, you may notify CLARK of such fact and request that
this Agreement be amended to delete the surviving spouse provisions. If in
the opinion of legal counsel to CLARK such amendment can be legally made
and will be effective to extinguish any legal rights that your spouse or
former spouse might have under this Agreement, and subject to the
satisfaction of any conditions (such as obtaining a written waiver or
consent from such spouse or former spouse) expressed in such legal opinion,
CLARK will agree to so amend this Agreement. CLARK will also agree to
include in such amendment an actuarial adjustment, on an equal value basis,
of the benefits payable to you under this Agreement to reflect the fact
that benefits will no longer be payable to a surviving spouse.
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11. SPOUSE OPTION AND GUARANTEE.
11.1 In calculating the monthly amounts of Sections 3.1 and 3.2, the 60%
Spouse Option under the Clark Equipment Company Retirement Program for
Salaried Employees was assumed. Accordingly, if and so long as this
Agreement provides for any benefits to be payable to your surviving spouse,
CLARK's agreement to make or to continue the monthly payments under
Sections 3.1 or 3.2 is expressly conditioned upon your selecting and
maintaining the 60% Spouse Option at the time you elect retirement.
11.2 If your widow, Jo Anne Sims, either becomes entitled to benefits
pursuant to Section 3.2 or 3.3, or would have been entitled to benefits
pursuant to one of such Sections but for the fact that she predeceased you,
and if the aggregate amount of the monthly payments made to you and to her
under this Agreement is less than the applicable guarantee as shown in the
table below, a lump sum payment will be made either to your estate or to
such other beneficiary as you may have otherwise designated, in an amount
equal to the difference between the applicable guaranteed amount and the
aggregate amounts paid to you and to her.
Section Under Which Your Guaranteed Total
Widow Was (or Would Have Payments Equal
Been) Eligible for 60 Times This
Monthly Benefits Monthly Amount:
3.2 The amount which was payable to you
under Section 3.1.
3.3 The amount which would have been payable
to you under Section 3.1 if you had
retired from CLARK on the first day of
the month in which you died
12. COMPENSATION ADMINISTRATION BY CLARK.
Notwithstanding your obligation under Section 5 to forego the receipt of
salary, CLARK will, except as otherwise required either by law or to
maintain the tax qualified status of its benefit programs, continue to
administer your salary, benefits and non-salary compensation as if that
obligation to forego did not exist.
13. CLARK RETIREMENT PROGRAM.
As used in this Agreement, the term "Clark Retirement Program" means the
Clark Equipment Company Retirement Program for Salaried Employees or any
successor pension plan funded entirely by CLARK. Such term does not
include the Clark Savings and Investment Plan or the Clark Leveraged
Employee Stock Ownership Plan. Notwithstanding the foregoing, for the
purpose of this Agreement, the amount of any monthly payment received by
either you, or your widow, from the CLARK Retirement Program shall be
deemed to include the entire amounts which would be payable to either of
you from the Clark Equipment Company Retirement Program for Salaried
Employees without regard to any reduction in such benefits to reflect the
amounts payable from the Clark Leveraged Employee Stock Ownership Plan.
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14. GOVERNING LAW.
This Agreement shall be governed by the law of the State of Indiana.
15. SEVERABILITY.
If any provision of this Agreement is held invalid, such invalidity shall
not affect the remaining provisions of this Agreement to the extent those
provisions are not dependent upon the invalid provision.
16. REMEDIES.
In the event of a violation of any of the provisions of this Agreement by
either you or CLARK, the other party will be entitled, if it so elects, in
addition to all other remedies under applicable law, to institute
proceedings at law or in equity to seek damages with respect to such
violation or to enforce specific performance of this Agreement or to enjoin
the violating party from engaging in any activity in violation thereof.
Prior to taking any legal action to seek damages or enforce such
provisions, either party will give to the other party written notice of the
claimed violations and allow the other party a period of sixty days to cure
such violations.
17. AMENDMENT AND RESTATEMENT OF THE 1992 AGREEMENT.
Upon execution by you of this Agreement, the 1992 Agreement shall be amend-
ed and restated by this Agreement.
If the foregoing is entirely satisfactory to you, please sign and return
the attached copy of this letter whereupon it shall constitute an agreement
between us as of the date first set forth above.
Very truly yours,
CLARK EQUIPMENT COMPANY
Accepted and Agreed to: By /s/ Leo J. McKernan
Leo J. McKernan
/s/ Frank M. Sims Chairman, President and
Chief Executive Officer
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Mr. Frank M. Sims
15 February 1995
EXHIBIT A
Benefit Schedule
Section 3.1 Payable for Retirement
Amounts Between
$ 9,766.67 1 August 1994 and 31 July 1995
$10,550.00 1 August 1995 and 31 July 1996
$11,391.67 1 August 1996 and 31 July 1997
$12,300.00 1 August 1997 and Thereafter
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EXHIBIT B
Mr. Frank M. Sims
15 February 1995
Salary Deferral Schedule
Section 5 Period Amount
1 June 1984 through 31 July 1985 $28,000
1 August 1985 through 31 July 1986 28,000
1 August 1986 through 31 July 1987 13,900
1 August 1987 through 31 July 1988 200
1 August 1988 through 31 July 1989 800
1 August 1989 through 31 July 1990 1,400
1 August 1990 through 31 July 1991 2,400
1 August 1991 through 31 July 1992 7,400
1 August 1992 through 31 July 1993 12,400
1 August 1993 through 31 July 1994 19,000
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