GEHL COMPANY/MULCAHY
CHANGE IN CONTROL AND SEVERANCE AGREEMENT
THIS AGREEMENT,
made and entered into as of the _____day of ___________, 2008, by
and between GEHL COMPANY, a Wisconsin corporation (hereinafter
referred to as the “GEHL”), and
_________________________ (hereinafter referred to as the
“Executive”).
W I T N E S S E T H :
WHEREAS, the
Executive is employed by GEHL in a key executive capacity, and the
Executive’s services are valuable to the conduct of the
business of GEHL;
WHEREAS, the
Board of Directors of GEHL (the “Board”) recognizes
that circumstances may arise in which a change in control of GEHL
occurs, through acquisition or otherwise, thereby causing
uncertainty about the Executive’s future employment with GEHL
without regard to the Executive’s competence or past
contributions, which uncertainty may result in the loss of valuable
services of the Executive to the detriment of GEHL and its
shareholders, and GEHL and the Executive wish to provide reasonable
security to the Executive against changes in the Executive’s
relationship with GEHL in the event of any such change in
control;
WHEREAS, GEHL
and the Executive are desirous that any proposal for a change in
control or acquisition of GEHL will be considered by the Executive
objectively and with reference only to the best interests of GEHL
and its shareholders;
WHEREAS, the
Executive will be in a better position to consider GEHL’s
best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of
employment which could result from any such change in control or
acquisition; and
WHEREAS, GEHL
deems it appropriate to provide the Executive with specified
severance benefits, as provided in this Agreement, in the event of
certain termination of the Executive other than in the context of a
Change in Control or acquisition.
NOW, THEREFORE,
in consideration of the foregoing and of the mutual covenants and
agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
Section
1. Change in Control . In the event a
Change in Control, as defined below, occurs while the Executive is
employed by GEHL and this Agreement is in effect, the Executive
shall automatically be entitled to employment by GEHL for two (2)
years after the occurrence of the Change in Control (such two
(2)-year term of employment is hereafter referred to as the
“Change in Control Contract Term”). While employed by
GEHL during the Change in Control Contract Term, the Executive
shall be entitled to a base salary, bonus opportunity and other
employee benefits substantially equivalent to those the Executive
was entitled to immediately prior to the Change in Control. In
addition, upon the occurrence of a Change in Control, and assuming
that the Executive is in the employ of GEHL at such time or
demonstrates that his prior termination was effected in
anticipation of a Change in Control as contemplated by the
succeeding paragraph, (i) the unvested stock options awarded to the
Executive under the GEHL Stock Option Plans shall vest, and (ii)
all restrictions limiting the exercise, transferability,
entitlement or incidents of ownership of any outstanding award,
including options, restricted stock, supplemental retirement
benefits, deferred compensation, or other property or rights
granted to the Executive after the date of this Agreement (other
than pursuant to plans of general application to salaried employees
such as tax-qualified retirement plans, life insurance and the
health plan) shall lapse, and such awards shall become fully vested
and be held by or for the Executive free and clear of all such
restrictions. This provision shall apply to all such property or
rights notwithstanding the provisions of any other plan or
agreement.
If
the Executive incurs a Separation from Service (as defined below)
because the Executive’s employment shall be terminated by
GEHL without Cause (as defined below) or the Executive shall
terminate his employment for Good Reason (as defined below) during
the Change in Control Contract Term, or if GEHL shall terminate the
Executive’s employment without Cause, triggering a Separation
from Service, within six (6) months before the execution of a
definitive purchase agreement that ultimately results in a Change
in Control and the Executive shall reasonably demonstrate that such
termination was in connection with or in anticipation of the Change
in Control, the Executive shall be entitled to the
following:
(iii)
paid in a lump sum within thirty (30) days of the date of the
Executive’s Separation from Service or the date that the
Executive demonstrates that such Separation from Service was in
connection with or in anticipation of the Change in Control,
whichever is applicable:
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(a) |
The Executive’s base salary as in effect on the
Separation from Service (“Current Base Salary”) through
the Separation from Service to the extent not theretofore paid;
and |
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(b) |
The pro rata portion (based on the completed months in the
calendar year through the Separation from Service divided by twelve
(12)) of the target bonus award that could have been earned by the
Executive under GEHL’s then-existing bonus plan, ignoring
performance requirements and any requirement that the Executive be
employed through the end of the fiscal year; and |
(iv)
paid in a lump sum on the first business day that is six (6) months
after the Separation from Service or the later date that the
Executive demonstrates that such Separation from Service was in
connection with or in anticipation of the Change in Control,
whichever is applicable:
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(c) |
Two (2) times the sum of (I) the Current Base Salary and (II)
the highest bonus amount earned by the Executive in any of the five
(5) fiscal years which precede the year in which the Separation
from Service occurs, including any amounts deferred;
and |
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(d) |
The present value of the Executive’s benefits under
Section 2 of the Executive’s most current Supplemental
Retirement Benefit Agreement using a discount rate equal to the
interest rate that would be used by the Gehl Company
Retirement Income Plan “B” to calculate the amount of a
lump sum distribution to be made on the same date as the payment
hereunder; |
2
provided,
however, that any payments under (c) and (d) shall be increased
with interest from the date that payment is made under (a) and (b)
until the payment is made under (c) and (d), with the rate of
interest announced by M&I Bank, Milwaukee, Wisconsin from time
to time as its prime or base lending rate, such rate to be
determined as of the Separation from Service.
If
benefits under (a), (b), (c) and (d) above are triggered, the
Executive shall also receive at the expense of GEHL (at the time
of entering into the agreement, the executive needs to irrevocably
select one of the following two options by checking the applicable
provision; no subsequent change in the election is
permitted):
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outplacement services, on an individualized basis at a level of
service commensurate with the Executive’s most senior status
with GEHL during the one hundred eighty (180)-day period prior to
the date of the Change in Control, provided by a nationally
recognized senior executive placement firm selected by GEHL with
the consent of the Executive, provided that the cost to GEHL of
such services shall not exceed twenty percent (20%) of the
Executive’s Current Base Salary and provided further that
such outplacement services shall cease no later than December 31 of
the second calendar year following the calendar year in which the
Executive’s Separation from Service occurs. |
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the lesser of Fifteen Thousand Dollars ($15,000) or twenty
percent (20%) of the Executive’s Current Base Salary, such
amount to be paid at the same time as the benefits in (c) and (d)
above with interest credited in the same fashion. |
If
benefits under the preceding paragraph and under (a), (b), (c) and
(d) in the second preceding paragraph are triggered, in addition,
for twenty-four (24) months after the Separation from Service, GEHL
shall provide to the Executive and his family medical benefits at
least substantially equal on a pre-tax basis to those provided to
him and his family just prior to the date of the Change in Control,
whether pursuant to a group plan or individual coverage.
Notwithstanding the foregoing, if the Executive obtains employment
during the twenty-four (24)-month period and family medical
benefits (substantially equivalent to those offered by GEHL just
prior to the date of the Change in Control) are available from the
new employer, GEHL’s obligation to provide such family
medical benefits shall cease for so long as the Executive remains
employed. If the extended coverage exceeds the applicable
“COBRA” continuation period, typically eighteen (18)
months, and if such coverage is provided under a health plan that
is subject to Code Section 105(h), benefits payable under such
health plan shall comply with the requirements of Treasury
regulation section 1.409A-3(i)(1)(iv)(A) and (B) and, if necessary,
GEHL shall amend such health plan to comply therewith.
In no event
shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the
Executive under this Agreement and such amounts shall not be
reduced (except to the extent set forth in the immediately
preceding paragraph) whether or not the Executive obtains other
employment. In addition, GEHL will not be entitled to reduce the
amounts payable under this Agreement for any claims or rights it
may have against the Executive.
3
“Change
in Control” for the purposes of this Agreement shall be
defined as one of the following:
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i) |
Securities of GEHL representing thirty percent (30%) or more of
the combined voting power of GEHL’s then outstanding voting
securities are acquired pursuant to a tender offer or an exchange
offer; or |
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ii) |
The shareholders of GEHL approve a merger or consolidation of
GEHL with any other corporation as a result of which less than
fifty percent (50%) of the outstanding voting securities of the
surviving or resulting entity are owned by the former shareholders
of GEHL (other than a shareholder who is an
“affiliate,” as defined under rules promulgated under
the Securities Act of 1933, as amended, of any party to such
consolidation or merger); or |
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iii) |
The shareholders of GEHL approve the sale of substantially all
of GEHL’s assets to a corporation which is not a wholly-owned
subsidiary of GEHL; or |
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iv) |
Any person becomes the “beneficial owner,” as
defined under rules promulgated under the Securities Exchange Act
of 1934, as amended, directly or indirectly of securities of GEHL
representing thirty percent (30%) or more of the combined voting
power of GEHL’s then outstanding securities the effect of
which (as determined by the Board) is to take over control of GEHL;
or |
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v) |
During any period of two (2) consecutive years, individuals
who, at the beginning of such period, constituted the Board cease,
for any reason, to constitute at least a majority thereof, unless
the election or nomination for election of each new director was
approved by the vote of at least two-thirds (2/3) of the directors
then still in office who were directors at the beginning of the
period; |
but only if
such event is also a change in ownership or effective control or a
change in the ownership of a substantial portion of the assets of
GEHL as defined by the applicable regulations for Code Section 409A
using its default provisions.
“Good
Reason” for the purposes of this Agreement shall be defined
as the occurrence of any one of the following events or conditions
after, or in anticipation of, the Change in Control:
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i) |
The removal of the Executive from, or any failure to re-elect
or reappoint the Executive to, any of the positions held with GEHL
on the date of the Change in Control or any other positions
with |
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