Change-In-Control Agreement - NCR Corp. and Lars Nyberg
CHANGE-IN-CONTROL
AGREEMENT
AGREEMENT by and between NCR Corporation, a Maryland corporation (the
"Company") and Lars Nyberg, effective as of January 1, 1997.
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its shareholders to assure that
the Company will have your continued dedication, notwithstanding the
possibility, threat or occurrence of a Change-in-Control (as defined below) of
the Company. The Board believes it is imperative to diminish your inevitable
distraction by the personal uncertainties and risks created by a pending or
threatened Change-in-Control and to encourage your full attention and dedication
to the Company currently and in the event of any threatened or pending
Change-in-Control, and to provide you with compensation and benefits
arrangements upon a Change-in-Control which ensure that your compensation and
benefits expectations will be satisfied and are competitive with those of other
corporations. Therefore, to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
Agreement in the event your employment with the Company is terminated subsequent
to a Change-in-Control in the circumstances hereinafter described.
1. Entitlement to Benefits
If your employment with the Company is terminated during the three-year
period beginning on the date of a Change-in-Control, either (a) involuntarily,
except for Cause, or (b) voluntarily, due to Good Reason, you will be entitled
to receive the benefits described in Section 3 ("Change-in-Control Benefits"),
provided you execute a release of all employment-related claims against the
Company and its subsidiaries and affiliates existing as of the date of
execution, in the standard form used by the Company without material
modification, addition or deletion. You will also become entitled to the
Change-in-Control Benefits if you voluntarily terminate employment with the
Company for any reason during the thirteenth month following the month in which
a Change-in-Control occurs, provided a release of claims is executed. You will
not receive such benefits if your employment with the Company terminates due to
any other reason, such as death or your becoming disabled to the extent that you
qualify for benefits from the NCR Long Term Disability Plan. The
Change-in-Control Benefits are payable in lieu of any benefits you might be
entitled to receive under the NCR Workforce Redeployment Plan.
1
<PAGE> 2
2. Change-in-Control Benefits
The Change-in-Control Benefits consist of the following:
(a) Separation Pay. A lump sum payment of three times your annual base
pay in effect on the date of termination of employment, or the date of the
Change-in-Control if higher, paid within 60 days after termination of
employment.
(b) Incentive Pay. The Change-in-Control Benefits include a lump sum
payment made within 60 days after termination of employment equal to the
following incentive pay:
(i) The incentive pay earned under the Management Incentive Plan
for Executive Officers, or any successor plan ("MIP") for the
calendar year in which termination of employment occurs, at
the greater of target for year of termination of employment or
the actual cash payment for the preceding year, pro-rated in
1/12 increments for the portion of the calendar year prior to
the last day of the month in which termination of employment
occurs.
(ii) Three times the greater of (A) the target MIP award for the
calendar year in which termination of employment occurs, or
(B) the actual cash MIP award for the preceding calendar year.
(iii) Cash payment for performance cycles under the Long Term
Incentive Program ("LTIP") that commenced prior to the date of
termination of employment and have not been paid out. For
performance cycles for which the cash value of the award has
been determined (either by the issuance of restricted stock
units or otherwise), the cash payment will equal the actual
cash value of the award. For performance cycles for which the
cash value of the award is not yet determinable, the cash
payment will be calculated using the target award amount. The
cash payment for the performance cycle beginning with the
calendar year in which termination of employment occurs will
be prorated in 1/12 increments for the portion of the
performance cycle prior to the last day of the month in which
termination of employment occurs.
(iv) Three times the greater of the following: (A) the target LTIP
award for the performance cycle beginning in the calendar year
in which termination of employment occurs, or (B) the cash
value of the most recent actual LTIP award received by you.
(c) Health Care and Insurance Coverage. Coverage for you and your
eligible dependents under the following Company welfare plans at no cost to you
for the separation pay period: (i) Coverage under the NCR Health Care Plan at
the Choice 2 level (20% co-payment); (ii) Coverage under the NCR Dental Plan at
the Choice 2 level;
2
<PAGE> 3
(iii) Life insurance coverage at two times base pay; and (iv) Accidental death
and dismemberment coverage at two times base pay.
If you are enrolled in Health Care Choice 1 or an HMO immediately prior
to termination of employment, you may continue this coverage in lieu of the
Health Care Choice 2 by paying the difference in cost between the current
coverage and Health Care Choice 2.
The coverages described in this subparagraph (c) will not terminate if
you become employed by an unrelated company, but will be secondary to any
coverage as an active employee. Extended health care and dental care coverage
runs concurrently with COBRA continuation coverage rights, so no additional
coverage under COBRA is available after the three-year severance period.
(d) Financial Counseling Continuation of executive financial
counseling benefits as in effect under the Company's policy on the date of the
Change-in-Control, for three years following termination of employment.
(e) Outplacement Assistance The Change-in-Control Benefits include
the Company's executive outplacement assistance program for three years
following termination of employment, provided by Wright Associates or a similar
organization, as in effect under the Company's policy on the date of the
Change-in-Control.
(f) Tax Gross-Up
(i) If it is determined that any payment or distribution by the
Company to you or for your benefit (whether paid or payable or
distributed or distributable pursuant to the terms of this
Plan or otherwise, but determined without regard to any
additional payments required under this subsection (f)) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are
incurred by you with respect to such excise tax (such excise
tax, together with any such interest and penalties,
hereinafter collectively referred to as the "Excise Tax"),
then the Change-in-Control Benefits shall include an
additional payment ("Gross-Up Payment") in an amount such that
after payment by you of all taxes (including any interest or
penalties imposed with respect to such taxes), including,
without limitation, any federal and state income taxes (and
any interest and penalties imposed with respect thereto), the
Medicare portion of FICA, and excise taxes imposed upon the
Gross-Up Payment, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the payments.
(ii) Subject to the provisions of subsection (iii), all
determinations required to be made under this subsection (f),
including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the
3
<PAGE> 4
assumptions to be utilized in arriving at such determination,
shall be made by Price Waterhouse (the "Accounting Firm"),
which shall provide detailed supporting calculations both to
the Company and you within 15 business days of the receipt of
notice from you that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change-in-Control,
you shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this subsection (f), shall be paid by
the Company to you within five days of the receipt of the
Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and you. As
a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that
the Company exhausts its remedies pursuant to subsection (iii)
and you thereafter are required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to you or for your
benefit.
(iii) You shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no
later than ten business days after you are informed in writing
of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be
paid. You shall not pay such claim prior to the expiration of
the 30-day period following the date on which you give such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies you in writing prior to the
expiration of such period that it desires to contest such
claim, you shall:
(A) give the Company any information reasonably requested
by the Company relating to such claim,
(B) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
4
<PAGE> 5
respect to such claim by an attorney reasonably
selected by the Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and
shall indemnify and hold you harmless, on an after-tax basis,
for any Excise Tax or federal and state income tax (including
interest and penalties with respect thereto) and the Medicare
portion of FICA imposed as a result of such representation and
payment of costs and expenses. Without limitation on the
foregoing provisions of this subsection (iii), the Company
shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct you to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and you agree to prosecute such contest to
a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if the
Company directs you to pay such claim and sue for a refund,
the Company shall advance the amount of such payment to you,
on an interest-free basis and shall indemnify and hold you
harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to payment of taxes for your taxable year with
respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable
hereunder and you shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Participant of an amount advanced
by the Company pursuant to subsection (f), you become entitled
to receive any refund with respect to such claim, you shall
(subject to the Company's complying with the requirements of
subsection (iii)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt
by you of an amount advanced by the Company pursuant to
subsection (iii), a
5
<PAGE> 6
determination is made that you shall not be entitled to any
refund with respect to such claim and the Company does not
notify you in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance
shall offset, to the extent, thereof, the amount of Gross-Up
Payment required to be paid.
3. Death Benefits
If you die after becoming entitled to the Change-in-Control Benefits
but before receiving payment, the Change-in-Control Benefits will be paid to
your estate. Your eligible dependents will continue coverage under the Health
Care Plan and Dental Plan for the remainder of the three-year coverage period.
4. Trust
The Compensation Committee may establish a trust with a bank trustee
(the "Trust") for the purpose of paying benefits under this Agreement, as well
as the NCR Change-in-Control Severance Plan for Executive Officers and the NCR
Change-in-Control Severance Plan for At-Risk Associates. The trust may be a
grantor trust subject to the claims of the Company's creditors.
5. Term of Agreement
This Agreement shall commence on December 31, 1996 and shall continue
in effect through December 31, 2000; provided, however, that commencing on
January 1, 1998, and on each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year beyond its original or
extended termination date so that, unless notice shall have been given as
provided in the following paragraph, on each January 1, this Plan shall have an
unexpired term of three years.
The Board of Directors of the Company may, not later than November 30
of any year, by resolution duly adopted by a majority of the entire membership
of the Board, determine that this Agreement shall not be extended, in which
event this Agreement shall expire at the end of the three-year term which began
on the January 1 immediately preceding such November 30.
Notwithstanding any resolution of the Board not to extend the term of
this Agreement, if a Change-in-Control shall have occurred during the original
or any extended term of the Agreement, the Agreement shall continue in effect
for three years after the date of the Change-in-Control.
6
<PAGE> 7
6. Successors
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
under this Agreement in the same manner and to the same extent that the Company
or a subsidiary (as appropriate) is required to perform. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any such
succession shall entitle you, if you terminate employment during the period of
time the Agreement would have been in effect had the Company complied with the
first sentence of this Paragraph 6, to compensation from the Company in the same
amount and on the same terms as you would be entitled hereunder if you had
terminated employment for Good Reason following a Change-in-Control.
7. Definitions
(a) "Cause" means:
(i) your willful and continued failure to perform substantially
the appropriate duties of your position with the Company or
one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), for a
period of at least 30 days after a written demand for
substantial performance is delivered to you by the Board which
specifically identifies the manner in which the Board believes
that you have not substantially performed your duties, or
(ii) you willfully engage in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on your part,
shall be considered "willful" unless it is done, or omitted to be done,
in bad faith or without reasonable belief that your action or omission
was in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done in good faith
and in the best interests of the Company. The termination of your
employment shall not be deemed to be for Cause unless and until there
shall have been delivered to you a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to you and you are
given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, you are
guilty of the conduct described in subsection (i) or (ii) above, and
specifying the particulars.
7
<PAGE> 8
(b) "Change-in-Control" means any of the following events:
(i) An acquisition by any individual, entity or group (within the
meaning of Article 13(d)(3) or 14(d)(2) of the Exchange Act)
(an "Entity") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of either (A) the then outstanding shares of common stock of
the Company (the "Outstanding Company Common Stock"), or (B)
the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (1) any
acquisition, directly from the Company, other than an
acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself
acquired directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (4) any acquisition by
any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) below; or
(ii) A change in the composition of the Board such that the
individuals who, as of January 1, 1997, constitute the Board
(such Board shall be hereinafter referred to as the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that for purposes of this
definition, any individual who becomes a member of the Board
subsequent to January 1, 1997, whose election, or nomination
for election by the Company's stockholders, was approved by a
vote of at least a majority of those individuals who are
members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this
provision) shall be considered as though such individual were
a member of the Incumbent Board; and provided further,
however, that any such individual whose initial assumption of
office occurs as a result of or in connection with either an
actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of an Entity other than
the Board shall not be so considered as a member of the
Incumbent Board; or
(iii) The approval by the stockholders of the Company of a merger,
reorganization or consolidation or sale or other disposition
of all or substantially all of the assets of the Company
(each, a "Corporate Transaction") or, if consummation of such
Corporate Transaction is subject, at the time of such approval
by stockholders, to the consent of any government or
governmental agency, the obtaining of such consent (either
explicitly or implicitly by consummation); excluding, however,
such a
8
<PAGE> 9
Corporate Transaction pursuant to which (A) all or
substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without
limitation, a corporation or other Person (as defined below)
which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly
or through one or more subsidiaries (a "Parent Company")) in
substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Entity (other
than the Company, any employee benefit plan (or related trust)
of the Company, such corporation resulting from such Corporate
Transaction or, if reference was made to equity ownership of
any Parent Company for purposes of determining whether clause
(A) above is satisfied in connection with the applicable
Corporate Transaction, such Parent Company) will beneficially
own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined
voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of
directors unless such ownership resulted solely from ownership
of securities of the Company prior to the Corporate
Transaction, and (C) individuals who were members of the
Incumbent Board will immediately after the consummation of the
Corporate Transaction constitute at least a majority of the
members of the board of directors of the corporation resulting
from such Corporate Transaction (or, if reference was made to
equity ownership of any Parent Company for purposes of
determining whether clause (A) above is satisfied in
connection with the applicable Corporate Transaction, of the
Parent Company); or
(iv) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
As used herein, "Person" means any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, limited liability company, other entity or government or
political subdivision thereof.
9
<PAGE> 10
(c) "Good Reason" means:
(i) the assignment to you of any duties inconsistent in any
respect with your position (including status, offices, titles
and reporting requirements), authority, duties or
responsibilities, as in effect immediately prior to a
Change-in-Control, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by you;
(ii) any reduction in your annual base salary as in effect
immediately before the Change-in-Control,
(iii) the failure to pay incentive compensation to which you are
otherwise entitled under the terms of the Company's Management
Incentive Plan for Executive Officers ("MIP") or Long Term
Incentive Program ("LTIP"), or any successor incentive
compensation plans at the time at which such awards are
usually paid or as soon thereafter as administratively
feasible, unless the failure to pay the incentive compensation
is because of the failure to meet objectives based on
quantitative performance;
(iv) the provision to you of an opportunity to earn a target annual
bonus under the MIP or a target performance award under the
LTIP or any successor incentive compensation plans
substantially less in amount than your target opportunities
for the last complete fiscal year of the Company ending prior
to the Change-in-Control;
(v) the failure by the Company to continue in effect any incentive
stock option plan in which you participate immediately prior
to the Change-in-Control, unless a substantially equivalent
alternative compensation arrangement (embodied in an ongoing
substitute or alternative plan) has been provided to you, or
the failure by the Company to continue your participation in
any such stock option plan on substantially the same basis,
both in terms of the amount of benefits provided and the level
of your participation relative to other participants, as
existed immediately prior to the Change-in-Control;
(vi) Except as required by law, the failure by the Company to
continue to provide to you employee benefits substantially
equivalent, in the aggregate, to those enjoyed by you under
the qualified and nonqualified employee benefit and welfare
plans of the Company, including, without limitation, the
pension, life insurance, medical, dental, health and accident,
disability retirement, and savings plans, in which you were
eligible to participate immediately prior to the
Change-in-Control, or the failure by the Company to provide
you with the number of paid vacation days to which you were
entitled under the Company's vacation policy immediately prior
to the Change-in-Control.
10
<PAGE> 11
(vii) the Company's requiring you to be based at any office or
location other than the principal place of your employment in
effect immediately prior to the Change-in-Control that is more
than 35 miles distant from the location of such principal
place of employment, unless the relocation is part of a
relocation, for bona fide business reasons, of the Company, or
the Company's requiring you to travel on Company business to a
substantially greater extent than required immediately prior
to the Change-in-Control;
(viii) any failure by the Company to comply with Paragraph 6,
Successors.
Any good faith determination of "Good Reason" made by you shall be
conclusive.
8. Legal Fees
The Company agrees to pay as incurred, to the full extent permitted by
law, all legal fees and expenses which you may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, you or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (whether such contest is
between the Company and you or between either of us and any third party), plus
in each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code, unless, in
the case of a legal action brought by you or in your name, a court finally
determines that such action was not brought in good faith.
9. Arbitration
Any dispute or controversy arising under or in connection with this
Plan shall be settled exclusively by arbitration in the City of Dayton, Ohio in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
10. Miscellaneous
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by you and such officer as may be specifically designated by the Board or the
Compensation Committee. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
11
<PAGE> 12
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof (i.e., change-in-control
severance benefits) have been made by either party which are not expressly set
forth in this Agreement. This Agreement does not supersede or replace any other
agreement or plan under which you are entitled to benefits or compensation from
the Company that is in effect on the date of your termination of employment,
except for the NCR Workforce Redeployment Plan and the NCR Change-in-Control
Severance Plan for Executive Officers. Accordingly, the letter agreement
between you and NCR effective January 1, 1997, specifying NCR's obligation to
pay compensation and benefits due to you under the letter agreements between
you and AT&T dated April 18, 1995 and June 7, 1996, are not superseded or
otherwise affected by this Change-in-Control Agreement.
This Agreement shall be subject to the laws of the State of Ohio. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of the Company under
Paragraphs 3 and 4 shall survive the expiration of the term of this Agreement.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
NCR CORPORATION
By: /Richard H. Evans/ /Lars Nyberg/
-------------------------------- ----------------
Richard H. Evans Lars Nyberg
Senior Vice President, Global HR Chairman and CEO
Date: May 9, 1997 Date: May 20, 1997
----------- ------------
12