EXHIBIT 10.3

 

TIME SHARING AGREEMENT

 

This Time Sharing Agreement (“Agreement”) by and between Caterpillar Inc., a
Delaware corporation (“Company”), and Douglas R. Oberhelman (“Executive”), is
effective April 13, 2011.

 

RECITALS

 

WHEREAS, Company is the record title holder and operates the aircraft set forth
on Exhibit A (individually and collectively, as the context requires, the
“Aircraft”); and

 

WHEREAS, Company employs a fully qualified flight crew to operate the Aircraft;
and

 

WHEREAS, Executive is the Chairman and Chief Executive Officer of Company; and

 

WHEREAS, to maximize Executive’s availability to carry out Executive’s
responsibilities to Company, and pursuant to an independent third party’s
evaluation of certain safety and security concerns, the Company’s Board of
Directors adopted a policy that generally requires Executive to travel on the
Aircraft for all of Executive’s air travel, whether on Company business or
personal travel; and

 

WHEREAS, Executive desires to lease one or more of the Aircraft from time to
time on a time sharing basis as defined in Sections 91.501(c)(1) of the Federal
Aviation Regulations (“FARs”) when Executive is required under the Board’s
policy to fly on the Aircraft for personal travel.

 

NOW, THEREFORE, in consideration of the foregoing, and the other promises
contained in this Agreement, the parties, intending to be legally bound, agree
as follows:

 

1.                                       Company agrees to lease to Executive
and Executive agrees to lease from Company the Aircraft on a non-exclusive basis
from time to time as mutually agreed between the parties for such purposes
allowed under FAR 91.501(b)(6) and Company agrees to provide a fully qualified
flight crew for all operations conducted under this Agreement.  This Agreement
shall remain in effect until terminated by either party upon ten (10) days prior
written notice to the other.

 

2.                                       (a) Except as limited by subparagraph
(a)0 below, Executive for the use of the Aircraft shall pay to Company for each
flight conducted under this Agreement an amount equal to the actual direct
operating expenses of such flights (“Lease Fee”).  Pursuant to FAR 91.501(d) the
Lease Fee will be limited to the following direct operating expenses:

 

(i)                                     Fuel, oil, lubricants, and other
additives;

 

(ii)                                  Travel expenses of the crew, including
food, lodging and ground transportation;

 

(iii)                               Hangar and tie-down costs away from the
Aircraft’s base of operation;

 

(iv)                              Insurance obtained for the specific flight;

 

(v)                                 Landing fees, airport taxes and similar
assessments;

 

(vi)                              Customs, foreign permits, and similar fees
directly related to the flight;

 

(vii)                           In-flight food and beverages;

 

(viii)                        Passenger ground transportation;

 

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(ix)                                Flight planning and weather contract
services; and

 

(x)                                   An additional amount equal to 100% of the
expenses listed in clause (a)(a)(i), above.

 

(b)                                 Notwithstanding the amount of the actual
direct operation expenses set forth in subparagraph (a)(a), above, in no event
shall Executive be obligated to pay Company a Lease Fee in excess of the greater
of (x) or (y) below, where:

 

(x) equals the applicable subsection 0 or 0 below:

 

(i)                                     For travel between cities served by
regularly scheduled first class commercial airline service, an amount equal to
the lowest published cost of the first class airfare available to the general
public, which will be solicited within one business day of the date the
Executive requests the specific flight, for the dates traveled multiplied by the
number of persons in Executive’s party for the flight; or

 

(ii)                                  For travel between cities served by
regularly scheduled coach or business class, but not first class commercial
airline service, an amount equal to the lowest published cost of the
unrestricted coach (or, if available, business class) airfare available to the
general public, which will be solicited within one business day of the date the
Executive requests the specific flight, for the dates traveled multiplied by the
number of persons in Executive’s party for the flight; and

 

(y) equals the amount of income that would be imputed to Executive for the
flight under the applicable Standard Industry Fare Levels as set forth in 26
C.F.R. §1.61-21(g) assuming that Executive did not pay the Lease Fee.

 

For purposes of computing the Lease Fee limitation under subparagraph 2(b)
above, if a city is not served by regularly scheduled commercial airline
service, the Lease Fee limitation shall be applied utilizing a city selected by
Company as close as reasonably practicable to the city without such service. 
Company’s determination of the Lease Fee shall be conclusive.  Prior to any
proposed flight, Company shall provide Executive with an estimate of the Lease
Fee for the particular flight.  If Executive proceeds with the proposed flight,
Executive shall be obligated to pay the Lease Fee.  Executive shall also be
responsible to pay, together with any Lease Fee, applicable state and federal
taxes (including, without limitation, federal excise taxes).  If Executive
declines the proposed flight, neither Executive nor Company shall have any
further obligation with respect to the proposed flight.

 

3.                                       Company will pay all expenses related
to the operation of the Aircraft when incurred, and will provide an invoice to
Executive for the Lease Fee determined in accordance with paragraph (a) above
after any flight or flights for the account of Executive.  Executive shall pay
Company the Lease Fee, together with applicable taxes.

 

4.                                       Executive will provide Company with
requests for flight time and proposed flight schedules as far in advance of any
given flight as possible, and in any case, at least two (2) business days in
advance of Executive’s planned departure (unless Company agrees to a shorter
notice in a particular case in Company’s sole discretion).  Requests for flight
time shall be in a form, whether written or oral, mutually convenient to, and
agreed upon by the parties.  In addition to the proposed schedules and flight
times, Executive shall provide at least the following information for each
proposed flight prior to scheduled departure as required by the Company or
Company’s flight crew:

 

(a)                                  proposed departure point;

 

(b)                                 destination;

 

(c)                                  date and time of flight;

 

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(d)                                 the number, name, and relationship to the
Executive of anticipated passengers;

 

(e)                                  the nature and extent of luggage and/or
cargo to be carried;

 

(f)                                    the date and time of return flight, if
any; and

 

(g)                                 any other information concerning the
proposed flight that may be pertinent or required by Company or Company’s flight
crew.

 

5.                                       Company shall have final authority over
the scheduling of the Aircraft, provided, however, that Company will give
Executive’s requests first priority over other utilization of the aircraft.  It
is understood that Company shall not be obligated to retain or contract for
additional flight crew or maintenance personnel or equipment in order to
accommodate Executive’s schedule requests.

 

6.                                       Company shall be solely responsible for
securing maintenance, preventive maintenance and required or otherwise necessary
inspections on the Aircraft, and shall take such requirements into account in
scheduling the Aircraft.  No period of maintenance, preventative maintenance or
inspection shall be delayed or postponed for the purpose of scheduling the
Aircraft, unless said maintenance or inspection can be safely conducted at a
later time in compliance with all applicable laws and regulations, and within
the sound discretion of the pilot in command.  The pilot in command shall have
final and complete authority to cancel any flight for any reason or condition
that in his or her judgment would compromise the safety of the flight.

 

7.                                       Company shall ensure that for each
flight conducted under this Agreement, the Aircraft will be under the command of
a qualified flight crew.  All flight operations by or on behalf of Executive
under this Agreement shall be conducted under Part 91 of the FAR.  The Company
shall have and exercise exclusive operational control of the Aircraft during all
phases of all flights under this Agreement, including, without limitation, all
flights during which Executive, and/or Executive’s guests, designees, or
property are on-board the Aircraft.

 

8.                                       In accordance with applicable FARs, the
qualified flight crew provided by Company will exercise all of its duties and
responsibilities in regard to the safety of each flight conducted under this
Agreement.  Executive specifically agrees that the flight crew, in its sole
discretion, may terminate any flight, refuse to commence any flight, or take
other action that in the considered judgment of the pilot in command is
necessitated by considerations of safety.  No such action of the pilot in
command shall create or support any liability for loss, injury, damage or delay
to Executive or any other person.  The parties further agree that Company shall
not be liable for delay or failure to furnish the Aircraft and crew pursuant to
this Agreement for any reason whatsoever.

 

9.                                       Company will maintain or cause to be
maintained in full force and effect throughout the term of this Agreement
aircraft liability’ insurance in respect of the Aircraft.  Such insurance shall
(a) name Executive as an additional insured; (b) contain a waiver of subrogation
against Executive; and (c) shall provide that if the insurers cancel such
insurance for any reason whatsoever, if the insurance is not renewed due to
non-payment of premium or if there is any material change in policy terms and
conditions, such cancellation, change or lapse shall not be effective as to
Executive unless Executive has been provided with at least thirty (30) days
prior written notice. Company will provide such additional insurance coverage as
Executive shall request or require, provided, however, that the cost of such
additional insurance shall be borne by Executive as set forth in paragraph 2.

 

10.                                 Executive warrants that:

 

(a)                                  Executive will use the Aircraft for and on
account of Executive own business or personal use only, and will not use the
Aircraft for the purpose of providing transportation of passengers or cargo in
air commerce for compensation or hire;

 

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(b)                                 Executive will refrain from incurring any
mechanics or other lien in connection with inspection, preventative maintenance,
maintenance or storage of the Aircraft, whether permissible or impermissible
under this Agreement, nor shall there be any attempt by Executive to convey,
mortgage, assign, lease or any way alienate the Aircraft or create any kind of
lien or security interest involving the Aircraft or do anything or take any
action that might mature into such a lien; and

 

(c)                                  During the term of this Agreement,
Executive will, and will cause any passengers in Executive party to, abide by
and conform to all such laws, governmental and airport orders, rules and
regulations, as shall from time to time be in effect relating in any way to the
operation and use of the Aircraft by a time sharing lessee.

 

11.                                 Company assumes and shall bear the entire
risk of loss, theft, confiscation, damage to, or destruction of the Aircraft. 
Company shall release, indemnify, defend and hold harmless the Executive and
Executive’s heirs, executors and personal representatives from and against any
and all losses, liabilities, claims, judgments, damages, fines, penalties,
deficiencies and expenses (including, without limitation, reasonable attorneys
fees and expenses) incurred or suffered by Executive on account of a claim or
action made or instituted by a third person arising out of or resulting from
operations of the Aircraft hereunder and/or any services provided by the Company
to Executive under this Agreement, except to the extent attributable to the
gross negligence or willful misconduct of Executive or Executive’s guests on the
Aircraft.

 

12.                                 For purposes of this Agreement, the
permanent base of operation of the Aircraft shall be at the Peoria International
Airport (PIA).

 

13.                                 Neither this Agreement nor any party’s
interest in this Agreement or the Aircraft shall be assignable to any other
party whatsoever.  This Agreement shall inure to the benefit of and be binding
upon the parties hereto, and their respective heirs, representatives and
successors.

 

14.                                 This Agreement constitutes the entire
agreement of the parties with respect to the time-share of the Aircraft as set
forth herein.  This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Illinois.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

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TRUTH IN LEASING STATEMENT

 

Company shall mail a copy of this Agreement for and on behalf of both parties
to: Flight Standards Technical Division, P.O. Box 25724, Oklahoma City, Oklahoma
73125, within twenty-four (24) hours of its execution, as provided by FAR
91.23(c)(1).  Additionally, Company agrees to comply with the notification
requirements of FAR Section 91.23 by notifying by telephone or in person the
Flight Standards District Office having jurisdiction over Executive’s first
flight under this Agreement at least forty-eight (48) hours prior to such
flight.

 

THE AIRCRAFT HAVE BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91 DURING THE 12
MONTH PERIOD (OR SUCH SHORTER PERIOD AS THE AIRCRAFT HAS BEEN OPERATED BY
COMPANY) PRECEDING THE DATE OF THIS LEASE.

 

THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER FAR PART 91 FOR OPERATIONS
TO BE CONDUCTED UNDER THIS LEASE.

 

COMPANY IS CONSIDERED RESPONSIBLE FOR OPERATIONAL CONTROL OF ALL AIRCRAFT
IDENTIFIED AND TO BE OPERATED UNDER THIS LEASE.  I, THE UNDERSIGNED, JAMES B.
BUDA, AS SENIOR VICE PRESIDENT AND CHIEF LEGAL OFFICER OF COMPANY CERTIFY THAT
COMPANY IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT FOR OPERATIONS TO
BE CONDUCTED UNDER THIS LEASE AND THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR
COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

 

AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL
AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS
DISTRICT OFFICE.

 

THE ADDRESS OF COMPANY IS:

 

100 NE ADAMS STREET, PEORIA, ILLINOIS 61629

 

IN WITNESS WHEREOF, the parties have executed this Time Sharing Agreement as of
the date first above written.

 

Company:  Caterpillar Inc., a Delaware corporation

Executive: Douglas R. Oberhelman

 

 

 

 

By:

/s/James B. Buda

 

By:

/s/Douglas R. Oberhelman

 

James B. Buda, Senior Vice President and Chief Legal Officer

Douglas R. Oberhelman, Individually

 

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