Exhibit 10
April 25, 2002
Xx. Xxxxxxxx X. Xxxxxxxx
c/o Xxxxxx Xxxxxxxxxxx
Xxxxxx Xxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Dear Xx. Xxxxxxxx:
You are presently employed by Xxxxxx Xxxxxxxxxxx (the "Corporation") as Chairman
of the Board, President and Chief Executive Officer under the terms of a letter
agreement dated September 23, 1997. This letter agreement (the "Agreement")
supersedes and replaces the letter agreement dated September 23, 1997 pursuant
to Section 15 below, and describes the terms and conditions of your employment
with the Corporation on and after April 1, 2002 and through January 31, 2005.
The provisions of this Agreement are as follows:
1. Base Salary. You will continue to serve as Chairman of the Board, President
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and Chief Executive Officer of the Corporation with a base salary at the annual
rate of not less than $1,400,000 per year, effective as of April 1, 2002. Your
base salary level will be reviewed periodically, but no less frequently than
annually, by the Corporate Governance and Compensation Committee (the
"Committee") of the Board of Directors or its successor. Provided that the
Corporation meets its 2002 Operating Plan for orders, revenue, cash flow and
earnings per share, your base salary will be increased in 2003 to not less than
$1,500,000 at the same time as other 2003 annual officer salary actions become
effective.
2. Annual Bonus. You will participate in the Executive Variable
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Compensation ("EVC") Plan (or any successor bonus plan) and your target will not
be less than 100% of your annual paid salary and your maximum potential award
under the EVC Plan will be 200% of your EVC target. The actual EVC paid to you,
if any, will be determined by the Committee in its sole discretion and will be
based on such factors as it deems appropriate. Your actual EVC payments, if any,
will be made in cash at the time of the award, subject to your election to defer
receipt of all or any portion of the EVC award in accordance with the terms of
the Xxxxxx Xxxxxxxxxxx Deferred Compensation Plan (or any successor deferred
compensation program). Subject to the provisions of Sections 8 and 9 below, if
you continue to be employed with the Corporation through January 31, 2005, you
will be eligible to receive an EVC award for the 2004 award year determined
under this Section 2 as if you had continued to be employed through the EVC
payout date, such payment to be made at the same time as if you had continued to
be employed.
3. Long-Term Incentive Awards. (a) You will be eligible to receive stock
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option awards under the terms of the 1990 Unisys Long-Term Incentive Plan (or
any successor stock option plan) and will receive stock option awards in each
year in which such awards are made to other executive officers generally. You
will also be eligible to receive long-term performance awards and restricted
share awards under the terms of the 1990 Long-Term Incentive Plan (or any
successor thereto) in each year in which such awards are made to executive
officers generally. In either case, such awards will be made on a basis no less
favorable to you than to other executives generally.
(b) Effective as of April 25, 2002, you will be awarded a stock option grant
under the terms of the 1990 Long-Term Incentive Plan for 750,000 shares of
Unisys common stock, which award will vest 20% per year commencing on the first
anniversary of the date of grant and will have a term of ten years. The
exercise price for the grant will be as follows: 500,000 shares will be
exercisable at two times the Fair Market Value (as defined in the 1990 Unisys
Long-Term Incentive Plan) of Unisys common stock on the date of grant and
250,000 shares will be exercisable at three times the Fair Market Value of
Unisys common stock on the date of grant.
4. Benefit Programs; Perquisites. You will receive all the supplemental
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executive benefits associated with the position of Chairman, President and Chief
Executive Officer, including a company car allowance of $900 per month. You also
will be eligible for a membership in two approved luncheon clubs, an annual
executive physical, supplemental life insurance equal to four times the sum of
annual base salary plus target EVC (in addition to the Corporation's Group Term
Life Insurance), post-retirement life insurance in an amount equal to the
greater of $1,000,000 or two and one-half times your annual base salary rate in
effect on the date of termination of your employment or retirement, umbrella
personal liability insurance up to $5,000,000 and contribution toward financial
counseling services of $7,500 per year. Unisys will, during your employment with
the Corporation through January 31, 2005, continue to provide you the long-term
disability insurance provided by Lloyd's of London as of the date of this
Agreement (the "Supplemental LTD Policy"), on a basis and with terms no less
favorable than as provided at the date of this Agreement, provided that the
issuer of the Supplemental LTD Policy may be changed by Unisys with your prior
written agreement, not unreasonably to be withheld. In addition, you and your
eligible dependents will be eligible to participate in all basic retirement,
welfare (including post-retirement medical and other welfare benefits) and other
benefit arrangements generally applicable to executive officers, in accordance
with the terms of such arrangements. You will be entitled to receive four weeks
of vacation each year. Reasonable expenses associated with the performance of
the duties of your position will be reimbursed in accordance with normal Unisys
policies. You are also eligible to join a country club of your choice and Unisys
will pay your initiation fees and annual dues. Unisys shall
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reimburse you for reasonable legal expenses incurred by you in negotiating this
Agreement.
5. Supplemental Pension.
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(a) You will be entitled to a pension benefit for your life fully vested from
your first day of employment and commencing on the first day of the month
following the termination of your employment, (provided, however, that in the
event termination is for "disability", as defined in Section 8, payment of your
benefit under this Section 5 shall begin on the first day of the month following
the date payments cease to be made to you under the Supplemental LTD Policy,
unless, at any time, the net after-tax benefit to you would be greater under
this Section 5 than under the Supplemental LTD Policy and, if applicable, the
Unisys Long-Term Disability Plan, in which case the benefit under this Section 5
shall commence on the first day of the month following the date at which your
net after-tax benefit will be greater under this Section 5), determined as
follows:
Full Years of Service Annual Accrued Benefit
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4 $ 570,000
5 $ 710,000
6 $ 860,000
7 or more $1,000,000
A "full year of service" shall be the period from September 23 of one year
through September 22 of the following year, commencing from September 23, 1997.
The benefit provided to you under this Section 5 will be provided in accordance
with the terms of the Xxxxxx Xxxxxxxxxxx Elected Officer Pension Plan ("EOPP")
as modified by the terms of this Agreement, and will be offset by any pension
benefit paid to you under the terms of the Unisys Pension Plan (or any successor
qualified pension plan) and the Unisys Supplemental Employee Retirement Income
Plan (or any successor non-qualified excess pension benefit plan). In the event
that your termination is for "disability", as defined in Section 8, and your
benefits under this Section 5 have not commenced because you are receiving
payments under the Supplemental LTD Policy, you shall not be eligible to
commence receipt of benefits under either the Unisys Pension Plan or the Unisys
Supplemental Executive Retirement Income Plan until such time that you commence
receipt of benefits under the EOPP as modified under this Section 5. If
termination of employment occurs prior to the completion of seven full years of
service, your benefit will be determined (i) in accordance with the terms of
this Section 5 and the provisions of Section 8 or 9 of this Agreement if
applicable and (ii) if such termination of employment occurs other than on the
date a full year of service is completed, by increasing the annual accrued
benefit applicable to your then-completed full years of service by an amount
equal to a pro-rata portion of the difference between the annual
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accrued benefit that would have been payable had you completed the current year
of service and the benefit payable with respect to your actual full years of
service. Such pro-rata portion will be based on the number of full months of
employment completed since your last full year of service divided by 12.
(b) Notwithstanding the foregoing, if you would receive a larger after-tax
benefit if calculated in accordance with Section 5.01 of the EOPP, the amount of
your benefit pursuant to this Section 5 will be calculated in accordance with
that Section of the EOPP, rather than Section 5(a) above.
(c) Your spouse will, upon your death, be entitled to a life annuity under
this Section 5 equal to 50% of the annual benefit (before offsets in accordance
with Section 5(a)) which you were receiving at the date of your death (less any
amounts due alternate payees under any qualified domestic relations orders). If
you die prior to commencement of your benefit under this Section 5, your spouse
will be entitled to such survivor's benefit based on the assumption that you had
retired and had been receiving retirement payments at the time of your death
based on your credited service to that date. Such survivor's benefit shall be
offset by any other survivor's pension benefit provided to your spouse under the
Unisys Pension Plan (or any other successor qualified pension plan) and the
Unisys Supplemental Employee Retirement Income Plan (or any successor non-
qualified excess pension benefit plan).
(d) Except as otherwise provided in this Agreement, your pension benefit
shall be determined in accordance with the provisions of the EOPP as in effect
on the date of this Agreement, or as subsequently modified, if such
modifications are favorable to you. If, prior to January 31, 2005, (i) your
employment is terminated by the Corporation for "cause" (as defined in Section
9(c)) or (ii) you terminate your employment voluntarily, other than for
"disability" (as defined in Section 8) or "good reason" (as defined in Section
9(c)), your benefit will be subject to suspension and forfeiture under the
provisions of Section 6.04 of the EOPP, provided, however, that (i) service on
the board of directors of other companies will not cause a suspension or
forfeiture of benefits under Section 6.04 of the EOPP; (ii) service as an
employee of or consultant to an entity a unit of which is in competition with
Unisys will not cause a suspension or forfeiture of benefits under Section 6.04
of the EOPP, provided that it can be demonstrated to the reasonable satisfaction
of the Committee that procedures are in place to assure that the unit that is in
competition with Unisys and any director, officer, employee, consultant or other
representative of such unit cannot directly or indirectly avail itself of your
services, (iii) service as an employee of or consultant to an entity that
provides consulting services to other entities, one or more of which are in
competition with Unisys, will not cause a suspension or forfeiture of benefits
under Section 6.04 of the EOPP, provided that it can be demonstrated to the
reasonable satisfaction of the Committee that procedures are in place to assure
that no entity that is in competition with Unisys nor any director, officer,
employee, consultant or other
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representative of such unit can directly or indirectly avail itself of your
services, (iv) "cause" in Section 6.04(b) of the EOPP shall be deemed to be
defined as provided in this Agreement; (v) your investment in securities that
are listed for trading on a national exchange or NASDAQ (provided that your
investment does not exceed 1% of the issued and outstanding shares of stock) and
your acquisition of a passive ownership interest in a non-public company will
not cause a suspension or forfeiture of benefits under Section 6.04 of the EOPP
and (vi) no activity in which you engage while employed under this Agreement
which you have undertaken in the good faith belief that it is in the best
interests, or that it is not opposed to the best interests, of Unisys shall be
deemed the basis for suspending or forfeiting your benefits under Section 6.04
of the EOPP. Your benefit shall not be subject to suspension or forfeiture under
any circumstances other than as provided in this Section 5(d).
(e) Notwithstanding anything to the contrary, if any provision of this
Agreement is inconsistent with any term or provision of the EOPP, including
without limitation Section 6.04 thereof, the provisions of this Agreement shall
prevail, and if the EOPP is terminated, it shall be deemed to continue for
purposes of providing the benefit in this Section 5.
(f) Upon your termination of employment, the Corporation will purchase and
transfer to you (or to your spouse upon your death) an annuity, as provided in
this Section 5(f), unless prior to January 31, 2005, (1) your employment is
terminated by the Corporation for "cause" (as defined in Section 9(c)) or (2)
you terminate your employment voluntarily other than for "disability" (as
defined in Section 8), "good reason" (as defined in Section 9(c)) or an
"approved personal reason" (as defined in this Section 5(f)). The annuity
provided to you (or to your spouse upon your death) will be an individual fixed
annuity that, together with benefits payable from the Unisys Pension Plan (or
any successor qualified pension plan), will pay to you 40% of the pension
benefit, computed prior to offsets for payments due under the terms of the
Unisys Pension Plan and the Unisys Supplemental Executive Retirement Income
Plan, payable under this Section 5 (and/or the appropriate survivor benefit to
your spouse). The annuity will pay you a monthly benefit for your life with a
50% surviving spouse benefit, will be purchased from an insurance company rated
at least AA or an equivalent rating by at least two of the three following
rating agencies, A.M. Best, Xxxxx'x and Standard and Poor's, and will be subject
to your reasonable review (or that of your spouse or personal representative, in
the event of your death or disability) of the terms of the annuity contract,
which will contain terms regarding the nonassignability of the contract by the
issuer in the ordinary course of business without your agreement (or that of
your spouse or personal representative, in the event of your death or
disability), and such other terms as you may reasonably request upon the advice
of counsel. The Corporation shall be liable for the remaining 60% of the pension
benefit provided for in this Section 5. In addition, the Corporation will make a
gross-up payment to you (the "Section 5 gross-up payment") for federal, state
and local
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income and employment taxes in an amount such that after payment by you of all
such taxes imposed as a result of the transfer of the individual annuity and the
payment of the Section 5 gross-up payment, you will have been reimbursed 100% by
the Corporation for the amount of all such taxes, including taxes on the Section
5 gross-up payment. Anything in this Section 5(f) to the contrary
notwithstanding, the Corporation will be liable for the benefits payable to you
(or your spouse) under the EOPP as modified by Section 5 of this Agreement
regardless of the circumstances of your termination, unless such circumstances
constitute a reason for suspension or forfeiture of benefits under Section 6.04
of the EOPP, if applicable pursuant to Section 5(d). "Approved personal reason"
means (i) you are advised by a licensed physician that continuation of your
employment will result in an immediate and serious hazard to your health, (ii)
the health of your spouse makes it impossible for you, in your good faith
judgment, to meet your obligations under this Agreement and, at the same time,
your responsibilities to your spouse or (iii) such other circumstance that
following your written request, the Committee may conclude, in the reasonable
exercise of its discretion, warrants approval of such termination, pursuant to
this Section 5(f), as a termination for an "approved personal reason". If you
intend to terminate your employment voluntarily for purposes of an "approved
personal reason", (y) you need to provide the Committee at least 30 days' prior
written notice of your intent to terminate your employment, stating with
specificity the reason for your termination, and if the condition of your health
or your spouse's health is the reason, a detailed description of the medical
condition that is the reason for your termination, and (z) in such case, the
Committee may, in its reasonable discretion, request an independent medical
examination of you or your spouse, as applicable, by a licensed physician
mutually agreed to between you and the Corporation in order to verify the
medical condition that serves as the basis for your termination for an "approved
personal reason".
6. Service on Other Boards. During the term of your employment hereunder, you
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will render substantially all of your business time to the business affairs of
the Corporation. You may serve on the board of directors of other companies and
non-profit organizations as expressly approved by the Board of Directors in its
discretion.
7. Manhattan Office. For the one-year period following your termination of
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employment, the Corporation will provide you with an office and secretarial
support in a Unisys facility in Manhattan.
8. Death or Disability. If you die while employed or your termination of
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employment is due to your becoming "disabled" (as defined below), you or your
estate will be entitled to the following:
(a) All restrictions on any outstanding restricted stock grant will
immediately lapse and your outstanding stock option grants will continue to vest
in accordance with the vesting schedule described in your stock option
agreements. For purposes of determining your rights (or your beneficiary's
rights) under this Section 8 to exercise your stock
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options, SARs or other equity-based awards under the 1990 Unisys Long-Term
Incentive Plan after your termination due to disability or your death, you will
be deemed to have completed at least five years of service and to have
terminated employment on your Normal Retirement Date as defined therein;
(b) If termination of employment or death occurs prior to the EVC payout date
for the previous EVC award year, you will be eligible to receive an EVC award
for such previous award year determined under Section 2 as if you had continued
to be employed through the EVC payout date, such payment to be made at the same
time that such EVC payment would have been made had you continued to be
employed, and an EVC payment for the year in which you terminate employment in
an amount equal to a pro rata portion, based on the period of service rendered
in such year, of the EVC amount paid for the previous year, payable as soon as
practicable after your death or your termination of employment;
(c) Any benefits available under the retirement, welfare, incentive, fringe
benefit, deferred compensation and perquisite programs generally available to
executive officers upon disability or death or under the terms of this
Agreement; and
(d) Any benefits available under Section 5, provided, however, that if your
termination is due to disability, you will continue to accrue service for
purposes of calculating your benefit under Section 5 until the earlier to occur
of (i) the date on which your disability ends or (ii) the date on which you
commence receipt of benefits under the EOPP as modified by Section 5.
You will be considered "disabled" if you are determined to be eligible to
receive benefits for Total Disability under the Supplemental LTD Policy in
accordance with the procedures of the Supplemental LTD Policy. If you become
disabled, you will be entitled to the benefits described in this Section 8 and
not those described in Section 9.
9. Termination of Employment. (a) Your employment may be terminated by the
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Corporation at any time with or without cause. In the event that you are
terminated for "cause" (as defined below) or you terminate your employment for
other than "good reason" (as defined below), no further amounts will be paid to
you hereunder except as otherwise provided under the terms of this Agreement,
including, without limitation, Section 5 of this Agreement, and under the normal
terms of the retirement, welfare, incentive, fringe, and perquisite programs in
which you participated at your date of termination. Your voluntary termination
of your employment shall not be deemed a violation of this Agreement.
(b) Upon termination by the Corporation without cause or your termination for
good reason, you will be entitled to the following:
(1) An amount equal to 100% of the base salary (at its then current rate on
the date of termination) payable for the remaining term of employment hereunder
as if you had continued to work through such
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remaining term of employment, but in no event less than one year's base salary.
Such termination payments will be paid in the same manner and at the same times
as the base salary payments would have been paid during employment and the
period during which such payments are to be made will be referred to as the
"Salary Continuation Period";
(2) If termination of employment occurs prior to the EVC payout date for the
previous EVC award year, you will be eligible to receive an EVC award for such
previous award year in an amount determined under Section 2 as if you had
continued to be employed through the EVC payout date. Such payment will be made
at the same time that such EVC payment would have been made had you continued to
be employed;
(3) An EVC payment for the year in which such termination occurs in an amount
equal to your target EVC percentage as of your date of termination. Such
payment will be made promptly following your termination of employment;
(4) An annual EVC award payable for the one-year period following your
termination of employment in an amount equal to your target EVC percentage as of
your date of termination times the payments made to you under Section 9(b)(1)
during such one-year period. Such payment will be made promptly following the
expiration of the one-year period;
(5) Continued participation, at the same costs applicable to active
employees, through the Salary Continuation Period, in the Unisys Medical and
Dental Plans (or, if such participation is prohibited by applicable law or the
terms of the plans, participation in arrangements that will provide benefits
substantially similar to those available under the Unisys Medical and Dental
Plans) for you and your eligible dependents, subject, however, to the generally
applicable terms of such plans;
(6) Any other benefits available under this Agreement or under the
retirement, welfare, incentive, fringe benefit, deferred compensation and
perquisite programs generally available to executive officers upon termination
of employment under similar circumstances;
(7) Immediate and full vesting in, and lapse of any remaining restrictions
on, all stock options, restricted share and other awards made under the 1990
Unisys Long-Term Incentive Plan (or under any successor incentive plan thereto);
for purposes of stock option, SAR and other equity-based award exercise rights
under the 1990 Unisys Long-Term Incentive Plan (or any successor incentive plan
thereto), you will be treated as if you had retired with at least five years of
service and your date of termination will be treated as a Normal Retirement Date
as defined therein; and
(8) Your benefit under the EOPP, as modified under Section 5 of this
Agreement, will be calculated as if you had continued to be employed for one
year following your date of termination.
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(c) For purposes of this Section 9, "cause" means (1) in carrying out your
duties, you engage in conduct that constitutes willful gross neglect or willful
gross misconduct resulting, in either case, in material economic harm to the
Corporation, unless you believed in good faith that such action or non-action
was in, or not opposed to, the best interests of the Corporation or (2) your
conviction of a felony involving moral turpitude. You will not be terminated
for "cause" under Section 9(c)(1) unless (A) the Corporation has provided you
with written notice stating the basis for the termination and you have been
given fifteen days to cure the basis of such claim and (B) you have been given
the opportunity for a hearing before the Board of Directors and, after such
hearing, at least two-thirds of the Board members who are not employees of the
Company vote in favor of your termination for "cause". "Good reason" means (i)
a reduction in your aggregate compensation target (base salary plus EVC target),
as such amounts may be increased during the term of this Agreement or a material
reduction of any employee benefit enjoyed by you, unless such reduction is due
to a reduction in compensation or benefits generally applicable to executive
officers or (ii) a reduction in your duties or authority, a change in reporting
structure such that you report to someone other than the Board of Directors, or
your removal as Chairman of the Board, President or Chief Executive Officer of
the Corporation or its successor unless such reduction, change or removal is (x)
for cause, as defined above, (y) is done with your written consent, or (z) is on
account of your inability to substantially perform your duties for an aggregate
of 90 days within any consecutive 12 month period due to your becoming
"disabled" (within the meaning of the Supplemental LTD Policy, provided that
such determination will be made in accordance with the procedures of the
Supplemental LTD Policy after the 90-day period described in this Section
9(c)(ii)(z)), and provided that your resignation occurs within 90 days after
such reduction, change or removal or (iii) the failure of the Corporation to
obtain the assumption in writing of its obligation to perform this Agreement by
any successor to all or substantially all of the assets of the Corporation
within 15 days after the effective date of a merger, consolidation, sale or
similar transaction, unless you consent to the Corporation's not obtaining such
assumption. Notwithstanding the foregoing, if there is a reduction in your
duties or authority, a change in your reporting structure and/or you have been
removed as Chairman, President and/or Chief Executive Officer as a result of
becoming disabled under this Section 9(c)(ii)(z), but you do not qualify for
long-term disability benefits under the Supplemental LTD Policy after the six-
month period required in the Policy, then you shall be entitled to terminate
your employment for "good reason" provided that you make yourself available to
return to work promptly after the determination is made that you are not
"disabled" and further provided that upon your return to work, the Corporation
does not restore the duties, authority, and/or reporting structure that were in
place before you became disabled under this Section 9(c)(ii)(z) and does not
restore your position as Chairman, President and Chief Executive Officer.
(d) The amounts payable to you under Section 9(b)(1) following your
termination of employment will be reduced by the amount of cash
9
compensation, if any, earned by you for services rendered to any other entity as
an employee, independent contractor, consultant, officer, director, or in any
other capacity, provided however, that (i) no such reduction will be applied
during the two-year period following your termination of employment, and (ii)
compensation earned by you for service as a director of any corporation will not
cause such a reduction to the extent such compensation is based on the same fee
structure as is received by all other directors thereof for Board service. You
will promptly advise the Senior Vice President - Worldwide Human Resources of
the Corporation of any facts that could cause such a reduction in the amounts
payable to you under Section 9(b)(1). Upon written notice from the Corporation,
you will promptly reimburse to the Corporation any overpayments made to you as a
result of your receipt of the cash compensation described in the first sentence
of this Section 9(d), provided that the amount you are required to reimburse
shall be on an after-tax basis (that is the amount determined, after taking into
account any taxes incurred by you on such overpayment less the tax benefit, if
any, you may derive from repayment to the Corporation). Notwithstanding anything
herein to the contrary, you shall have no obligation to seek other employment.
(e) Payments or benefits under this Agreement are not intended to duplicate
payments or benefits under any other Unisys agreement or severance program,
including, without limitation, your Executive Employment Agreement. To the
extent that you may be entitled to receive duplicate payments or benefits under
this and any other Unisys agreement or program, the provisions of that agreement
or program which is most favorable to you or provides you with the greater
payment or benefit shall be effective. Solely for the avoidance of doubt, the
reference to the term "SERP" in Section 6(a)(i)(C) of your Executive Employment
Agreement includes, but is not limited to, the Unisys Supplemental Executive
Retirement Income Plan and the EOPP, as modified by Section 5 of this Agreement.
10. Certain Additional Payments by the Corporation. (a) Anything in this
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Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Corporation to or for your benefit
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 10) (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, are hereinafter collectively referred to as the
"Excise Tax"), then you shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by you of all federal,
state and local taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments, including the Gross-up Payment.
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(b) Subject to the provisions of Section 10(c), all determinations required
to be made under this Section 10, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized accounting firm mutually agreed to by the parties (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Corporation 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
Corporation. All fees and expenses of the Accounting Firm shall be borne solely
by the Corporation. Any Gross-Up Payment, net of any taxes (including income
and excise taxes) required to be withheld, as determined pursuant to this
Section 10, shall be paid by the Corporation to you within five days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by you, it shall furnish you with a
written opinion that failure to report the Excise Tax on your applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Corporation 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 Corporation should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Corporation exhausts its remedies pursuant to Section 10(c) 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 Corporation to or for your benefit.
(c) You shall notify the Corporation in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the
Corporation 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 Corporation 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 the IRS gives such notice to the Corporation (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Corporation notifies you in writing prior to the expiration of such
period that it desires to contest such claim, you shall:
(i) give the Corporation any information reasonably requested by the
Corporation relating to such claim,
(ii) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Corporation,
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(iii) cooperate with the Corporation in good faith in order effectively to
contest such claim, and
(iv) permit the Corporation to participate in any proceedings relating to
such claim;
provided, however, that the Corporation 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 income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses including without limitation, reasonable legal
fees. Without limitation on the foregoing provisions of this Section 10(c), the
Corporation 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 xxx 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 Corporation shall determine; provided, however, that if the
Corporation directs you to pay such claim and xxx for a refund, the Corporation
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 Corporation'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.
(d) If, after the receipt by you of an amount advanced by the Corporation
pursuant to Section 10(c), you become entitled to receive any refund with
respect to such claim, you shall (subject to the Corporation's complying with
the requirements of Section 10(c)) promptly pay to the Corporation 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
Corporation pursuant to Section 10(c), a determination is made that you shall
not be entitled to any refund with respect to such claim and the Corporation
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
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and the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
11. Conduct after Termination. From and after the termination of your
-------------------------
employment for any reason:
(a) For a period of 24 months from the date of termination of your
employment, you shall not engage in or become employed as a business owner,
employee, agent, representative or consultant in any activity which is in
competition with any line of business of Unisys (or its subsidiaries or
affiliates) existing as of your termination date, except with the express prior
written consent of the Committee, provided, however, you shall be deemed not to
be in competition for purposes of Section 11 of this Agreement (1) if you serve
on boards of directors of other companies, (2) if you are an employee of or a
consultant to an entity a unit of which is in competition with Unisys, provided
that it can be demonstrated to the reasonable satisfaction of the Committee that
procedures are in place to assure that any unit that is in competition with
Unisys and any director, officer, employee, consultant or other representative
of such unit cannot directly or indirectly avail itself or themselves of your
services, (3) if you are an employee of or a consultant to an entity that
provides consulting services to other entities, one or more of which are in
competition with Unisys, provided that it can be demonstrated to the reasonable
satisfaction of the Committee that procedures are in place to assure that no
entity that is in competition with Unisys nor any director, officer, employee,
consultant or other representative of such unit can directly or indirectly avail
itself or themselves of your services, (4) if you invest in securities which are
listed for trading on a national exchange or NASDAQ and your investment does not
exceed 1% of the issued and outstanding shares of stock or (5) if you acquire an
ownership interest in a non-public company, provided that such ownership
represents a passive investment;
(b) For a period of 24 months from the date of termination of your
employment, you shall not negatively comment publicly or privately about Unisys
(or its subsidiaries or affiliates), any of its products, services or other
businesses, its present or past Board of Directors, its officers, or employees,
nor shall you in any way discuss the circumstances of your termination of
employment, except that (1) you may give truthful testimony before a court or
governmental agency, (2) you may make comments about the circumstances of your
termination with the prior written approval of the Corporation, (3) you may
respond publicly to any untrue public comment made by the Corporation, (4) you
may discuss the circumstances of your termination with your attorneys, your
financial and tax advisers, members of your family and any prospective employer,
provided that you take all necessary steps to assure that each such person does
not, as a result of your discussions with them, make any such negative comment
prohibited under this Section 11(b) and (5) you may make comments to an
arbitrator or court for the purpose of determining or enforcing your rights
under this Agreement or any
13
entitlement under any agreement, plan, award, policy or program with or
sponsored by Unisys (or any of its subsidiaries or affiliates);
(c) For a period of eighteen months from the date of the termination of your
employment, you shall not induce or attempt to induce any employee of Unisys (or
any of its subsidiaries or affiliates) to render services for any other person,
firm or business entity, except that you will be permitted to give
recommendations, if requested, for employees seeking employment outside of
Unisys;
(d) (1) You shall not use, furnish or divulge to any other person, firm or
business entity any confidential information relating to Unisys business (or
that of any of its subsidiaries or affiliates), or any trade secrets, processes,
contracts or arrangements involved in any such business, except (A) when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of Unisys or by any administrative or
legislative body (including a committee thereof) with apparent jurisdiction to
order you to divulge, disclose or make accessible such information, (B) to an
attorney as necessary to enforce your rights under this Agreement, or any other
agreement, plan, policy, award or program with or sponsored by Unisys or (C)
after such information becomes known to the public or within the relevant
industry to which such confidential information pertains.
(2) For a period of 24 months following the date of termination of your
employment, Unisys (and its subsidiaries and affiliates) agrees not to
negatively comment publicly or privately about you or the circumstances of your
termination of employment, except (A) Unisys may give truthful testimony before
a court or governmental agency, (B) Unisys may make comments about the
circumstances of your termination with your prior written approval, (C) Unisys
may respond publicly to any untrue public comment made by you, (D) Unisys may
discuss the circumstances of your termination with its attorneys and its
financial and tax advisers, provided that it takes reasonable steps to assure
that each such person does not, as a result of Unisys discussions with them,
make any such negative comment prohibited under this Section 11(d) and (E)
Unisys may make comments to an arbitrator or court for the purpose of
determining its rights under this Agreement or any agreement, plan, award,
policy or program with or sponsored by Unisys (or any of its subsidiaries or
affiliates).
(3) You and Unisys mutually agree that the obligations contained in this
Section 11 are reasonable and necessary for each party's mutual protection and
that one party cannot be reasonably or adequately compensated in damages in an
action at law in the event that the other party breaches such obligations. You
and Unisys expressly agree that, in addition to any other rights or remedies
which each may possess, each shall be entitled to injunctive and other equitable
relief to prevent a breach of this Section 11 by the other party, including a
temporary restraining order or temporary injunction from any court of competent
jurisdiction restraining any threatened or actual violation, and you and Unisys
each consents to the entry of such an order and injunctive relief
14
and waives the making of a bond as a condition for obtaining such relief. Such
right shall be cumulative in addition to any other legal or equitable rights and
remedies the parties may have. In addition, in the event that you should
materially breach your obligations under Section 11(b) or you should breach any
other obligation described in this Section 11, Unisys shall have the right to
terminate any remaining payments due under Section 9(b)(1) and (4).
(e) (1) With respect to the last paragraph of Section 6(e)(3) of the 1990
Long-Term Incentive Plan, if applicable, the Corporation agrees that (A) the
term "cause" shall be construed as defined in this Agreement, (B) in the event
that any action is contemplated under such Section, you shall be provided with a
written notice stating (i) with specificity, the nature of the alleged conduct
that is deemed to be "materially adverse or detrimental to the interests of the
Company" and, if such alleged conduct is curable, (ii) the steps, if any, you
should reasonably take to cure such alleged conduct and (iii) the period of time
by which such alleged violation must be cured (which time period shall not be
less than 30 days after receipt of such written notice). No action shall be
taken by the Senior Vice-President, Worldwide Human Resources or any other
person pursuant to such Section 6.3(e)(3) after the expiration of such time
period unless you have been given the opportunity to be heard by the Committee
and there is a vote of two-thirds of all non-employee members of the Committee,
determining that the alleged conduct is materially adverse or materially
detrimental to the interests of the Corporation and instructing the Senior Vice
President, Worldwide Human Resources or such other person to take such action.
(2) The restrictive covenants contained in this Section 11 will
supersede and replace any similar covenants or provisions relating to the
revocation, suspension or restriction of benefits or entitlements for conduct
deemed adverse or detrimental to the interests of the Corporation in any plan,
program, policy or arrangement sponsored by the Corporation or any of its
subsidiaries or affiliates. Other than as expressly set forth in this Agreement,
there shall be no restrictions on your activities following termination of your
employment, except restrictions imposed by law.
12. Plan Documents; Code of Ethical Conduct. Each of the above-described
---------------------------------------
benefits which are more fully described in an applicable Unisys plan document
(including, without limitation EVC, stock option and restricted share award
documents) are subject to the terms of such plan or award document (as may be
amended by Unisys from time to time) and, except as expressly provided in this
Agreement, each such plan document or award document will govern the benefit
payable hereunder and thereunder. In addition, you agree that the Unisys
policies and procedures applicable to all Unisys employees, including, without
limitation, the Unisys Code of Ethical Conduct, shall be applicable to you as in
effect as of the date of this Agreement.
15
13. Successors. This agreement shall be binding upon Unisys and its successors
----------
and assigns.
14. Indemnification. You will be entitled to the indemnification rights
---------------
contained in the Restated Certificate of Incorporation of Xxxxxx Xxxxxxxxxxx,
dated September 27, 1999, the By-Laws of Xxxxxx Xxxxxxxxxxx, dated July 19, 2001
and the Indemnification Agreement between you and the Corporation dated as of
September 23, 1997 as any of them may be amended from time to time. Unisys
agrees to maintain directors and officers liability insurance covering you to
the extent that Unisys provides such coverage for its other directors and
officers.
15. Miscellaneous. Except as expressly set forth herein, this Agreement
-------------
constitutes the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements including, without limitation,
the employment agreement dated September 23, 1997. For the avoidance of doubt,
your Indemnification Agreement dated as of September 23, 1997 and your Executive
Employment Agreement dated as of September 23, 1997 continue in full force and
effect. Any reference to your employment agreement dated September 23, 1997 in
the Executive Employment Agreement shall be deemed to refer to this Agreement.
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
the Chairman of the Committee or his designee. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania without giving effect to the provisions thereof
relating to conflicts of laws.
16. No Mitigation; No Offset. In the event of any termination of your
------------------------
employment hereunder, you shall be under no obligation to seek other employment
or otherwise mitigate the obligations of the Corporation under this Agreement,
and, except as provided in Section 9(d) above, there shall be no offset against
amounts or benefits due to you under this Agreement or otherwise on account of
(a) any claim that the Corporation may have against you or (b) any remuneration
or other benefit earned or received by you after such termination, except as
otherwise provided under the applicable terms of any agreement, plan, award,
policy or program with or sponsored by Unisys (or any of its subsidiaries or
affiliates), subject to the terms of this Agreement, including, but not limited
to, Sections 5(d) and 11.
17. Validity. 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.
18. Arbitration. Any dispute or controversy arising under or in connection
-----------
with this Agreement shall be settled exclusively by arbitration in Philadelphia,
Pennsylvania in accordance with the rules of the American Arbitration
Association. Any arbitration award will be final and conclusive upon the
parties, and a judgment enforcing such
16
award may be entered in any court of competent jurisdiction. Costs of
arbitration shall be borne by Unisys. Unless the arbitrator determines that you
did not have a reasonable basis for asserting your position with respect to the
dispute in question, Unisys shall also reimburse you for your reasonable
attorneys' fees incurred with respect to any arbitration.
19. Corporate Authority. Unisys represents and warrants that it is fully
-------------------
authorized and empowered to enter into this Agreement. This Agreement and any
necessary determination under or modification of, any plan, program or
arrangement of the Corporation required by this Agreement, have been authorized
by the Board and approved by the Committee.
If the foregoing sets forth our agreement with you, please sign and return to us
the enclosed copy of this Agreement.
Very truly yours,
XXXXXX XXXXXXXXXXX The foregoing is accepted:
By: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------- -----------------------------
Xxxxxxx X. Xxxxx; Chairman Xxxxxxxx X. Xxxxxxxx
Compensation and Organization
Committee
Board of Directors
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