July 2, 1997
Xx. Xxxxx X. Xxxxx
Chairman and Chief Executive Officer
Xxxxxx Xxxxxxxxxxx
P. O. Box 500
Blue Bell, PA 19424
Dear Xxx:
You are presently employed by Xxxxxx Xxxxxxxxxxx (the "Corporation") as
Chairman of the Board and Chief Executive Officer under the terms of a letter
agreement dated August 10, 1994 (as amended on July 28, 1995), and an
Employment Agreement dated July 28, 1995. This letter agreement (the
"Agreement") supersedes and replaces the letter agreement dated August 10, 1994
(as amended on July 28, 1995), and the Employment Agreement dated July 28,
1995, and describes the terms and conditions of your employment with the
Corporation on and after the date hereof until April 30, 1998 (the "Term").
The provisions of this Agreement are as follows:
1. Base Salary. You shall continue to serve, at the pleasure of the Board
of Directors, as Chief Executive Officer and/or Chairman of the Board of
the Corporation at a base salary at the annual rate of not less than
$836,000 per year.
2. Annual Bonus. You shall be eligible to receive an annual bonus award
at a target bonus level of not less than 100% of your base salary. If
your employment is terminated by the Corporation without cause or upon
your serving as an employee of the Corporation from the date hereof
until completion of the Term, you will be eligible to receive a pro rata
bonus for the year in which your employment is terminated based on the
percentage of the year you were employed by the Corporation. The actual
annual or pro rata bonus paid to you, if any, shall be determined by the
Compensation and Organization Committee of the Board of Directors (the
"Committee") in its sole discretion and shall be based on such factors
as it deems appropriate. Your actual annual or pro rata bonus payments,
if any, shall be made in cash at the time of the award, subject to your
election to defer receipt of all or any portion of the bonus award in
accordance with the terms of the Deferred Compensation Plan for Officers
of Xxxxxx Xxxxxxxxxxx (or any successor deferred compensation program).
3. Benefit Programs. During your employment hereunder, you shall
participate in the retirement, welfare, fringe, and perquisite programs
generally made available to executive officers of the Corporation and at
such benefit levels customarily provided to the Chief Executive Officer
and/or Chairman of the Board of the Corporation.
4. Service on Other Boards. During the term of your employment hereunder,
you shall render your full-time attention to the business affairs of the
Corporation. You may serve on the board of directors of other companies
as expressly approved by the Board of Directors of the Corporation in
its discretion. However, so long as you serve as Chief Executive
Officer of the Corporation, you agree not to actively seek other
employment.
5. Death or Disability. In the event of your disability or death prior to
the date of the termination of your employment hereunder, all future
compensation under this Agreement (other than those amounts and benefits
described in the following sentence) shall terminate. You and your
estate shall receive (a) an annual bonus award for the year in which you
terminate employment in an amount equal to a pro rata portion, based on
the period of service rendered, of the bonus amount paid in the previous
year, (b) benefits under the retirement, welfare, incentive, fringe and
perquisite programs generally available to executive officers upon
disability or death and (c) any deferred account balance under the
Deferred Compensation Plan for Officers of Xxxxxx Xxxxxxxxxxx (or any
successor deferred compensation program) in accordance with the terms of
such plan. For purposes of this Agreement, disability means a mental or
physical injury or illness which renders you incapable of substantially
performing your duties hereunder. The determination of whether you are
disabled for purposes of this Section 5, and when you became disabled,
shall be made by a medical doctor jointly selected by the Committee and
you or your representative, and such determination shall be final and
binding on all parties.
6. Termination of Employment.
(a) Your employment may be terminated by the Company at any
time with or without cause. In the event that you are terminated for
"cause" (as defined below) or you terminate your employment, no further
amounts shall be paid to you hereunder except as otherwise provided
under the normal terms of the retirement, welfare, incentive, fringe,
and perquisite programs in which you participated at your date of
termination.
(b) Upon termination by the Corporation without cause or upon
your serving as an employee of the Corporation from the date hereof
until completion of the Term, you shall be entitled to the following:
(1) Base salary through the completion of the Term to the
extent not theretofore paid, plus such bonus as may be
determined as provided in Section 2 hereof.
(2) Termination payments for a period of 24 months
following completion of the Term in the amount determined as
follows:
(A) For purposes of this Section 6(b), termination
payments for the first 12 months following completion of
the Term shall consist of base salary (at its then
current rate on the date of termination) and annual bonus
(in an amount equal to 50% of your target bonus, times
your base salary both as in effect at your date of
termination).
(B) For purposes of this Section 6(b), termination
payments for the 13th to the 24th month following the
completion of the Term shall consist of base salary (at
its then current rate on the date of termination) and
annual bonus (in an amount equal to 50% of your target
bonus, times your base salary both as in effect at your
date of termination).
(C) The amount of base salary and annual bonus
payable to you for the 13th month to the 24th month
following the completion of the Term shall be reduced by
the amount of cash compensation, if any, earned by you
during such period for services rendered to any other
entity as an employee, independent contractor,
consultant, officer, director, or in any other capacity,
provided, however, that compensation earned by you for
service as a director of any corporation shall 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.
Such termination payments shall be paid in the same manner and
at the same times as the salary and annual bonus due hereunder
during employment.
(3) For a period ending on the earlier of (A) 24 months
following your date of termination, or (B) your becoming
eligible for medical, dental or life insurance from another
employer, continued participation, at the same costs applicable
to active employees in the Unisys medical, dental and life
insurance 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, dental and life
insurance plans) for you and your eligible dependents, subject,
however, to the generally applicable terms of such plans.
(4) Following the period of participation in active
employee benefits under Section 6(b)(3) hereof, you shall be
entitled to receive the post-retirement medical and post-
retirement life insurance coverage generally available to other
retired executive officers;
(5) Full vesting in all stock options, restricted stock
and other awards made under the Corporation's Long-Term
Incentive Plans (or under any successor incentive plan thereto),
effective as of the end of the Term; for purposes of stock
option, SAR and other equity-based award exercise rights under
the applicable Long-Term Incentive Plans (or any successor
incentive plan thereto), you shall be treated as if you had
retired on your normal retirement date as of your date of
termination;
(6) Extension of the repayment period on any corporate
interest-free home mortgage loan until the first to occur of the
following: (i) the fifth anniversary of your date of
termination; (ii) the date on which your home is sold; or (iii)
the date on which your home is leased, unless such action has
been approved by the Committee in its sole discretion.
(c) For purposes of this Agreement, "cause" shall mean
intentional dishonesty or gross neglect of your duties.
(d) You shall not be entitled to receive payments under the
Corporation's Income Assistance Plan or any successor severance or
income assistance plan generally applicable to employees of the
Corporation.
(e) For a period beginning on the first day of the month
following your date of termination and ending on the earlier of (A) 24
months following such date, or (B) the date you commence employment with
another employer, the Corporation will reimburse you for office and
secretarial expenses incurred by you in an amount not to exceed $4,167
per month.
(f) The payments provided for in this Section 6 are being
extended to you to provide you with reasonable severance compensation in
connection with your retirement from active service with the
Corporation and in recognition of your service to the Corporation as
Chairman of the Board and Chief Executive Officer, and not to any degree
whatsoever in contemplation of a change of control of the Corporation.
7. Conduct Following Termination of Employment.
(a) During the 24 month period following your date of
termination, you hereby agree that you will not:
(1) without the prior written approval of the
Committee, become engaged or employed as a business owner,
employee or consultant in any activity which is in competition
with any line of business of the Corporation existing as of your
date of termination;
(2) directly or indirectly (including through someone
else acting on your recommendation, suggestion, identification
or advice) solicit any existing employee of the Corporation to
leave the employ of the Corporation;
(3) use or disclose to anyone any confidential
information regarding the Corporation; or
(4) negatively comment, publicly or privately, about
the Corporation (or its subsidiaries or affiliates), any of its
products, services or other businesses, its present or past
Board of Directors, its officers or employees.
(b) Upon completion of the Term or, if earlier, on your date
of termination, you hereby agree that you will thereafter:
(1) resign, upon request, as a director and officer of
the Corporation and any subsidiaries or affiliates of the
Corporation;
(2) make yourself available upon request to provide
accurate information or testimony or both in connection with any
legal matter affecting the Corporation or any of its
subsidiaries or affiliates, subject to reasonable accommodation
of your schedule and reimbursement of reasonable expenses (which
shall include the reasonable expenses of counsel retained by you
in connection therewith); and
(3) promptly advise the Senior Vice President - Human
Resources of the Corporation of any facts which could cause a
reduction in the amounts payable to you or the benefits received
by you pursuant to Sections 6(b)(2)(C) or 6(b)(3) hereof.
In the event you breach any term of Section 7(a), the Corporation may
cancel or terminate all benefits and payments remaining to be made to
you or on your behalf under Section 6(b) hereof, invoke applicable
provisions of the Corporation's Elected Officer Pension Plan, and obtain
any injunctive relief to which it may be entitled.
If you do not breach any term of Section 7(a) during the 24 month
period following your date of termination, the Corporation agrees that
it will not thereafter invoke against you the provisions of Section
6.04(a) of the Corporation's Elected Officer Pension Plan.
8. Change of Control.
(a) If a Change of Control shall occur during the Term and
prior to your date of termination, and the Corporation shall thereafter
terminate your employment prior to the completion of the Term other than
for cause, death or disability:
(1) the Corporation shall pay to you in a lump sum in
cash within 30 days after your date of termination the aggregate
of the following amounts:
(A) the sum of (i) your base salary through
the completion of the Term to the extent not
theretofore paid, (ii) a bonus pro-rated for the
portion of the year until your date of
termination at the rate provided in Section
6(b)(2)(A), (iii) the amount payable to you under
Section 6(b)(2)(A) hereof and (iv) the amount
payable to you under Section 6(b)(2)(B) hereof,
subject to repayment by you under the provisions
of Section 6(b)(2)(C) hereof; and
(B) an amount equal to the excess of (i) the
actuarial equivalent of the benefit under the
Corporation's qualified defined benefit
retirement plan (the "Retirement Plan")
(utilizing actuarial assumptions no less
favorable to you than those in effect under the
Company's Retirement Plan immediately prior to
your date of termination), and any excess or
supplemental retirement plan in which you
participate (the "SERP") which you would receive
if your employment continued through the
completion of the Term, assuming that your
compensation is that required by Section 1 and
Section 2 hereof, over (ii) the actuarial
equivalent of your actual benefit (paid and
payable), if any, under the Retirement Plan and
the SERP as of your date of termination.
(b) For the purpose of this Section 8, a "Change of Control"
shall mean:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"))(a "Person") 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 Corporation
(the "Outstanding Corporation Common Stock") or (B) the
combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally
in the election of directors (the "Outstanding
Corporation Voting Securities"); provided, however, that
for purposes of this Section 8(b)(1), the following
acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the
Corporation, (ii) any acquisition by the
Corporation, (iii) any acquisition by any
employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, or
(iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (A),
(B) and (C) of Section 8(b) (3) hereof; or
(2) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director
subsequent to the date hereof whose election, or
nomination for election by the Corporation's
stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or removal
of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other
than the Board; or
(3) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Corporation (a
"Business Combination"), in each case, unless, following
such Business Combination, (A) all or substantially all
of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50%
of, respectively, the then 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 Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (B) no
Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or
related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock
of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the
Business Combination and (C) at least a majority of the
members of the board of directors of the corporation
resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the stockholders of the Corporation of
a complete liquidation or dissolution of the Corporation.
9. Successors. This Agreement shall be binding upon the Corporation and
its successors and assigns. The Corporation will require any such
successor to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Corporation would be
required to perform it if no such succession had taken place.
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 Corporation. 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.
11. 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.
12. Other Agreements. It is not intended that you shall receive duplicate
rights and benefits under this Agreement and any other agreement,
contract, plan, or other arrangement with, or sponsored by, the
Corporation. This Agreement supersedes and replaces all prior
understandings and agreements between you and the Corporation.
13. 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 award may be
entered in any court of competent jurisdiction. The expenses incurred
by you in pursuing arbitration (including reasonable legal fees and
expenses) will be borne by the Corporation unless the arbitrator
determines that you have caused the dispute to be submitted to
arbitration in bad faith.
14. Corporate Approval. This Agreement has 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:
___________________________ ______________________
Xxxxxxx X. Xxxxx, Chairman Xxxxx X. Xxxxx
Compensation and Organization
Committee
Board of Directors
