EXHIBIT 7
AGREEMENT
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THIS AGREEMENT (the "Agreement") entered into on April 26, 1999, by and
between FORE Systems, Inc., a Delaware corporation (the "Company"), and Xxxxxx
X. Xxxxxx, a resident of Fox Chapel, Pennsylvania ("Xxxxxx").
WHEREAS, Xxxxxx is currently employed as a Senior Vice President and Chief
Technology Officer of the Company and is a participant in the Company's Change
in Control Separation Plan, as amended and restated effective September 4, 1998,
(the "Plan"); and
WHEREAS, the Company has contracted to enter into a transaction whereby,
upon the closing of the transaction (the "Closing"), the Company will become a
wholly-owned indirect subsidiary of The General Electric Company, p.l.c. (the
"Parent Company"), which transaction will constitute a "Change in Control" as
defined by Article II(e) of the Plan; and
WHEREAS, Xxxxxx and the Company are considering his future role with the
Company and on or before December 31, 1999, Xxxxxx intends to elect either to
retire from the employ of the Company and become a consultant or to remain
employed in an executive officer capacity with the Company and, in either case
to enter into a new agreement with the Company; and
WHEREAS, after negotiation, the Company and Xxxxxx wish to enter into a
current contract that will provide for Xxxxxx'x continued service to the Company
in some capacity with the Company, to take effect immediately prior to the time
of Closing (the "Effective Date"), in partial exchange for and full replacement
of any obligation the Company might have thereupon incurred under the Plan to
Xxxxxx, except as provided in Section 1 below, which Xxxxxx hereby waives; and
WHEREAS, both parties also desire to enter into this Agreement to obligate
themselves to execute a new agreement on or prior to December 31, 1999, and to
set forth certain obligations of Xxxxxx not to misuse the Company's Confidential
Information, as defined below, and not to compete with the Company or solicit
its Principal Customers, as defined below, in exchange, in part, for the
conversion of certain stock options previously granted to Xxxxxx into options to
purchase phantom ordinary shares of the Parent Company;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. New Agreement. On the Effective Date, Xxxxxx shall continue in his
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current capacity with the Company and shall be entitled to receive the same
compensation and benefits in effect on the Effective Date. On or prior to
December 31, 1999, the Company and Xxxxxx shall have entered into a new
employment agreement substantially in the form of agreement entered into between
the Company and Xxxxx X. Xxxxx of even date herewith or, failing that, Xxxxxx
agrees to execute a consulting agreement with the Company substantially in the
form of agreement entered into between the Company and Xxxx X. Xxxxxx of even
date herewith. In consideration for the terms set forth in this Agreement,
Xxxxxx hereby waives any further participation in the Plan which shall no longer
apply to him on or after the Effective Date; provided, however, that the
provisions of Section 4.4 of the Plan shall continue to apply to Xxxxxx should
any of the actions, payments or benefits under this Agreement require the
additional payments called for by that Section in connection with the Change in
Control that will occur as a result of the transaction referred to above; and,
provided, further, that any interest and penalties imposed upon Xxxxxx related
to such event under that Section shall be covered by the
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Company as well on a net after-tax basis to Xxxxxx assuming he is in the highest
marginal tax bracket for Federal, state and local income and employment taxes.
2. Confidential Information. Xxxxxx recognizes and acknowledges that by
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reason of Xxxxxx'x employment by and service to the Company prior to the
Effective Date and by reason of his services after the Effective Date, Xxxxxx
has had and will have access to certain confidential and proprietary information
relating to the business of the Company, which may include, but is not limited
to, trade secrets, trade "know-how", customer information, supplier information,
cost and pricing information, marketing and sales techniques, strategies and
programs, computer programs and software and financial information (collectively
referred to as "Confidential Information"). Xxxxxx acknowledges that such
Confidential Information is a valuable and unique asset of the Company and
Xxxxxx covenants that Xxxxxx will not, unless expressly authorized in writing by
the Board, at any time during the period of his service to the Company or
thereafter use any Confidential Information or divulge or disclose any
Confidential Information to any person, firm or corporation except in connection
with the performance of Xxxxxx'x duties for the Company and in a manner
consistent with the Company's policies regarding Confidential Information,
unless such information is in the public domain through no fault of Xxxxxx or
except when required to do so by a court of law, by any governmental agency
having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order Xxxxxx to divulge, disclose or make accessible such
information, in which case Xxxxxx will inform the Company in writing promptly of
such required disclosure, but in any event at least 15 business days prior to
disclosure or the amount of time Consultant has to respond to the required
request minus one day if shorter. All written Confidential Information
(including, without limitation, in
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any computer or other electronic format) which comes into Xxxxxx'x possession
during the period in which he is rendering services to the Company shall remain
the property of the Company. Unless expressly authorized in writing by the
Board, Xxxxxx shall not remove any written Confidential Information from the
Company's premises, except in connection with the performance of Xxxxxx'x duties
for the Company and in a manner consistent with the Company's policies regarding
Confidential Information. At the end of his period of service to the Company,
Xxxxxx agrees immediately to return to the Company all written Confidential
Information in Xxxxxx'x possession. For the purposes of this Section 2 and
Section 4, the term "Company" shall be deemed to include the Company and
Affiliates, as defined in as defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934 (the "Exchange Act").
3. Non-Competition; Non-Solicitation; Consideration.
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(a) The Company hereby agrees to (i) xxxxx Xxxxxx, on the Effective
Date, a non-qualified phantom share option (for a term expiring ten years
thereafter) to purchase phantom ordinary shares of the Parent Company, the
number of which shall equal two times $230,000 divided by the then current fair
market value of a share of the Parent Company (the "Option"). Xxxxxx'x right to
exercise the Option shall vest in 25% increments on each of the first four
anniversaries of the Effective Date, if, in each case, Executive is then
employed by the Company (except that in the case of death, disability, as
defined in the company's long term disability plan on the Effective Date, or
termination without cause, Executive shall be fully vested in the Option;
provided, however, that entering into a consulting contract shall be treated as
an event of forfeiture for purposes of the Option). The terms of the Option, to
the extent not inconsistent with the provisions outlined in this Section, shall
be made subject to the terms of the
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Parent Company's Phantom Share Option Scheme, (ii) provide Xxxxxx with, at
Xxxxxx'x election, either, or in combination, (A) a cash payment equal to the
value of the spread on all stock options previously granted to Xxxxxx by the
Company, whether or not vested as of the Effective Date, based upon the price
paid for shares of the Company by the Parent Company in the transaction
described above, or (B) that number of options to purchase phantom shares of the
Parent Company that preserves the inherent value of those stock options, based
on the conversion calculation attached hereto as Appendix A, previously granted
to Xxxxxx by the Company, whether or not vested as of the Effective Date, that
Xxxxxx elects to convert to fully-vested options for phantom shares of the
Parent Company based upon the price paid for shares of the Company by the Parent
Company in the transaction described above and (iii) cause all stock options
previously issued to him by the Company, the purchase price for which is $30 per
share or higher, to be vested immediately and converted by the Parent Company
into options to purchase phantom ordinary shares of the Parent Company under its
Phantom Share Option Scheme, which options shall be exercisable until the last
day of the 12th month after Xxxxxx ceases to render services for the Company. In
exchange for the consideration provided in preceding sentence, during the 36
month period commencing on the Effective Date (the "Restriction Period"), within
the Company's "Service Area," as defined below, Xxxxxx will not, except with the
prior written consent of the Board, directly or indirectly, own, manage,
operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise
with, or use or permit Xxxxxx'x name to be used in connection with, any business
or enterprise that is directly competitive with any business or enterprise in
which the Company is engaged at the Effective Date. For the purposes of this
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Section, "Service Area" shall mean the geographic area within which the Company
is operating on the Effective Date.
(b) The foregoing restrictions shall not be construed to prohibit the
ownership by Xxxxxx of less than five percent (5%) of any class of securities of
any corporation which is engaged in any of the foregoing businesses, provided
that such ownership represents a passive investment and that neither Xxxxxx nor
any group of persons including Xxxxxx in any way, either directly or indirectly,
manages or exercises control of any such corporation, guarantees any of its
financial obligations, otherwise takes any part in its business, other than
exercising Xxxxxx'x rights as a shareholder, or seeks to do any of the
foregoing.
(c) Xxxxxx further covenants and agrees that during the Restriction
Period, Xxxxxx will not, directly or indirectly, (i) solicit, divert, take away,
or attempt to solicit, divert or take away, any of the Company's "Principal
Customers," defined for the purposes hereof to include any customer of the
Company, from which $100,000 or more of annual gross revenues are derived at
such time, or (ii) encourage any Principal Customer to reduce its patronage of
the Company.
(d) Xxxxxx further covenants and agrees that during the Restriction
Period, Xxxxxx will not, except with the prior written consent of the Board,
directly or indirectly, solicit or hire, or encourage the solicitation or hiring
of, any person who was an employee of the Company at the Effective Date or
during the Restriction Period by any employer other than the Company for any
position as an employee, independent contractor, consultant or otherwise. The
foregoing covenant of Xxxxxx shall not apply to any individual after 12 months
have elapsed subsequent to the date on which such individual's employment or
engagement by the Company has terminated.
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4. Equitable Relief.
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(a) Xxxxxx acknowledges and agrees that the restrictions contained in
Sections 2 and 3 are reasonable and necessary to protect and preserve the
legitimate interests, properties, goodwill and business of the Company, that the
Company would not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by the Company should
Xxxxxx breach any of the provisions of those Sections. Xxxxxx represents and
acknowledges that (i) Xxxxxx has been advised by the Company to consult Xxxxxx'x
own legal counsel in respect of this Agreement, and (ii) that Xxxxxx has had
full opportunity, prior to execution of this Agreement, to review thoroughly
this Agreement with Xxxxxx'x counsel.
(b) Xxxxxx further acknowledges and agrees that a breach of any of the
restrictions in Sections 2 and 3 cannot be adequately compensated by monetary
damages. Xxxxxx agrees that the Company shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages, as
well as provable damages and an equitable accounting of all earnings, profits
and other benefits arising from any violation of Sections 2 or 3 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 2 or 3 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provision shall be
amended to the extent of the maximum time, geographic, service, or other
limitations permitted by applicable law, that such amendment shall apply only
within the jurisdiction of the court that made such adjudication and that the
provision otherwise be enforced to the maximum extent permitted by law.
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(c) Xxxxxx irrevocably and unconditionally (i) agrees that any suit,
action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the United States District Court for the Western District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Pittsburgh, Pennsylvania,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Xxxxxx may have
to the laying of venue of any such suit, action or proceeding in any such court.
Xxxxxx also irrevocably and unconditionally consents to the service of any
process, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 6 hereof.
5. Survivorship. The respective rights and obligations of the parties
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under this Agreement shall survive any termination of Xxxxxx'x engagement to the
extent necessary to the intended preservation of such rights and obligations.
6. Notices. All notices and other communications required or permitted
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under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to:
FORE Systems, Inc.
0000 XXXX Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Vice President, Corporate Counsel and Secretary
With a required copy to:
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Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxxxxx xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx, Esquire
If to Sansom, to:
Xxxxxx X. Xxxxxx
at address on file with the Company
or to such other names or addresses as the Company or Xxxxxx, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
7. Contents of Agreement; Amendment and Assignment.
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(a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Xxxxxx.
(b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Xxxxxx under this
Agreement are of a personal nature and shall not be assignable or delegatable in
whole or in part by Xxxxxx. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to Xxxxxx, expressly to assume
and agree to perform this Agreement in the same manner and to the extent the
Company would be required to perform if no such succession had taken place.
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8. Severability. If any provision of this Agreement or application
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thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable
with respect to particular circumstances, it shall nevertheless remain in full
force and effect in all other circumstances.
9. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
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this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or
power under this Agreement or existing at law or in equity shall be construed as
a waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.
10. Miscellaneous. All section headings used in this Agreement are for
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convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
11. Governing Law. This Agreement shall be governed by and interpreted
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under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
FORE SYSTEMS, INC.
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxx
___________________________ By:_______________________
President and
Chief Executive Officer
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APPENDIX A
At the Effective Time under the Agreement and Plan of Merger, each outstanding
Employee Option which the executive elects shall not be canceled or exercised
but shall be amended and converted into phantom stock units equivalent to a
number of ordinary shares of GEC, p.l.c. ("GEC Shares") (rounded down to the
nearest whole share) determined by multiplying the number of shares subject to
such Employee Option by the Conversion Ratio (as defined below), at a price per
GEC Share equivalent (rounded up to the nearest whole xxxxx) equal to (A) the
exercise price for the shares previously purchasable pursuant to such Employee
Option converted into pounds sterling at the Noon Buying Rate (as defined below)
divided by (B) the Conversion Ratio (each, as so adjusted, a "Substitute Phantom
Unit"). The value of each Substitute Phantom Unit will be payable upon exercise
(less applicable withholding Taxes), at Parent Company's election, in cash or
GEC Shares (provided that such GEC Shares are publicly traded on the London
Stock Exchange or a U.S. stock exchange) valued at the closing sales price for a
GEC Share on the London Stock Exchange (the "LSE") on the date of exercise and
shall have other terms and conditions comparable to those of the Employee Option
replaced by such Substitute Phantom Unit. The "Conversion Ratio" shall be equal
to U.S. $35 converted into pounds sterling at the noon buying rate in New York
City for cable transfers in pounds sterling as certified for customs purposes by
the Federal Reserve Bank of New York on the date of the Effective Time (the
"Noon Buying Rate") divided by an amount equal to the average of the closing
price for a GEC Share on the LSE for the twenty trading days preceding the
Effective Time and weighted for trading volumes of GEC Shares on each such day.
In the event another company becomes the successor ultimate parent of Parent,
the shares of such successor will be substituted for GEC Shares on an equitable
basis.
