October 6, 2008
Mr. X. Xxxxxx Xxxxxxx
00 Xxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
I am pleased to offer you the position of Chairman of the Board and Chief
Executive Officer of Xxxxxx Xxxxxxxxxxx (the "Corporation" or "Unisys"). This
letter (the "Agreement") describes the terms and conditions of your employment:
1. Base Salary. You will serve as Chairman of the Board and Chief Executive
Officer of the Corporation with a base salary at the annual rate of not less
than $972,000. Your base salary level will be reviewed periodically by the
Board of Directors after receiving a recommendation from the Compensation
Committee (the "Committee").
2. Annual Bonus. (a) You will participate in the Corporation's Executive
Variable Compensation ("EVC") Plan (or any successor bonus plan) and your
target will not be less than 125% of your annual paid salary. Subject to
subsection (b) below, the actual EVC paid to you, if any, will be determined by
the Board of Directors in its sole discretion after receiving a recommendation
from the Committee, and will be based on your attainment of performance
criteria to be determined annually by the Board and the Committee. 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).
(b) For the first six months of your employment hereunder, you will be
entitled to a guaranteed bonus of $607,500. You will receive a portion of this
amount at the time EVC payments are made in respect of the 2008 EVC award year,
such amount to be pro-rated for the portion of such six-month period that you
are employed by the Corporation in 2008. You will receive the remainder of
such amount at the time EVC payments are made in respect of the 2009 EVC award
year. Any additional EVC payments to you in respect of the 2009 EVC award year
will be determined by the Board of Directors in its sole discretion as set
forth in subsection (a) above. You must continue to be employed by Unisys
through the applicable EVC payment date in order to receive a bonus.
3. Long-Term Incentive Awards. (a) Effective as of the business day
following your first day of employment, you will receive: (1) a grant of
300,000 restricted stock units ("RSUs") under the terms of the Xxxxxx
Xxxxxxxxxxx 2003 Long-Term Incentive and Equity Compensation Plan ("2003
Plan"). These RSUs, which will be subject to the terms of the 2003 Plan and
the standard terms of the Corporation's RSU award documents, will vest on a
time basis in three equal annual installments starting on the first anniversary
of the date of grant and be settled upon vesting in shares of common stock of
the Corporation and (2) a stock option grant under the terms of the Xxxxxx
Xxxxxxxxxxx 2007 Long-Term Incentive and Equity Compensation Plan ("2007 Plan")
for 1,200,000 shares of common stock of the Corporation. These stock options,
which will be subject to the terms of the 2007 Plan and the standard terms of
the Corporation's stock option award documents, will vest in three equal annual
installments starting on the first anniversary of the date of grant and will
have a term of five years. The option price for this grant will be the Fair
Market Value (as defined in the 2007 Plan) of Unisys common stock on the date of
grant.
(b) Within 120 days of your first day of employment, you will receive a grant
of 900,000 RSUs under the 2003 Plan. These RSUs, which will be subject to the
terms of the 2003 Plan and the standard terms of the Corporation's RSU award
documents, will vest on a time and performance basis in three equal annual
installments starting on the first anniversary of the date of grant if and to
the extent that performance criteria to be mutually agreed prior to the date of
grant are met and will be settled upon vesting in shares of common stock of the
Corporation.
(c) You will be eligible to receive stock option awards, long-term performance
awards, restricted share (or restricted share unit) awards and any other
incentive award under the terms of the 2003 Plan, the 2007 Plan, or any
successor thereto, in each year in which such awards are made to executive
officers generally.
4. Benefit Programs; Housing. During your employment hereunder, you will
participate in the retirement, welfare, incentive, fringe and perquisite
programs generally made available to executive officers of the Corporation and
at such benefit levels appropriate for the Chairman and Chief Executive Officer
of the Corporation. In addition, during your employment hereunder until such
time as you relocate your primary residence to the Philadelphia metropolitan
area, you will be provided with the use of a Corporation-paid apartment in the
Philadelphia metropolitan area for business purposes. The annual expense of
such apartment is subject to the approval of the Committee.
5. Service on Other Boards. During your employment with the Corporation, you
shall render your full-time attention to the business affairs of the
Corporation. You may serve on the board of directors of other entities only as
expressly approved in advance by the Board of Directors of the Corporation in
its discretion.
6. Termination of Employment.
(a) Your employment may be terminated by the Corporation at any time with or
without "cause" (as defined below), and you may terminate your employment at any
time with or without "good reason" (as defined below). In the event that you
are terminated for cause or you terminate your employment for other than good
reason, you shall be entitled only to the benefits provided to the Corporation's
executive employees upon a similar termination of employment.
(b) In the event the Corporation terminates your employment for other than
cause or you terminate your employment for good reason, you will be entitled to
the following:
(1) An amount equal to two times (i) your base salary (at its then
current rate on the date of termination) plus (ii) your annual bonus under the
EVC Plan (in an amount equal to the average percentage of your target bonus paid
for the three years preceding your date of termination (or, if you have been
employed with the Corporation for fewer than three years, the average percentage
paid for the number of years you were so employed)times your target bonus amount
as in effect at your date of termination). Such termination payments shall be
paid in a lump sum in cash within 30 days of the date of termination.
(2) Continued participation, at the same costs applicable to active
employees, for a period of up to two years following termination of employment,
in the Unisys Medical and Dental Plans for you and your eligible dependents,
subject, however, to the generally applicable terms of such plans. These
benefits shall be provided in such a manner that they are excluded from your
income for federal income tax purposes. If you become employed during such two-
year period, your right to such participation in the Unisys Medical and Dental
Plans will cease. You will promptly advise the Senior Vice President, Worldwide
Human Resources, if you become employed.
(3) You shall be entitled to all other benefits generally available to
executive officers of Unisys upon termination of employment in accordance with
their normal terms except that you shall not be entitled to receive payments
under the Unisys Income Assistance Plan, the Unisys Supplemental Unemployment
Benefits Plan or any other severance or income assistance plan generally
applicable to employees of Unisys;
(4) Notwithstanding the foregoing provisions of this subsection (b), in
the event that you are a "specified employee" within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended (the "Code")(as determined in
accordance with the methodology established by the Corporation as in effect on
your date of termination) (a "Specified Employee"), amounts that would otherwise
be payable and benefits that would otherwise be provided under this subsection
(b) during the six-month period immediately following your date of termination
shall instead be paid or provided on the first business day after the date that
is six months following your "separation from service," within the meaning of
Section 409A of the Code (the "Delayed Payment Date"), if and to the extent
necessary to prevent accelerated or additional taxes from being imposed on you
pursuant to Section 409A of the Code.
(5) At the time the parties enter into this Agreement, you and the
Corporation will enter into an Executive Employment Agreement covering your
benefits in the event of a change in control. In the event that you become
entitled to termination payments under this Agreement and payments under such
Executive Employment Agreement, you shall not receive duplicate payments under
both agreements. Instead, if you are entitled to benefits under both
agreements, the provisions of this agreement as to any matter or the
corresponding provisions of the Executive Employment Agreement, whichever is
more favorable to you or provide you with the greater benefit as determined by a
nationally recognized accounting firm mutually agreed to by the Corporation and
you, shall be used in determining your status, compensation and benefits, and
other rights and obligations.
(c) For purposes of this Section 6, "cause" shall mean intentional dishonesty
or gross neglect of your duties. "Good reason" shall mean (1) a reduction in
your aggregate compensation target (base salary plus bonus target), as such
amounts may be increased during the term of this Agreement, unless such
reduction is due to your continued failure to adequately perform your duties
(provided that the Corporation has provided you notice identifying the manner in
which the Corporation believes that you have failed to adequately perform your
duties, and you have failed to discontinue your inadequate performance within 90
days of receiving such notice) or is due to a reduction in compensation
generally applicable to executive officers or (2) a reduction in your duties or
authority or your removal as Chairman and Chief Executive Officer of the
Corporation or its successor, unless such reduction or removal is for cause, as
defined above, or is on account of your inability to substantially perform your
duties for an aggregate of 120 days within any consecutive 12 month period due
to a mental or physical injury or illness, and provided that your resignation
occurs within 120 after such reduction or removal.
(d) In the event your employment is terminated on account of your disability or
death, all compensation and benefits under this agreement shall terminate,
except that you or your estate shall receive benefits under the retirement,
welfare, incentive, fringe and perquisite programs generally available to
executive officers upon disability or death. For purposes of this Agreement,
disability means a mental or physical injury or illness that renders you
incapable of substantially performing your duties hereunder for a period of
three consecutive months and shall commence for purposes of this agreement at
the end of such three-month period. If such three-month period is shorter than
the period of short-term disability provided for under the Corporation's short-
term disability plan then in effect, the Corporation will, for the remainder of
the short-term disability period provided for in such plan, pay you the amounts
that you would have been entitled to under such plan if your employment had not
been terminated. In the event of the termination of your employment on account
of your disability or death, you will be entitled to the benefits described in
this subsection (d), and not those described in section (b). If you become
entitled to payments and benefits under this subsection (d) on account of your
termination of employment due to a disability which does not meet the
requirements set forth in Section 409A of the Code and the Treasury Regulations
thereunder, and you are a Specified Employee at the time of such termination,
amounts that would otherwise be payable and benefits that would otherwise be
provided under this subsection (d) during the six-month period immediately
following your date of termination shall instead be paid or provided on the
Delayed Payment Date, if and to the extent necessary to prevent accelerated or
additional taxes from being imposed on you pursuant to Section 409A of the Code.
7. Conduct after Termination. (a) For a period of 12 months from and after the
termination of your employment for any reason:
(1) 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 7 of this Agreement (i) 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, (ii) 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, (iii) 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 (4) if you acquire an ownership interest in a non-public company, provided
that such ownership represents a passive investment;
(2) 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 (i) you may give truthful testimony before a court or
governmental agency, (ii) you may make comments about the circumstances of your
termination with the prior written approval of the Corporation, (iii) you may
respond publicly to any untrue public comment made by the Corporation, (iv) you
may discuss the circumstances of your termination with your attorneys, 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 these discussions, make any such negative comment prohibited under
this Agreement and (v) you may make comments to an arbitrator or court for the
purpose of determining or enforcing your rights under this Agreement or any
entitlement under any agreement, plan, award, policy or program with or
sponsored by Unisys (or any of its subsidiaries or affiliates);
(3) You shall not, directly or indirectly, 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;
(4) 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 (i) Unisys may give truthful testimony before
a court or governmental agency, (ii) Unisys may make comments about the
circumstances of your termination with your prior written approval, (iii) Unisys
may respond publicly to any untrue public comment made by you, (iv) 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 Agreement, (v) 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) and (vi)
Unisys may make such disclosures as are required by law or regulation.
(b) From and after the termination of your employment for any reason, 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 (1) 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, in each case with advance written notice to
Unisys in sufficient time to allow Unisys to challenge the disclosure of such
information if it so chooses (2) 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 (3) after such information becomes known
to the public or within the relevant industry to which such confidential
information pertains.
(c) In the event that you should materially breach your obligations under
Section 7(a)(2) or you should breach any other obligation described in
this Section 7, (1) Unisys shall have the right, in addition to any other legal
or equitable remedies, to terminate any payments due you under Section 6(b)(1);
and (2) you agree that you shall repay to Unisys any payments previously made to
you under Section 6(b)(1).
8. 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 RSU 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 Ethics and Business Conduct, shall be applicable to you as in effect as
of the date of this Agreement.
9. Successors. This agreement shall be binding upon Unisys and its successors
and assigns.
10. Miscellaneous. Except as expressly set forth herein, this Agreement
constitutes the entire agreement between the parties concerning the subject
matter hereof. 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.
11. Section 409A Compliance. This Agreement is intended to comply with the
requirements of Section 409A of the Code or an exemption or exclusion therefrom
and shall in all respects be administered in accordance with Section 409A of the
Code. Each payment under this Agreement shall be treated as a separate payment
for purposes of Section 409A of the Code. In no event may you, directly or
indirectly, designate the calendar year of any payment to be made under this
Agreement. If you die following your date of termination and prior to the
payment of any amounts delayed on account of Section 409A of the Code, such
amounts shall be paid to the personal representative of your estate within 30
days after the date of your death. All reimbursements and in-kind benefits
provided under this Agreement shall be made or provided in accordance with the
requirements of Section 409A of the Code, including, without limitation, that
(a) in no event shall reimbursements by the Corporation under this Agreement be
made later than the end of the calendar year next following the calendar year in
which the applicable fees and expenses were incurred, provided, that you shall
have submitted an invoice for such fees and expenses at least 10 days before the
end of the calendar year next following the calendar year in which such fees and
expenses were incurred; (b) the amount of in-kind benefits that the Corporation
is obligated to pay or provide in any given calendar year shall not affect the
in-kind benefits that the Corporation is obligated to pay or provide in any
other calendar year; (c) your right to have the Corporation pay or provide such
reimbursements and in-kind benefits may not be liquidated or exchanged for any
other benefit; and (d) in no event shall the Corporation's obligations to make
such reimbursements or to provide such in-kind benefits apply later than your
remaining lifetime (or if longer, through the 20th anniversary of the date of
this Agreement). Within the time period permitted by the applicable Treasury
Regulations, the Corporation may, in consultation with you, modify this
Agreement, in the least restrictive manner necessary and without any diminution
in the value of the payments to you, in order to cause the provisions of this
Agreement to comply with the requirements of Section 409A of the Code, so as to
avoid the imposition of taxes and penalties on you pursuant to Section 409A of
the Code.
12. 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.
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/ Xxxxxxxx X. Xxxxxx /s/ X. Xxxxxx Xxxxxxx
---------------------------- ---------------------
Xxxxxxxx X. Xxxxxx, Chairman X. Xxxxxx Xxxxxxx
Compensation Committee
Board of Directors
Date: October 6, 2008 Date: October 6, 2008
