Exhibit10(m)
AGREEMENT BETWEEN
ELECTRONIC DATA SYSTEMS CORPORATION
AND
XXXXXX X. XXXXXXXXX, XX.
This Agreement between the Company (hereinafter defined) and Xxxxxx X.
Xxxxxxxxx, Xx. ("Executive") is entered into on August 6, 1998 (the "Effective
Date").
I. RECITALS
1. Executive was employed by the Company in 1968, became an officer in 1974,
president in 1986, chief executive officer in 1987 and chairman of the board in
1988. During this period the Company has overcome the departure of Xx. Xxxxx and
has grown to approximately $17 billion in revenue with operations in forty four
countries and completed its separation from General Motors. From the date of
this Agreement until the election of a new chief executive officer of the
Company, the Company desires that Executive undertake unique duties critical to
the Company and its future in addition to his current duties. After election of
a new chief executive officer, Executive will remain with the Company as an
employee or consultant, as applicable, until March 31, 2004.
2. It is the desire of both parties that the remainder of Executive's employment
at the Company, and his subsequent retirement from the Company, be conducted in
an amicable manner and without undue prejudice to either party.
3. During his tenure at the Company, Executive has been entrusted with,
acquired, or developed substantial knowledge and expertise of a special nature
relating to the business, financial and functional areas of the Company, as well
as other information and knowledge concerning the Company and its internal
business affairs. As an executive of the Company and in such capacity Executive
has obtained trade secrets, and highly confidential business, technological,
customer, and strategic information, as well as business and other information
relating to internal affairs of the Company.
4. As set forth below, the Company is providing the Executive benefits of
substantial value under this Agreement, and Executive agrees to be strictly
bound by the terms hereof.
THEREFORE, in order to set forth the terms, conditions and covenants upon
which the parties have agreed, the Company and Executive agree as follows:
II. CERTAIN DEFINITIONS
1. "Company" shall mean Electronic Data Systems Corporation, a Delaware
corporation, and all of its direct and indirect subsidiaries and affiliated
entities and successors and assigns thereof.
2. "Company Information" shall mean all business information, financial
information, technological information, intellectual property, trade secrets,
customer and other information belonging to the Company or relating to the
Company's internal affairs, or information relating to its business, technology
and customers which is not readily available to the general public.
3. "Participate" shall mean lending one's name to, acting as a consultant or
advisor to, being retained or employed by, or acquiring any direct or indirect
interest in any business or enterprise, whether as a stockholder, partner,
officer, director, employee or otherwise (other than by ownership of less than
five percent of the stock of a publicly-held corporation).
III. TERMS
1. Change of Status and Subsequent Termination of Employment. From the date of
this Agreement until the election of a new chief executive officer by the
Company, Executive shall at the request of the Board of Directors of the Company
remain Chairman and Chief Executive Officer of the Company. Upon the election of
a new chief executive officer of the Company, Executive shall resign from all
positions held by him at the Company as an officer or director and his level of
responsibility as an employee at the Company will be significantly reduced. He
will remain as an employee until March 31, 1999, or when a new chief executive
officer is elected, whichever is later. After terminating his employment on such
date Executive shall, until March 31, 2004, provide consulting services to the
Company as an independent contractor. The consulting services shall be advice,
information, guidance, and assistance as reasonably requested. On March 31,
2004, Executive shall resign as a consultant to the Company.
2. Non-Competition and Other Conduct. Executive acknowledges and agrees that
under the terms and the provisions of this Agreement, and in consideration for
compliance with the terms, conditions and covenants hereunder, he will receive
cash and stock benefits from the Company, and that such benefits are substantial
and material and that he is not otherwise entitled to such stock and cash
benefits. Executive further acknowledges and agrees that in the course of his
employment with the Company he has been entrusted with, and been privy to,
sensitive, privileged and confidential Company Information, and as an executive
of the Company has participated in the legal affairs, management, strategic
planning and development of the business and services of the Company, the
analysis of the needs and requirements of the Company's customers, and other
similar matters that, if discussed, communicated, or disclosed to third parties
or used in competition with the Company, would be highly detrimental to the
Company. In addition, Executive has been entrusted with, and has obtained, other
Company Information. Accordingly, Executive agrees to the following provisions
and covenants:
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2.1 Non-Competition and Other Restrictions. For the period of time that
Executive is receiving salary, compensation or retirement benefits pursuant to
Subsection 3 hereof, but not more than 20 years, Executive will not (without the
Company's express written waiver), directly or indirectly, engage in the
following conduct:
a. Participate in any activity as or for a competitor of the
Company, which is the same or similar to the activities in
which Executive was involved in at the Company whether as an
employee or a consultant;
b. Hire, attempt to hire or to assist any other person or entity
in hiring or attempting to hire an employee of the Company, or
any person who was a Company employee within the six-month
period prior to the hire, attempted hire or assistance in
hiring or attempting to hire (This Subsection 2.1b shall not
prohibit Executive from retaining the services of a former
administrative assistant at the Company, to perform
administrative duties for him personally);
c. Solicit, in competition with the Company, the business of any
Company customer or any entity whose business the Company was
actively soliciting during the prior six month period;
d. Consult with or accept employment with any existing or
prospective customer, contractor or venture partner of the
Company with respect to any matters or transactions in which
the Company has an economic or financial interest (for
purposes of this Subsection 2.1d., prospective customer,
contractor or venture partner means any person or entity to or
with which the Company is proposing or negotiating any
business relationship);
e. Participate voluntarily with any person or entity that is
involved in a potential or existing business or legal dispute
with the Company, including but not limited to litigation,
except as may be required by law or if mandated by subpoena or
a court to do so.
2.2 Other Conduct. Executive will not discuss, disclose, communicate, or
use for any purpose with any one not an employee, agent or attorney of the
Company, any Company Information, except as may be required by law or if
mandated by subpoena or a court to do so. (By way of example and not by way of
limitation, absent written approval from the Company, Executive shall not
publish any books or articles related to his employment at the Company and shall
not grant interviews and/or make public appearances regarding his employment at
the Company). Executive also agrees that absent written approval by the Company,
he shall make no public statements nor publish in any form any information
related to his separation and/or pending separation from the Company. Executive
further agrees he will not commit any act or make any statement that is, or
could reasonably be interpreted as, detrimental to the business, reputation, or
good will of the Company, including disparaging or embarrassing the Company or
its officers, directors, agents,
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attorneys and other personnel, or discussing the internal or private business
affairs of the Company with any third parties. However, this Subsection 2.2
shall not prohibit Executive from communicating to third parties general
information about his duties and responsibilities while employed by the Company,
general information about the Company that is readily available to the general
public, the positions he held while employed by the Company and the time period
he was employed by the Company. Nothing in this Agreement shall preclude
Executive from providing information if required by law or if mandated by
subpoena or a court to do so.
2.3 Remedies. If the scope of any provision contained in Subsection 2 of
Section III of this Agreement is too broad to permit enforcement of such
provision to its full extent, then such provision shall be reformed and/or
modified to exclude the unenforceable language, and enforced as reformed or
modified to the maximum extent permitted by law, in any proceedings brought to
enforce such provision. Subject to the provisions of the foregoing sentence,
whenever possible, each provision of Subsection 2 of Section III of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of the Agreement is held to be
prohibited by or invalid under applicable law, such provision, to the extent of
such prohibition or invalidity, shall be deemed not to be a part of this
Agreement, and shall not invalidate the remainder of such provision or the
remaining provisions of this Agreement. Executive understands and agrees that
the Company would be irreparably damaged in the event that the provisions of
Subsection 2 of Section III of this Agreement are violated, and agrees that the
Company shall be entitled (in addition to any other remedy to which it may be
entitled, at law or in equity) to an injunction or injunctions to redress
breaches of this Agreement and to specifically enforce the terms and provisions
hereof.
3. Compensation, Benefits and Other Consideration to be Received by Executive.
Following the Effective Date of this Agreement, the Company shall provide and
Executive shall be entitled to the following compensation, benefits and other
consideration pursuant to the terms, conditions and covenants in this Agreement:
a. A salary of $850,000 per annum, to be paid semi-monthly and to
be continued through December 31, 1998.
b. Cash payments of $1,700,000 per annum, beginning January 1,
1999, to be paid semi-monthly and to be continued through
March 31, 2004.
c. Payment of the residual bonus under the Executive Bonus
Program in January 1999, in the total amount of $250,000.
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d. The shares of the Company common stock awarded to Executive
under the provisions of the Company Stock Incentive Plan
(SIP), (741,000 shares in the aggregate), shall vest, without
any restrictions or conditions under the SIP or otherwise, as
follows:
---------------------------- -------------------------
Date of Vesting Number of shares
---------------------------- -------------------------
January 1, 1999 306,000
---------------------------- -------------------------
January 1, 1999 72,500
---------------------------- -------------------------
January 1, 2000 72,500
---------------------------- -------------------------
January 1, 2001 72,500
---------------------------- -------------------------
January 1, 2002 72,500
---------------------------- -------------------------
January 1, 2003 72,500
---------------------------- -------------------------
March 31, 2004 72,500
---------------------------- -------------------------
If Executive dies before March 31, 2004, all unvested common
stock shall vest upon his death.
Restrictions on sale of shares after vesting under the SIP or
otherwise, including the restrictions on 25,500 shares already
vested under the SIP, shall be void and of no further effect,
allowing Executive to sell all the shares at any time after
vesting without any contractual restrictions with the Company.
e. The Nonqualified Stock Option Agreement dated as of December
17, 1996, providing Executive with the right to acquire
950,000 shares of Common Stock of the Company at a price of
$45.06 per share, is hereby amended to provide that (i) the
option shall be fully vested and exercisable as to all or a
portion of the shares immediately upon execution of this
Agreement and shall be exercisable until 5:00 P.M. Plano,
Texas time on March 31, 2004 and (ii) Executive's death or
termination of employment with the Company, whether voluntary
or involuntary, shall not terminate the option.
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f. The Company shall pay annually to Executive as a retirement
benefit $1,000,000 beginning on Executive's sixtieth birthday,
in equal monthly amounts, until his death, and upon his death
the Company shall pay to Executive's wife $500,000 annually,
in equal monthly installments, until her death (the
"Retirement Benefit"). Within 30 days after executing this
Agreement the Company shall deposit in the trust created under
its Supplemental Executive Retirement Plan (the "Plan"), or a
comparable trust, for the benefit of Executive such amount of
cash as will be required to fund the Retirement Benefit under
the actuarial assumptions utilized by the Plan.
g. Executive and Executive's family shall receive through March
March 31, 2004, all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
except disability benefits but including, without limitation,
medical, prescription, dental, vision, group life and supple-
mental group life, accidental death and travel accident insur-
ance plans and programs, to the extent applicable generally to
other executives of the Company and its affiliated companies,
but in no event shall plans, practices, policies and programs
provide Executive with benefits that are less favorable, in
the aggregate, than the most favorable such plans, practices,
policies and programs of the Company. If Executive is not xxx-
gible at any time during this period to receive benefits under
the Company's plans, policies and programs, the Company shall
pay to Executive annually an amount equal to his costs in se-
curing equivalent benefits from other providers through March
31, 2004.
h. The services of one secretary/administrative assistant and
financial and tax planning services through March 31, 2004.
The foregoing compensation, benefits and other consideration to be received by
Executive under this Agreement and the additional possible payments provided for
in Sections 4, 6 and 13 constitute his sole and exclusive rights to any payments
or benefits from the Company, and Executive shall receive no consideration or
benefits other than those expressly granted herein except for benefits to which
he is entitled under any Company plan qualified under Section 401(a) of the
Internal Revenue Code, including the Retirement Plan and the Deferred
Compensation Plan of the Company.
4. Change in Control and Additional Payments.
a. In the event the Company experiences a change in control (as
defined in Appendix "A") at anytime prior to August 1, 2008,
sixty (60) days thereafter, Executive shall be provided with
immediate vesting and exercisability of, and termination of
any restrictions on sale or transfer (other than any such
restriction arising by operation of law) with respect to
each and every common stock award under the SIP referred to
in Subsection 3 of Section III of this Agreement.
b. Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or
distribution to or for the benefit of the Executive (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 Subsection 4 of Section III of this Agreement) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any
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interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with
any such interest and penalties, hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Execu-
tive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without lim-
itation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
c. Subject to the provisions of Subsection 4d of Section III of
this Agreement, all determinations required to be made under
this Subsection 4 of Section III of this Agreement,
including whether and when 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 KPMG Peat Marwick LLP (the "Accounting Firm"); provided,
however, that the Accounting Firm shall not determine that
no Excise Tax is payable by the Executive unless it delivers
to the Executive a written opinion (the "Accounting
Opinion") that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty.
In the event that KPMG Peat Marwick LLP has served, at any
time during the two years immediately preceding a Change in
Control (as defined in Appendix "A"), as accountant or
auditor for the individual, entity or group that is involved
in effecting or has any material interest in the Change in
Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations and
perform the other functions specified in this Subsection 4
of Section III of this Agreement (which accounting firm
shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the
Company, the Accounting Firm shall make all determinations
required under this Subsection 4 of Section III of this
Agreement, shall provide to the Company and the Executive a
written report setting forth such determinations, together
with detailed supporting calculations, and, if the
Accounting Firm determines that no Excise Tax is payable,
shall deliver the Accounting Opinion to the Executive. Any
Gross-up Payment, as determined pursuant to this Subsection
4 of Section III of this Agreement, shall be paid by the
Company to the Executive within five days of the receipt of
the Accounting Firm's determination. Subject to the
remainder of this Subsection 4 of Section III of this
Agreement, any determination by the Accounting Firm shall be
binding upon the Company and the Executive. 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 Company should
have been made ("Underpayment"), consistent with the
calculations required
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to be made hereunder. In the event that it is ultimately
determined in accordance with the procedures set forth in
Subsection 4d of Section III of this Agreement that the Exe-
cutive is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Under-
payment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for the benefit of the
Executive.
d. The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than 30 days after the Executive
actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid; provided,
however, that the failure of the Executive to notify the
Company of such claim (or to provide any required
information with respect thereto) shall not affect any
rights granted to the Executive under this Subsection 4 of
Section III of this Agreement except to the extent that the
Company is materially prejudiced in the defense of such
claim as a direct result of such failure. The Executive
shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with respect
to such claim by an attorney selected by the Company
and reasonably acceptable to the Executive;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) if the Company elects not to assume and control the
defense of such claim, permit the Company to
participate in any proceedings relating to such claim;
provided, however, that the Company 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 the Executive 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
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expenses. Without limitation on the foregoing provisions of
this Subsection 4d of Section III of this Agreement, the
Company shall have the right, at its sole option, to assume
the defense of and control all proceedings in connection with
such contest, in which case it may pursue or forego any and
all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible
manner, and the Executive agrees 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 Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment
to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive 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 the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's
right to assume the defense of and control the contest shall
be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive 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.
e. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Subsection 4d of Section III of
this Agreement, the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of
Subsection 4d of Section III of this Agreement) promptly pay
to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Subsection 4d of
Section III of this Agreement, a determination is made that
the Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify the
Executive 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 and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
5. Confidentiality. This Agreement and its provisions shall be kept strictly
confidential. This Agreement and its provisions shall not be disclosed by the
Company to anyone other than its Board of Directors, its legal counsel and its
accountants, without prior written approval by Executive or as otherwise
required by law. Executive may disclose such information to his spouse, to
individuals
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retained by him to provide advice/guidance on personal financial
and/or legal matters, to individuals retained by him to provide administrative
assistance, or as may be required by a financial institution for business
reasons. The Company, absent written approval by Executive, shall make no public
statements nor publish in any form any information related to his separation
and/or pending separation from the Company. The Company further agrees it will
not commit any act or make any statement that is, or could reasonably be
interpreted as, detrimental to the reputation or good will of Executive,
including disparaging or embarrassing Executive.
6. Indemnification of Executive. In accordance with the laws of the State of
Delaware, and in compliance with and pursuant to the express terms of Paragraph
6.1 of Article VI of the Amended and Restated Bylaws of the Company, the Company
agrees to indemnify Executive and to advance expenses incurred by him.
7. Effect of Executive's Death. In the event of Executive's death, his estate
shall receive, if not already delivered, the compensation, benefits, stock and
other consideration set forth in Subsection 3 of Section III of this Agreement
at the same times and in the same amounts as if Executive were alive, except (i)
as provided in Subsection 3d of Section III of this Agreement, any unvested
shares under the SIP shall vest upon Executive's death, (ii) the Retirement
Benefit payable to Executive's wife shall be paid beginning on the Executive's
sixtieth birthday or Executive's death, whichever is later, and (iii) the
amounts payable under Subsection 3b of Section III of this Agreement shall
terminate upon the death of Executive's wife.
8. Complete Release. It is understood and agreed by the parties that except as
specifically set forth in this Agreement, the Company shall not be required to
pay any amount or provide any benefit to Executive. As of the Effective Date of
this Agreement, Executive hereby releases the Company, and the employees,
agents, attorneys, officers and directors of the Company, from all claims or
demands Executive may have based on Executive's employment with the Company or
the termination of that employment. As of the Effective Date of this Agreement,
Executive also releases the Company, and the employees, agents, attorneys,
officers and directors of the Company, from all other claims, contracts or
causes of action of any nature whatsoever, that he has or may have, whether
accrued or contingent, and whether known or unknown. Such release includes, but
is not limited to, a release of any rights or claims Executive may have under
the Change of Control Employment Agreement dated June 25, 1995; the Age
Discrimination in Employment Act, which prohibits age discrimination in
employment; Title VII of the Civil Rights Act of 1964, as amended by the Civil
Rights Act of 1991, which prohibits discrimination in employment based on race,
color, national origin, religion or sex; the Equal Pay Act, which prohibits
paying men and women unequal pay for equal work; the Americans with Disabilities
Act of 1990, which prohibits discrimination against disabled persons; or any
other federal, state or local laws or regulations prohibiting employment
discrimination. This also includes a release by Executive of any claims for
wrongful discharge or workplace torts.
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This release agreement does not include a release of (i) any rights or claims
that Executive may have under the Age Discrimination in Employment Act which
arise after the date Executive signs this Agreement, or (ii) any rights or
claims Executive may have pursuant to the terms of this Agreement.
9. Amendments. The Agreement may not be modified or amended, and there shall be
no waiver of its provisions, except by a written instrument executed by
Executive and a corporate officer of the Company.
10. Entire Agreement. This Agreement constitutes the entire agreement of the
parties, and supersedes and prevails over all other prior agreements,
understandings or representations by or between the parties, whether oral or
written, including, but not limited to, the Change of Control Employment
Agreement (which Executive acknowledges is terminated and of no further force
and/or effect), with respect to Executive's employment with the Company and the
subject matters herein.
11. Termination. The Company can xxx in law or in equity for injunctions,
specific performance or damages for any breach of this Agreement but Executive
cannot be terminated by the Company under this Agreement nor can any of the
Company's obligations under this Agreement, including the compensation, benefits
and other consideration provided in Subsection 3 of Section III of this
Agreement, be terminated or released unless Executive shall have committed:
a. intentional embezzlement or theft in connection with his duties or
in the course of his employment with the Company; or
b. intentional wrongful disclosure of confidential information of the
Company which is harmful to the Company; or
c. intentional wrongful engagement in any activity competitive with the
Company which is harmful to the Company.
12. Governing Law. Except as otherwise expressly provided herein, this Agreement
and its enforceability shall be governed by and construed in accordance with the
substantive law of the State of Texas. Any dispute or conflict arising out of or
relating to the Agreement must be brought in a court of competent jurisdiction
located in Collin County, Texas.
13. Attorney Fees. All reasonable legal fees and costs incurred by the Executive
in connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed immediately by the Company to
the Executive as bills for such services are presented by the Executive to the
Company. Upon resolution of any dispute or controversy, the Executive shall pay
to the Company the amount of such reimbursements only if Executive fails to
succeed, in whole or in part, in the prosecution or defense, as the case may be,
of such dispute or controversy.
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14. Period for Review and Consideration of Agreement. Executive understands he
has been given a period of 21 days to review and consider the Agreement before
signing it. Executive further understands he may use as much of the 21 day
period as he wishes prior to signing.
15. Encouragement to Consult with Attorney. Executive acknowledges he was
encouraged to and did consult with an attorney before signing the Agreement.
16. Employee's Right to Revoke Agreement. Executive may revoke the Agreement
within seven days of signing it. Revocation can be made by delivering a written
notice of revocation to the Company. For the revocation to be effective, written
notice must be received by the Company no later than the close of business on
the seventh day after Executive signs the Agreement. If Executive revokes the
Agreement, it shall not be effective or enforceable and Executive will not
receive the benefits described in Subsection 3 of Section III or any other
payments or benefits from the Company, except those to which he otherwise is
entitled by law.
17. Notices. All notices and other communications hereunder shall be in writing
and shall be given by telecopy or facsimile transmission at the
telecommunications number set forth below, by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows and shall be effective upon receipt:
If to the Executive: Xxxxxx X. Xxxxxxxxx, Xx.
[address on file with the Company]
If to the Company: Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx
Xxxxx 0X-00
Xxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx, Xx. 000-000-0000 (Fax)
Executive Vice President
With a copy to: Xxxxx X. Xxxxxx 000-000-0000 (Fax)
Xxxxx & Xxxxx
3000 One Shell Plaza
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THE AGREEMENT, UNDERSTANDS IT AND
IS VOLUNTARILY ENTERING INTO IT.
PLEASE READ THE AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS.
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IN WITNESS WHEREOF, the parties have executed this Agreement to be
binding and enforceable on the Effective Date.
EXECUTIVE: ELECTRONIC DATA SYSTEMS CORPORATION
/s/ Xxxxxx X. Xxxxxxxxx, Xx. /s/ Xxxx X. Xxxxxx, Xx.
-------------------------------- ---------------------------------------
Xxxxxx X. Xxxxxxxxx, Xx. Xxxx X. Xxxxxx, Xx.
Executive Vice President
Dated: August 6, 1998
Dated: August 6, 1998
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Appendix A
Change of Control
(a) As used in this Appendix "A", the terms set forth below shall
have the following respective meanings:
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on June 18, 1996.
"Associate" shall mean, with reference to any Person, (i) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than EDS) of which such Person is an officer or general
partner (or officer or general partner of a general partner) or is, directly or
indirectly, the Beneficial Owner of 10% or more of any class of equity
securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity and (iii) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person.
"Beneficial Owner" shall mean, with reference to any securities,
any Person if:
(i) such Person or any of such Person's Affiliates and Associates,
directly or indirectly, is the "beneficial owner" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on June 18, 1996) such securities or
otherwise has the right to vote or dispose of such securities,
including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this subsection (i) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (x) arises solely from a revocable proxy
or consent given in response to a public (i.e., not including a
solicitation exempted by Rule 14a-2(b)(2) of the General Rules and
Regulations under the Exchange Act) proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act and (y) is not
then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report);
(ii) such Person or any of such Person's Affiliates and
Associates, directly or indirectly, has the right or obligation to
acquire such securities (whether such right or obligation is
exercisable or effective immediately or only after the passage of time
or the occurrence of an event) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, other rights, warrants or options,
or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to "beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of
such Person's
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Affiliates or Associates until such tendered securities are accepted
for purchase or exchange or (B) securities issuable upon exercise of
Exempt Rights; or
(iii) such Person or any of such Person's Affiliates or Associates
(A) has any agreement, arrangement or understanding (whether or not in
writing) with any other Person (or any Affiliate or Associate thereof)
that beneficially owns such securities for the purpose of acquiring,
holding, voting (except as set forth in the proviso to subsection (i)
of this definition) or disposing of such securities or (B) is a member
of a group (as that term is used in Rule 13d-5(b) of the General Rules
and Regulations under the Exchange Act) that includes any other Person
that beneficially owns such securities;
provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the Beneficial Owner of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of forty
days after the date of such acquisition. For purposes hereof, "voting" a
security shall include voting, granting a proxy, consenting or making a request
or demand relating to corporate action (including, without limitation, a demand
for a stockholder list, to call a stockholder meeting or to inspect corporate
books and records) or otherwise giving an authorization (within the meaning of
Section 14(a) of the Exchange Act) in respect of such security.
The terms "beneficially own" and "beneficially owning" shall have
meanings that are correlative to this definition of the term "Beneficial Owner."
"Change of Control" shall mean any of the following occurring on
or after June 18, 1996:
(i) Any Person (other than an Exempt Person) shall become the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding or 15% or more of the combined voting power of the Voting
Stock of EDS then outstanding; provided, however, that no Change of
Control shall be deemed to occur for purposes of this subsection (i) if
such Person shall become a Beneficial Owner of 15% or more of the
shares of Common Stock or 15% or more of the combined voting power of
the Voting Stock of EDS solely as a result of (x) an Exempt Transaction
or (y) an acquisition by a Person pursuant to a reorganization, merger
or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (x), (y) and (z) of
subsection (iii) of this definition are satisfied;
(ii) Individuals who, as of June 18, 1996, 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 June 18, 1996 whose election, or nomination
for election by EDS' shareholders, 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; provided, further, that there shall be excluded, for this
purpose, any such individual whose initial assumption of
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office occurs as a result of any actual or threatened election contest
that is subject to the provisions of Rule 14a-11 under the Exchange
Act;
(iii) Approval by the shareholders of EDS of a reorganization,
merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (x) more than 85% of the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation and the combined voting
power of the then outstanding Voting Stock of such corporation
beneficially owned, directly or indirectly, by all or substantially all
of the Persons who were the Beneficial Owners of the outstanding Common
Stock immediately prior to such reorganization, merger or consolidation
in substantially the same proportions as their ownership, immediately
prior to such reorganization, merger or consolidation, of the
outstanding Common Stock, (y) no Person (excluding any Exempt Person or
any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 15% or
more of the Common Stock then outstanding or 15% or more of the
combined voting power of the Voting Stock of EDS then outstanding)
beneficially owns, directly or indirectly, 15% or more of the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding Voting Stock of such corporation and (z)
at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the
initial agreement or initial action by the Board providing for such
reorganization, merger or consolidation; or
(iv) Approval by the shareholders of EDS of (x) a complete
liquidation or dissolution of EDS, unless such liquidation or
dissolution is approved as part of a plan of liquidation and
dissolution involving a sale or disposition of all or substantially all
of the assets of EDS to a corporation with respect to which, following
such sale or other disposition, all of the requirements of clauses
(y)(A), (B) and (C) of this subsection (iv) are satisfied, or (y) the
sale or other disposition of all or substantially all of the assets of
EDS, other than to a corporation, with respect to which, following such
sale or other disposition, (A) more than 85% of the then outstanding
shares of common stock of such corporation and the combined voting
power of the Voting Stock of such corporation is then beneficially
owned, directly or indirectly, by all or substantially all of the
Persons who were the Beneficial Owners of the outstanding Common Stock
immediately prior to such sale or other disposition in substantially
the same proportion as their ownership, immediately prior to such sale
or other disposition, of the outstanding Common Stock, (B) no Person
(excluding any Exempt Person and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or
indirectly, 15% or more of the Common Stock then outstanding or 15% or
more of the combined voting power of the Voting Stock of EDS then
outstanding) beneficially owns, directly or indirectly, 15% or more of
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding Voting Stock of such
corporation and (C) at least a majority of the members of the board of
directors of such corporation
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were members of the Incumbent Board at the time of the execution of the
initial agreement or initial action of the Board providing for such
sale or other disposition of assets of EDS.
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exempt Person" shall mean any of the following:
(i) EDS, any subsidiary of EDS, any employee benefit plan of EDS
or any subsidiary of EDS, and any Person organized, appointed or
established by EDS for or pursuant to the terms of any such plan; or
(ii) the General Motors Hourly-Rate Employees Pension Plan for its
Hourly Employees, or any trustee of or fiduciary with respect to such
plan (when acting in such capacity) (the "Hourly Plan"), unless and
until, at any time when the Hourly Plan, together with all Affiliates
thereof, is the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding or 15% or more of the combined voting power of
the Voting Stock of EDS then outstanding, (A) the Hourly Plan shall
purchase or otherwise become the Beneficial Owner of any additional
shares of Common Stock constituting 1% or more of the then outstanding
shares of Common Stock or shares of Voting Stock of EDS representing 1%
or more of the combined voting power of the then outstanding shares of
Voting Stock or (B) any other Person or Persons who is or are the
Beneficial Owner of any shares of Common Stock constituting 1% or more
of the then outstanding shares of Common Stock or shares of Voting
Stock of EDS representing 1% or more of the combined voting power of
the then outstanding shares of Voting Stock of EDS shall become an
Affiliate of such Person.
"Exempt Rights" shall mean any rights to purchase shares of Common
Stock or other Voting Securities of the Company if at the time of the issuance
thereof such rights are not separable from such Common Stock or other Voting
Securities (i.e., are not transferable otherwise than in connection with a
transfer of the underlying Common Stock or other Voting Securities) except upon
the occurrence of a contingency, whether such rights exist as of the Agreement
Effective Date or are thereafter issued by EDS as a dividend on shares of Common
Stock or other Voting Securities or otherwise; provided, however, that from and
after the date (the "Separation Date") as of which such rights become separable
from the underlying shares of Common Stock or other Voting Securities, such
rights shall only constitute "Exempt Rights" pursuant to this definition to the
extent that they are beneficially owned by a Person that acquired such rights
prior to the Separation Date.
"Exempt Transaction" shall mean an increase in the percentage of
the outstanding shares of Common Stock or the percentage of the combined voting
power of the outstanding Voting Stock of EDS beneficially owned by any Person
solely as a result of a reduction in the number of shares of Common Stock then
outstanding due to the repurchase of Common Stock by
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EDS, unless and until such time as (A) such Person or any Affiliate or Associate
of such Person shall purchase or otherwise become the Beneficial Owner of
additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or additional Voting Stock representing 1% or
more of the combined voting power of the then outstanding Voting Stock or (B)
any other Person (or Persons) who is (or collectively are) the Beneficial Owner
of shares of Common Stock constituting 1% or more of the then outstanding shares
of Common Stock or Voting Stock representing 1% or more of the combined voting
power of the then outstanding Voting Stock shall become an Affiliate or
Associate of such Person.
"Person" shall mean any individual, firm, corporation, partner-
ship, association, trust, unincorporated organization or other entity.
"Voting Stock" shall mean, with respect to a corporation, all
securities of such corporation of any class or series that are entitled to vote
generally in the election of directors of such corporation (excluding any class
or series that would be entitled so to vote by reason of the occurrence of any
contingency, so long as such contingency has not occurred).
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