Exhibit 10.1
CHANGE OF CONTROL
EMPLOYMENT
AGREEMENT
This Agreement, by and between
Electronic Data Systems Corporation, a Delaware Corporation, its
successors and assigns (“Company”), and
(“Executive”), dated as of
(“Agreement”).
The Compensation and Benefit
Committee of the Company’s Board of Directors, on behalf of
the Board of Directors of the Company (“Board”), has
determined it is in the best interests of the Company and its
shareholders to assure the Company will have the continued
dedication of Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control. The Board believes it is
imperative to diminish the inevitable distraction of Executive by
virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage Executive’s
full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control. Therefore, in
order to accomplish these objectives, the Compensation and Benefit
Committee of the Board has caused the Company to enter into this
Agreement.
The parties hereby agree as follows:
1. Effect of
Agreement.
Unless and until there occurs,
during the Term of this Agreement, a Change of Control or a
termination of Executive’s employment in anticipation of a
Change of Control as contemplated by Section 3, this Agreement
shall have no effect and shall not provide any rights or benefits
to Executive. Similarly, unless and until there occurs, during the
Term of this Agreement, a Change of Control or a termination of
Executive’s employment in anticipation of a Change of Control
as contemplated by Section 3, and unless contrary to applicable law
or the terms of a written contract executed by and/or approved by
the Chief Executive Officer of the Company, employment with the
Company remains of an indefinite term and may be ended, with or
without cause, at any time by either Executive or the Company, with
or without previous notice.
2. Terms of
Employment.
This Section 2 sets forth the terms
and conditions on which the Company agrees to employ Executive
during the period (the “Protected Period”) beginning on
the first day during the Term of this Agreement on which a Change
of Control occurs and ending on the second anniversary of that
date, or such earlier date as Executive’s employment
terminates as contemplated by Section 3.
(A) Position and Duties.
(1) During the Protected Period,
Executive’s services shall be performed at the office where
Executive was employed immediately preceding the date of the Change
of Control or any office or location less than 50 miles from such
office, unless Executive is on international assignment on the date
of the Change of Control and is relocated as a result of
Executive’s being repatriated pursuant to the terms of
Executive’s international assignment agreement as in effect
before the date of the Change of Control.
(2) During the Protected Period,
Executive agrees to devote reasonable attention and time during
normal business hours (except when on authorized vacation, holidays
or sick leave) to the business and affairs of the Company, and, to
the extent necessary to discharge the responsibilities assigned to
Executive, to use Executive’s reasonable best efforts to
perform faithfully and efficiently such responsibilities; provided,
that Executive may (A) contingent upon obtaining all required
approvals, serve on corporate, civic or charitable boards and
committees, (B) fulfill speaking engagements, and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of Executive’s
responsibilities as an employee of the Company; and provided,
further, that to the extent that any such activities have been
conducted by Executive before the date of the Change of
Control, the continued conduct of
such activities after the date of the Change of Control shall not
be deemed to significantly interfere with the performance of
Executive’s responsibilities to the Company.
(B) Compensation.
(1) Base Salary. During the
Protected Period, Executive shall continue to receive the same
annual base salary Executive was receiving immediately preceding
the date of the Change of Control. Executive shall be paid at such
intervals as the Company pays executive salaries generally. During
the Protected Period, Executive’s annual base salary shall be
reviewed for possible increase at least annually, beginning no more
than 12 months after the last such annual review prior to the date
of the Change of Control.
(2) Incentive Compensation.
Executive shall remain eligible to receive bonuses and other forms
of short-term incentive compensation. In addition, during the
Protected Period, Executive shall remain eligible to participate in
all long-term, stock-based and other incentive plans, practices,
policies and programs generally applicable to peer executives of
the Company.
(3) Savings and Retirement Plans.
During the Protected Period, Executive shall remain eligible to
participate in the savings and retirement plans, practices,
policies and programs generally applicable to peer executives of
the Company. Without limiting the generality of the foregoing,
Executive shall continue to participate in the EDS Supplemental
Executive Retirement Plan.
(4) Welfare Benefit Plans. During
the Protected Period, Executive and/or Executive’s eligible
dependents, as the case may be, shall remain eligible to
participate in and receive benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including
without limitation medical, prescription drug, dental, vision,
disability, life insurance, accidental death and dismemberment, and
travel accident insurance plans and programs) to the extent
generally applicable to peer executives of the Company.
(5) Expenses. During the Protected
Period, Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by Executive in accordance
with the policies, practices and procedures of the Company to the
extent generally applicable to peer executives of the
Company.
(6) Fringe Benefits. During the
Protected Period, Executive shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies of the
Company to the extent generally applicable to peer executives of
the Company.
(7) Vacation. During the Protected
Period, Executive shall be entitled to paid vacation in accordance
with the plans, policies, programs and practices of the Company as
in effect for Executive immediately preceding the date of the
Change of Control.
3. Termination of
Employment.
(A) By the Company. The Company may
terminate Executive’s employment during the Protected Period
for Cause or without Cause.
(B) By Executive. Executive may
terminate employment during the Protected Period for Good Reason or
without Good Reason.
(C) Termination In Anticipation of a
Change of Control. Despite anything in this Agreement to the
contrary, if (1) a Change of Control occurs, (2) Executive’s
employment with the Company is terminated by the Company before the
Change of Control occurs in a manner and under
circumstances that would be
considered a termination by the Company without Cause if it had
occurred during the Protected Period, and (3) it is reasonably
demonstrated by Executive that such termination of employment was
at the request of a third party that had taken steps reasonably
calculated to effect the Change of Control or otherwise arose in
connection with or in anticipation of the Change of Control, then
such termination shall be treated for all purposes of this
Agreement as a termination by the Company without Cause during the
Protected Period.
4. Obligations of the Company
upon Termination.
(A) If, during the Protected Period,
the Company involuntarily terminates Executive’s employment
other than for Cause (excluding termination for death or
Disability) or Executive voluntarily terminates employment for Good
Reason and Executive executes a separation agreement deemed
acceptable to the company substantially in the form attached hereto
as Exhibit “A” (“Separation
Agreement”):
(1) the Company shall pay to
Executive, within 30 days after the Date of Termination, or if
later, within 5 days of the Separation Agreement signed by
Executive becoming legally effective, the following:
(a) a lump sum payment equal to
Executive’s accrued, but unpaid base salary through the date
of termination, less all applicable deductions;
(b) a lump sum payment equivalent to
2.99 times Executive’s final annual base salary, less all
applicable deductions;
(c) a lump sum payment equivalent to
2.99 times Executive’s annual performance bonus target as
approved by the Compensation and Benefits Committee of EDS’
Board of Directors for the year in which he/she is terminated, less
all applicable deductions; and
(d) all deferred and restricted EDS
stock units and/or stock options awarded to Executive that remain
outstanding on the date of termination shall immediately vest,
shall immediately be freed of any restrictions regarding their sale
or transfer (other than any such restrictions arising by operation
of law or pursuant to the terms of any applicable deferral plan),
and with regard to all stock options other than those awarded as
part of the acquisition of The Feld Group, Inc., they shall be
exercisable for a period of (1) year from the date of termination.
With regard to the stock options awarded as part of the acquisition
of The Feld Group, Inc., such options shall be exercisable for the
period of time provided for in Executive’s applicable stock
option award agreement.
(B) If Executive’s employment
is involuntarily terminated for Cause, death or Disability during
the Protected Period, the Company shall provide to Executive
his/her accrued, but unpaid base salary through the date of
termination, less all applicable deductions, and shall have no
other severance and/or separation obligations to Executive pursuant
to the terms of this Agreement. If Executive voluntarily terminates
his/her employment during the Protected Period other than for Good
Reason, the Company shall pay his/her accrued, but unpaid base
salary through the date of termination, less all applicable
deductions, and shall have no other severance and/or separation
obligations to Executive pursuant to the terms of this
Agreement.
5. Exclusivity of
Benefits.
If Executive receives benefits
pursuant to this Agreement, Executive understands and acknowledges
he/she shall not be eligible to receive any other form of severance
and/or separation pay or benefits from the Company, except as may
otherwise be provided in Executive’s restricted stock award
agreements or stock option agreements.
6. Certain Additional Payments by
the Company.
(A) If any Payment is subject to the
Excise Tax, then the Company shall pay the Executive a Gross-Up
Payment (regardless of whether the Executive’s employment has
terminated). Notwithstanding the foregoing, if the Parachute Value
of all Payments does not exceed 110% of the Safe Harbor Amount,
then the Company shall not pay the Executive a Gross-Up Payment,
and the Payments due under this Agreement shall be reduced so that
the Parachute Value of all Payments, in the aggregate, equals the
Safe Harbor Amount; provided, that if even after all Payments due
hereunder are reduced to zero, the Parachute Value of all Payments
would still exceed the Safe Harbor Amount, then no reduction of any
Payments shall be made. The reduction of the Payments due
hereunder, if applicable, shall be made by first reducing the
payments under Section 4(A)(1)(b), (c) and/or (d), in that order,
unless an alternative method of reduction is elected by the
Executive, subject to approval by the Company, and in any event
shall be made in such a manner as to maximize the economic present
value of all Payments actually made to the Executive, determined by
the Accounting Firm as of the date of the Change of Control for
purposes of Section 280G of the Code using the discount rate
required by Section 280G(d)(4) of the Code.
(B) All determinations required to
be made under this Section 6, including whether and when Gross-Up
Payments are required and the amount of such Gross-Up Payments,
whether and in what manner any Payments are to be reduced pursuant
to the second sentence of Section 6(A), and the assumptions to be
utilized in arriving at such determinations, shall be made by the
Accounting Firm, and shall be binding upon the Company and the
Executive, except to the extent the Internal Revenue Service or a
court of competent jurisdiction makes an inconsistent final and
binding determination. The Accounting Firm shall provide detailed
supporting calculations both to the Company and the Executive
within 15 business days after receiving notice from the Executive
that there has been a Payment or such earlier time as may be
requested by the Company. All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment
that becomes due pursuant to this Section 6 shall be paid by the
Company to the Executive within five days of the receipt of the
Accounting Firm’s determination, or, if later, at least 20
business days before the Executive is obligated to pay the related
Excise Tax. 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 that will not have been made by the Company should have
been made (an “Underpayment”). In the event the
Accounting Firm determines that there has been an Underpayment or
the Executive is required to make a payment of any Excise Tax as a
result of a claim described in Section 6(C), then the Accounting
Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(C) The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than 10 business days after the Executive
is informed in writing of such claim. The Executive shall apprise
the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the
date on which the Executive 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
the Company desires to contest such claim, the Executive
shall:
(1) give the Company any information
reasonably requested by the Company relating to such
claim,
(2) 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 reasonably selected by the Company,
(3) cooperate with the Company in
good faith in order effectively to contest such claim,
and
(4) 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
Taxes imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 6(C), the Company shall control all proceedings
taken in connection with such contest, and, at its sole discretion,
may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion,
either direct the Executive to pay the Taxes claimed and sue 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 sue 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 Taxes
imposed with respect to such advance or with respect to any imputed
income in connection with such advance; and provided, further, that
any extension of the relevant statute of limitations is limited
solely to such contested amount. Furthermore, the Company’s
control of the contest shall be limited to issues with respect to
which the 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.
(D) If, at any time after receiving
a Gross-Up Payment or an advance pursuant to Section 6(C), the
Executive receives any refund of the associated Excise Tax, the
Executive shall (subject to the Company’s having complied
with the requirements of Section 6(C), if applicable) promptly pay
to the Company the amount of such refund, together with any
interest paid or credited thereon net of all Taxes applicable
thereto. If, after the Executive receives an advance pursuant to
Section 6(C), a determination is made that the Executive is not
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 any Gross-Up Payment owed
to the Executive shall be reduced (but not below zero) by the
amount of such advance.
(E) Notwithstanding any other
provision of this Section 6, the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service
or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the
Executive hereby consents to such withholding.
(F) Any other liability for unpaid
or unwithheld Excise Taxes, other than those described above, is
borne exclusively by the Company, in accordance with Code Section
3403. The assumption of such liability by the Company shall not in
any manner relieve the Company of any of its obligations under
Section 6 of the Agreement.
7. Successors.
(A) This Agreement is personal to
Executive and shall not be assignable by Executive other than by
will or the laws of descent and distribution.
(B) This Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns. Except as provided in Section 7(C), without the prior
written consent of Executive, this Agreement shall not be
assignable by the Company.
(C) The Company shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place.
8. Miscellaneous.
(A) This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be
amended or modified other than by a written agreement that is
specifically identified as an amendment of this Agreement and
executed by the Executive and the Chief Executive Officer of the
Company.
(B) All notices and other
communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as
follows:
If to Executive:
[address]
If to the Company:
Telecommunications Number: (972)
605-1926
5400 Legacy Drive
H3-1D-22
Plano, Texas 75024
Attention: Vice President, Global
Compensation & Benefits
With a copy to:
Telecommunications Number (972)
605-5610
5400 Legacy Drive
H3-3A-05
Plano, Texas 75024
Attention: General
Counsel
or to such other address as either
party shall have furnished to the other in writing. Notice and
communications shall be effective when actually received by the
addressee.
(C) The invalidity or
unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of
this Agreement.
(D) The Company may withhold from
any amounts payable under this Agreement such Taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
9. Certain Definitions.
The following terms shall have the
meanings set forth below for purposes of this Agreement.
“Accounting Firm” means
any law firm or the certified public accounting firm among those
regularly consulted by the Company during the twelve-month period
prior to the date of the Change of Control.
“After-Tax” means after
taking into account all applicable Taxes and Excise Tax.
“Board” has the meaning
set forth
