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August 10, 1994
Mr. James A. Unruh
Chairman and Chief Executive Officer
Unisys Corporation
P.O. Box 500
Blue Bell, PA 19424
Dear Jim:
You are presently employed by Unisys Corporation (the
"Corporation") as Chairman of the Board and Chief Executive
Officer under the terms of a letter agreement dated December 20,
1991. This letter agreement (the "Agreement") supersedes and
replaces the letter agreement dated December 20, 1991 and
describes the terms and conditions of your employment with the
Corporation on and after July 1, 1994 and through June 30, 1997.
The provisions of this Agreement are as follows:
1. Base Salary. You shall continue to serve as Chairman of the
Board and Chief Executive Officer of the Corporation at a
base salary at the annual rate of not less than $800,000 per
year. Your base salary level shall be reviewed periodically
by the Compensation and Organization Committee (the
"Committee") or its successor.
2. Annual Bonus. You shall be eligible to receive an annual
bonus award at a target bonus level of not less than 100% of
your base salary. The actual annual bonus paid to you, if
any, shall be determined by the Committee in its sole
discretion and shall be based on such factors as it deems
appropriate. Your actual annual bonus payments, if any,
shall be made in cash at the time of the award, subject to
your election to defer receipt of all or any portion of the
bonus award in accordance with the terms of the Deferred
Compensation Plan for Officers of Unisys Corporation (or any
successor deferred compensation program).
3. Long-Term Incentive Awards. You shall be eligible to
receive stock option awards under the terms of the 1990
Long-Term Incentive Plan (or any successor stock option
plan) and shall receive stock option awards in each year in
which such awards are made to other executive officers
generally. You shall also be eligible to receive long-term
performance awards on an annual basis under the terms of the
1990 Long-Term Incentive Plan (or any successor thereto) in
each year in which such awards are made to executive
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officers generally. Your annual award target (expressed in
present value terms using the same methods and assumptions
generally used in calculating award targets for other
executive officers of the Corporation) for awards made under
the 1990 Long-Term Incentive Plan (or any successor thereto)
shall be 95% of the sum of your base salary and target
annual bonus.
4. Benefit Programs. During your employment hereunder, you
shall participate in the retirement, welfare, incentive,
fringe, and perquisite programs generally made available to
executive officers of the Corporation and at such benefit
levels customarily provided to the Chairman of the Board and
Chief Executive Officer of the Corporation.
5. Service on Other Boards. During the term of your employment
hereunder, you shall render your full-time attention to the
business affairs of the Corporation. You may serve on the
board of directors of other companies as expressly approved
by the Board of Directors in its discretion.
6. Death or Disability. In the event of your disability or
death, all future compensation under this Agreement (other
than those amounts and benefits described in the following
sentence) shall terminate. You or your estate shall receive
(a) an annual bonus award for the year in which you
terminate employment in an amount equal to a pro rata
portion, based on the period of service rendered, of the
bonus amount paid in the previous year, (b) benefits under
the retirement, welfare, incentive, fringe and perquisite
programs generally available to executive officers upon
disability or death and (c) any deferred account balance
under the Deferred Compensation Plan for Officers of Unisys
Corporation (or any successor deferred compensation program)
in accordance with the terms of such plan. For purposes of
this Agreement, disability means a mental or physical injury
or illness which renders you incapable of substantially
performing your duties hereunder for a period of six
consecutive months and shall commence for purposes of this
Agreement at the end of such six-month period.
7. Termination of Employment.
(a) Your employment may be terminated by the Company
at any time with or without cause. In the event that you
are terminated for "cause" (as defined below) or you
terminate your employment for other than "good reason" (as
defined below), no further amounts shall be paid to you
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hereunder except as otherwise provided under the normal
terms of the retirement, welfare, incentive, fringe, and
perquisite programs in which you participated at your date
of termination.
(b) Upon termination by the Corporation without cause
or your termination for good reason, you shall be entitled
to the following:
(1) An amount equal to 100% of the compensation
allocable to the remaining term of employment hereunder
as if you had continued to work through such remaining
term of employment, but in no event less than one
years' compensation. For purposes of this Section
7(b), compensation consists of base salary (at its then
current rate on the date of termination) and annual
bonus (in an amount equal to the average percentage of
the annual bonus payments made for the three years
preceding your date of termination, but in no event
less than 50% of your target bonus times your base
salary both as in effect at your date of termination).
Such termination payments shall be paid in the same
manner and at the same times as the salary and annual
bonus due hereunder during employment.
(2) An amount equal to 100% of the amount
otherwise payable with respect to Performance Awards
under the Corporation's Long-Term Incentive Plan (or
any successor incentive plan thereto) previously
granted as if earned by continuous employment through
the remaining term of this Agreement. Such termination
payments shall be paid in the same manner and times as
Performance Awards are paid to other executive
officers.
(3) Continued participation, at the same costs
applicable to active employees, through attainment of
age 55, or, if later, through the remaining term of
this Agreement, in the Unisys Medical and Dental Plans
(or, if such participation is prohibited by applicable
law or the terms of the plans, participation in
arrangements that will provide benefits substantially
similar to those available under the Unisys Medical and
Dental Plans) for you and your eligible dependents,
subject, however, to the generally applicable terms of
such plans;
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(4) Upon attainment of age 55, you shall be
entitled to receive the post-retirement medical and
post-retirement life insurance coverage generally
available to other retired executive officers;
(5) Immediate and full vesting in all stock
options, restricted stock and other awards made under
the Corporation's Long-Term Incentive Plans (or under
any successor incentive plan thereto); for purposes of
stock option, SAR and other equity-based award exercise
rights under the applicable Long-Term Incentive Plans
(or any successor incentive plan thereto), you shall be
treated as if you had retired on your normal retirement
date as of your date of termination;
(6) A noncontributory retirement benefit, payable
beginning at age 55, calculated under the terms of the
Unisys Elected Officer Pension Plan (or any successor
pension plan thereto) as if you had satisfied the
vesting requirements described in the Plan and as if
you had continued employment through the remaining term
of this Agreement;
(7) Extension of the repayment period on any
corporate interest-free home mortgage loan until the
first to occur of the following: (i) the fifth
anniversary of your date of termination; (ii) the date
on which your home is sold; or (iii) the date on which
your home is leased, unless such action has been
approved by the Committee in its sole discretion.
(c) For purposes of this Section 7, "cause" shall mean
intentional dishonesty or gross neglect of your duties.
"Good reason" shall mean (i) 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
(ii) a reduction in your duties or authority or your removal
as Chairman of the Board or 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
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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 days after such
reduction or removal.
(d) You shall not be entitled to receive payments
under the Unisys Income Assistance Plan or any successor
severance or income assistance plan generally applicable to
employees of the Corporation.
(e) The payments specified in this paragraph 7 shall
be paid notwithstanding the acceptance of other employment
by you after termination of employment.
(f) In the event that you become entitled to
termination payments under this Section 7 and payments under
your Executive Employment Agreement dated September 27, 1985
(the "Executive Employment Agreement"), then 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 your Executive Employment
Agreement, whichever is more favorable to you or provides
you with the greater benefit as determined by the Accounting
Firm (as defined in Section 8), shall be used in determining
your status, compensation and benefits, and other rights and
obligations.
8. Certain Additional Payments by the Corporation.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment or distribution by the Corporation to or for
your benefit (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 Section 8) (a "Payment") would
be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by you with
respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then you
shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by
you of all federal, state and local taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any
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interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, you retain an
amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8,
including whether and when a 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 Ernst & Young (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
Corporation and you within 15 business days of the receipt
of notice from you that there has been a Payment, or such
earlier time as is requested by the Corporation. In the
event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the
change of control which has caused Section 4999 of the Code
to be applicable, you shall appoint another nationally
recognized accounting firm to make the determinations
required hereunder (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
Corporation. Any Gross-Up Payment, net of any taxes
(including income and excise taxes) required to be withheld,
as determined pursuant to this Section 8, shall be paid by
the Corporation to you within five days of the receipt of
the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by you, it shall
furnish you with a written opinion that failure to report
the Excise Tax on your applicable federal income tax return
would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm
shall be binding upon the Corporation and you. 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 Corporation
should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event
that the Corporation exhausts its remedies pursuant to
Section 8(c) and you thereafter are required to make a
payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the
Corporation to or for your benefit.
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(c) You shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by the Corporation of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after you
are informed in writing of such claim and shall apprise the
Corporation of the nature of such claim and the date on
which such claim is requested to be paid. You shall not pay
such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the
Corporation (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If
the Corporation notifies you in writing prior to the
expiration of such period that it desires to contest such
claim, you shall:
(i) give the Corporation any information
reasonably requested by the Corporation relating to
such claim,
(ii) take such action in connection with
contesting such claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good
faith in order effectively to contest such claim, and
(iv) permit the Corporation to participate in
any proceedings relating to such claim;
provided, however, that the Corporation 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 you 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
expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Corporation shall control all
proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct you to pay
the tax claimed and sue for a refund or contest the claim in
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any permissible manner, and you agree 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 Corporation shall determine;
provided, however, that if the Corporation directs you to
pay such claim and sue for a refund, the Corporation shall
advance the amount of such payment to you, on an interest-
free basis and shall indemnify and hold you 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 your taxable year with
respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore,
the Corporation's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be
payable hereunder and you 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, after the receipt by you of an amount advanced
by the Corporation pursuant to Section 8(c), you become
entitled to receive any refund with respect to such claim,
you shall (subject to the Corporation's complying with the
requirements of Section 8(c)) promptly pay to the
Corporation the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by you of an amount
advanced by the Corporation pursuant to Section 8(c), a
determination is made that you shall not be entitled to any
refund with respect to such claim and the Corporation does
not notify you 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.
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9. Retirement Trust.
(a) The Corporation shall establish a grantor trust, the
assets of which shall be subject to the claims of
creditors of the Corporation, to serve as a vehicle for
payment of retirement benefit amounts due to you or
your spouse under the terms of the Elected Officer
Pension Plan and the Supplemental Executive Retirement
Income Plan or any successor pension plans thereto (the
"non-qualified plans"). Except as otherwise provided
in Subsection (b), upon a potential change in control
(as defined in Section 9(c)), the Committee shall
determine in its sole discretion whether or not to
contribute to the grantor trust, on a revocable basis,
up to one hundred and five percent (105%) of the
amounts necessary to provide in the manner described
below the retirement benefit amounts due to you under
the non-qualified plans, as calculated under Section
7(b)(6) of this Agreement. Any such contributions made
to the grantor trust and any interest earned thereon
may be returned to the Corporation, upon a written
determination by the Committee that a potential change
in control no longer exists, at any time prior to the
occurrence of a change in control (as defined in
Section 9(c)). If a change in control does not occur
within one year from the date of the potential change
in control (or, if one or more additional potential
changes in control occur in that one-year period, then
one year from the date of the most recent potential
change in control), the trustee of the grantor trust
shall return to the Corporation all amounts contributed
upon the potential change in control to the grantor
trust, and interest earned thereon. If a change in
control occurs within the one-year period described in
the preceding sentence, then the amounts contributed
upon the potential change in control shall not be
returned to the Corporation, the funding of the trust
shall become irrevocable, and the trustee of the
grantor trust shall purchase an annuity for the grantor
trust from an insurance company having the top rating
from any two of Standard & Poors Corporation, Moody's
Investors Services and A.M. Best, in the amount
necessary to provide payment of the retirement benefit
amounts due to you under the non-qualified plans as
calculated under Section 7(b)(6) hereof. In the event
that contributions to the grantor trust by the
Corporation, the trust's becoming irrevocable with
respect to all assets, or the purchase of an annuity is
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determined to be a taxable event to you, the grantor
trust will permit such annuity to be surrendered to you
by the trustee of the grantor trust, and the terms of
the annuity will permit it to be cashed in by you. In
the event that you continue to remain employed by the
Corporation after the occurrence of the change in
control, the Corporation, at its discretion, may
contribute to the grantor trust the amounts necessary
to provide from the trust any additional retirement
benefits accrued by you under the non-qualified plans
through your retirement.
(b) The Corporation's ability to make contributions to the
grantor trust described in Subsection (a) is
conditioned upon the Corporation's receipt of (i) a
favorable ruling from the Internal Revenue Service or
(ii) a legal opinion from the Corporation's tax
counsel, in a form acceptable to the Corporation as of
the date of the change in control, that the actions
contemplated by Section 9(a) will not constitute a
taxable event to the beneficiary of the trust until
such time as trust assets are paid from the trust to
the beneficiary. If the Corporation does not receive
such ruling or legal opinion, or, to the extent that
the assets held in the trust at the occurrence of a
change in control are not sufficient to purchase an
annuity described in the fifth sentence of Section 9(a)
in the full amount described therein, the Corporation
shall pay to you in cash (in lieu of additional
contributions to the grantor trust) an amount
sufficient to purchase from the Prudential Insurance
Company of America or the Metropolitan Life Insurance
Company an annuity which, together with the annuity
purchased by the trustee of the grantor trust pursuant
to Section 9(a), will fully provide for the payment of
the retirement benefit amounts due you under the non-
qualified plans, calculated as if Section 7(b)(6) had
been triggered. After a change in control has
occurred, the calculation of your retirement benefits
shall be made by the independent actuary that prepares
the annual valuation for the non-qualified plans and
that calculation shall be subject to review for
reasonableness by the Corporation's independent
auditors.
(c) For purposes of this Section 9, a change in control
shall be deemed to have taken place if (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of
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the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the
Corporation representing 50% or more of the combined
voting power of the Corporation's then outstanding
securities, or (ii) during any one-year period,
individuals who at the beginning of such period
constitute the Board, including for this purpose any
new director whose election (y) resulted from a vacancy
caused by the mandatory retirement, death or disability
of a director and (z) was approved by a vote of at
least two-thirds of the directors then still in office
who were directors at the beginning of the period,
cease for any reason to constitute a majority thereof.
A potential change in control shall be deemed to have
taken place if (i) the Corporation enters into an
agreement, the consummation of which would result in a
change in control, (ii) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"))
is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation
representing 9.9% or more of the combined voting power
of the Corporation's then outstanding securities, (iii)
any person publicly announces an intent to take actions
which, if consummated, would result in a change in
control, or (iv) the Committee adopts a resolution that
a potential change in control has taken place.
10. Extension of Term.
(a) On July 1, 1997 and on the first day of each July
thereafter, the term of employment hereunder shall be
automatically extended by one additional year (July 1 - June
30) unless prior to July 1, 1997 or the first day of July of
any subsequent year, the Corporation shall deliver to you or
you shall deliver to the Corporation written notice that the
term of employment hereunder will not be further extended,
in which case the term of employment hereunder will end at
the expiration of the then existing term of employment
hereunder, including any previous extension, and shall not
be further extended except by agreement of the Corporation
and you.
(b) Notwithstanding Section 10(a), upon the occurrence
of a change in control, this Agreement shall be extended for
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an additional three years from the date of such change in
control. For purposes of this Section 10(b), a change in
control shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Corporation representing 20% or more of
the combined voting power of the Corporation's then
outstanding securities, and (ii) during any one-year period,
individuals who at the beginning of such period constitute
the Board, including for this purpose any new director whose
election (y) resulted from a vacancy on the Board caused by
the mandatory retirement, death or disability of a director
and (z) was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period, cease for any reason to constitute
a majority thereof.
11. Successors. This Agreement shall be binding upon the
Corporation and its successors and assigns. The Corporation
will require any such successor to assume expressly and
agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to
perform it if no such succession had taken place.
12. Miscellaneous. No provision of this agreement may be
modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed
by you and such officer as may be specifically designated by
the Corporation. The validity, interpretation, construction
and performance of this Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania without giving
effect to the provisions thereof relating to conflicts of
laws.
13. 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.
14. Other Agreements. It is not intended that you shall receive
duplicate rights and benefits under this Agreement and any
other agreement, contract, plan, or other arrangement with,
or sponsored by, the Corporation. This Agreement supersedes
and replaces all prior understandings and agreements between
you and the Corporation except for your Executive Employment
Agreement.
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15. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively
by arbitration in Philadelphia, Pennsylvania in accordance
with the rules of the American Arbitration Association. Any
arbitration award will be final and conclusive upon the
parties, and a judgment enforcing such award may be entered
in any court of competent jurisdiction. The expenses
incurred by you in pursuing arbitration (including
reasonable legal fees and expenses) will be borne by the
Corporation unless the arbitrator determines that you have
caused the dispute to be submitted to arbitration in bad
faith.
16. Corporate Approval. This Agreement has been authorized by
the Board and approved by the Committee.
If the foregoing sets forth our agreement with you, please sign
and return to us the enclosed copy of this Agreement.
Very truly yours,
UNISYS CORPORATION The foregoing is accepted:
_____________________________ ___________________________
Donald V. Seibert, Chairman James A. Unruh
Compensation and Organization
Committee
Board of Directors