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Exhibit 10
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
Agreement made and entered into as of the 29th day of January 2002 by and
between International Business Machines Corporation, a New York Corporation (the
"Company"), and Louis V. Gerstner, Jr. (the "Executive"). Pursuant to Section 17
of the Employment Agreement dated as of March 26, 1993 between the Company and
the Executive, as amended on January 1, 1996 and November 17, 1997, said
Agreement is further amended as follows:
1. Section 2 shall be amended by deleting "60" in clause (a) thereof and
substituting therefor "61" and by deleting the last sentence therefrom.
2. Section 3(a) shall be amended by restating the first sentence thereof to
read: "Until March 1, 2002, the Executive shall be employed as the Chairman and
Chief Executive Officer of the Company, and for the remainder of the Term of
Employment the Executive shall be employed as the Chairman of the Company."
3. Section 3(c) shall be amended by restating the first sentence thereof to
read: "If the Executive reaches Retirement (as defined in Section 8 below), then
he (i) shall be retained for a period of ten years to provide consulting
services to the Company; and (ii) during said ten year consulting period and for
a period of ten years thereafter, (a) shall refrain from engaging in
"Detrimental Activity" as defined in the IBM 1999 Long-Term Performance Plan,
including those provisions prohibiting service on the board of directors of, or
the performance of consulting or other services for, any company deemed
competitive to the Company in its sole discretion, and shall be subject to the
Company's then existing employment rules governing confidentiality,
non-competition and non-solicitation (provided the Company has given the
Executive written notice of any changes to such rules made after the date of
this Amendment); and (b) shall continue to be provided with access to Company
aircraft (as set forth on Exhibit C to the Agreement), cars, office, and
apartment, and to financial planning and home security services and shall be
reimbursed for club expenses for Company business."
4. Section 3(c) shall be further amended by adding the following at the end
thereof: "For purposes of Section 3(c)(ii)(a), it is understood that the Company
is concerned with material violations of such Section, and not with inadvertent
or de minimis actions or activities by the Executive. Therefore, the Company
shall exercise reasonable care and diligence in its determinations of what
constitutes a violation of such Section, taking into account the specific facts
and circumstances of each particular situation, including the nature and degree
of such alleged violation, including without limitation, any competitive
activity. In the event the Executive engages in conduct the Company deems to be
a violation of Section 3(c)(ii)(a), the Company shall give the Executive written
notice of its determination and the Executive shall be given a reasonable
opportunity and period of time to cure such action."
5. Section 8(i) shall be amended by deleting "60" from Subsection 8(i) and
substituting therefor "61" and by restating Subsection 8(ii) to read: "at such
earlier time as agreed by the Board and the Executive."
6. Section 9 shall be amended by deleting the first word thereof, and
substituting therefor "Upon Retirement or other termination of employment in
accordance with Section 11, the" and by restating the beginning of the second
sentence thereof to read: "The amount payable by the Company under this Section
9 starting at Retirement or other termination of employment in accordance with
Section 11 shall be the amount to which the Executive would have been entitled
at age 60 as shown" and then continuing with the rest of the sentence.
7. Section 9 shall be further amended by adding the following sentence after the
sixth sentence thereof: "The Executive's accrued benefits under this Section 9
shall not be subject to offset by any amounts that may become owed or payable by
the Executive to the Company."
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8. Section 11(d) shall be amended by restating the first sentence thereof to
read: "In the event the Executive's employment is terminated without Cause
(other than due to Disability or death), or in the event there is a Constructive
Termination Without Cause, the Executive shall be entitled to: ", and Section
11(d)(ii) shall be amended by deleting "60" therefrom and substituting therefor
"61."
9. No provision in the Employment Agreement, as amended, may be amended or
waived unless agreed to in writing and signed by the Executive and an authorized
officer of the Company or reflected in the official minutes of the meetings of
the Board of Directors of the Company as approved by the Board, including the
Executive in his capacity as Chairman.
10. This Amendment may be executed in two or more counterparts.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /s/ J. Randall MacDonald /s/ Charles F. Knight
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J. Randall MacDonald Charles F. Knight
Senior Vice President, Human Resources Chairman, Executive Compensation
and Management Resources Committee
Agreed to and accepted by:
By: /s/ Louis V. Gerstner. Jr
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Louis V. Gerstner. Jr
Chairman and Chief Executive Officer
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EXHIBIT C
Upon the Executive's Retirement and for the period set forth in Section
3(c)(ii), the Executive shall have preferred access to Company aircraft, but not
to any specific aircraft. For purposes of this Agreement, "preferred access"
means that the Executive has access to Company aircraft following the then
Chairman, the Chief Executive Officer, any President, any Chief Operating
Officer, and any Vice Chairman.