American Electric Power (NYSE: AEP) is a major investor-owner electric utility in various parts of the United States. AEP ranks among the nation's largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a nearly 39,000-mile (63,000 km) network that includes 765 kilovolt ultra-high voltage transmission lines; more than all other U.S. transmission systems combined. AEP's transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP's utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia, West Virginia, and Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP's headquarters are in Columbus, Ohio.
American Electric Power was the first utility to utilize 345KV transmission lines which took place in 1953.
PURPOSES OF THE PLAN AND DEFINITIONS
1.1 Purpose. The purpose of this Plan is to retain senior management of Electronic Data Systems Corporation, a Delaware corporation (the "Company" or "EDS"), and its subsidiaries during a critical period of transition from the present chief executive officer of the Company to a new chief executive officer of the Company.
1.2 Definitions.
"1996 Stock Incentive Plan" means the 1996 Incentive Plan of Electronic Data Systems Corporation.
"Annual Incentive Bonus" means the amount of annual bonus awarded to a Participant under the Annual Incentive Plan.
"Annual Incentive Plan" means the Company's annual performance bonus program for its executives for a calendar year.
"Award Agreement" means a written instrument signed by the Company and a Participant evidencing a Participant's participation in this Plan.
"Beneficiary" means the person, estate, trust or other legal entity that is designated by the Participant or otherwise entitled to receive benefits specified in the Plan (i) with respect to Restricted Stock Units or Stock Options, under the terms and procedures of the Company's 1996 Stock Incentive Plan and related agreements, (ii) with respect to the SERP, the spouse of the Participant, as provided in the SERP, and (iii) with respect to other benefits specified hereunder, including but not limited to the Retention Bonus, in the manner prescribed by the Committee.
"Board" means the Board of Directors of the Company.
"Cause" means (i) dishonesty by Participant which results in substantial personal enrichment at the expense of the Company or (ii) demonstrably willful repeated violations of Participant's obligations to the Company which are intended to result and do result in material injury to the Company.
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In the event the Company terminates a Participant for Cause, the Company shall so notify the Participant of that fact in writing at the time of the termination, specifying the acts or conduct claimed to constitute such Cause. Any acts or conduct not so specified by the Company shall not constitute Cause unless the Company establishes that the Participant deliberately concealed or obstructed discovery of such acts or conduct.
"Change of Control of the Company" shall have the meaning set forth in Exhibit A.
"COC Agreement" means an individualized contractual written agreement between a Participant and the Company providing for benefits or compensation to the Participant or with respect to the Participant by reason of a Change of Control of the Company or a Potential Change of Control of the Company, other than insurance or indemnification, contractual or otherwise, provided to the Participant to protect against liability for service as an employee, officer or director of the Company.
"Code" means the United States Internal Revenue Code of 1986, as amended from time to time.
"Committee" means the Compensation and Benefits Committee of the Board or such other committee of the Board as is designated by the Board to administer the Plan.
"Common Stock" means the Common Stock, par value $.01 per share, of the Company.
"Company" or "EDS" shall have the meaning set forth in Section 1.1.
"Competition" means engaging in any of the conduct described in subparagraphs (a)-(g) below, either directly or indirectly, individually or as an employee, contractor, consultant, partner, officer, director or stockholder (other than as a stockholder of less than 5% of the equity securities of a publicly traded corporation) or in any other capacity for any person, firm, partnership or corporation:
(a) perform duties as or for a competitor of EDS (i) which are the same
or similar to the duties performed by the Participant at any time
during the 12-month period preceding Participant's termination; or (ii)
which involve the use of any confidential information which the
Participant has received, obtained or acquired during, or as a
consequence of, his/her employment with EDS;
(b) participate in the direction of the business, affairs or policies
of such a competitor, whether by way of serving in a position as a
director or senior executive or by way of the exercise or potential
exercise of voting power of securities of such competitor;
(c) perform duties for any then current customer of EDS or for any
prospective customer of EDS with whom EDS is actively negotiating a
contract or arrangement;
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(d) participate in the inducement of or otherwise encourage EDS
employees, customers, or vendors to breach, modify, or terminate any
agreement or relationship that they have with EDS;
(e) participate voluntarily with or provide assistance or information
to any person or entity that is involved in (i) negotiations with EDS
involving a contract or services to be rendered by EDS; or (ii) a
potential or existing business or legal dispute with EDS, including,
but not limited to, litigation, except as may otherwise be required by
law;
(f) hire, attempt to hire or assist any other person or entity in
hiring or attempting to hire or engage any current employee,
independent contractor, or consultant of EDS or any person who was an
EDS employee within the 12-month period prior to the termination of
Participant's employment; or
(g) solicit, divert, or take away, in competition with EDS, the
business or patronage of any current EDS customer or any prospective
customer. Notwithstanding the foregoing, this restriction shall not
apply to any person or entity who is no longer a customer or
prospective customer at the time of any such solicitation by
Participant.
"Disability" means the absence of the Participant from the Participant's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Participant or the Participant's legal representative (such agreement as to acceptability is not to be withheld unreasonably).
"EDS Retirement Plan" shall mean the EDS defined benefit plan qualified under Section 401(a) of the Code.
"Earnings" shall have the meaning set forth in the SERP.
"Effective Date" means August 6, 1998.
"Employee" means an employee of the Company who is a corporate officer.
"Good Reason" with respect to a Participant means:
(a) an act of the Company which results in a substantive
diminution in the Participant's position or responsibilities
as of the Effective Date;
(b) the Company's requiring the Participant to be based at any
office or location other than such Participant's principal
work location as of the Effective Date;
(c) any reduction by the Company in either the Participant's
compensation (including salary, bonus opportunity, short-term
and long-term incentive compensation awards) or in the
benefits provided under or in eligibility for the
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employee benefit plans, programs or practices as applicable to
the Participant as of the Effective Date, other than (i) an
isolated, unsubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Participant or
(ii) a change in employee benefit plans and programs (other
than this Plan) of the Company or its subsidiaries which
applies to all eligible employees generally or which is
required by law; or
(d) any event or condition described or provided for in a
contractual agreement (except for a COC Agreement) between the
Company and the Participant, including in an Award Agreement,
as Good Reason for termination of the Participant's employment
with the Company.
Provided, however, that in the event a Participant believes that Good Reason exists under the foregoing provisions of this definition of "Good Reason", such Participant shall give notice of that fact to the Company in writing (specifying the action or conduct constituting Good Reason) within a reasonable period of time after the Participant becomes aware of the act or conduct. After receipt of such notice, the Company may fully and promptly reverse or correct such act or conduct. In the event of a failure by the Participant to give such notice or in the event of such a full and prompt reversal or correction by the Company, the act or conduct shall not constitute Good Reason;
Provided further, however, that if an act or conduct constituting Good Reason occurs prior to the end of the Retention Period, then so long as a Participant complies with the requirements of giving notice within a reasonable time as specified herein, the fact that the notice is given after the end of the Retention Period or that the Company's failure to correct or reverse same occurs after the end of the Retention Period shall not impair Participant's right to terminate employment for Good Reason and receive benefits hereunder as if such termination had occurred on the date of such act or conduct;
And provided further, that if a Participant gives such notice and the Company fails to fully correct or reverse such act or conduct, the Participant may seek a determination from the Committee as to whether or not Good Reason exists under and in accordance with the provisions of Section 9.9 of this Plan;
And provided further, that no failure by the Company to effect such a reversal or correction shall be deemed to establish or create a presumption in and of itself that Good Reason does not exist or that Good Reason does exist, nor shall the giving of notice by a Participant that Good Reason exists in and of itself establish or create any presumption that Good Reason does exist.
"Monthly Salary Rate" means a Participant's rate of monthly base salary as then in effect as reflected in the Company's records.
"Option Award Agreement" means an agreement between the Company and a Participant reflecting the terms and conditions relating to a grant of Stock Options to such Participant.
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"Participant" means an Employee selected by the Committee pur- suant to Section 3.1.
"Plan" means the Electronic Data Systems Corporation Senior Management Retention Plan as set forth herein.
"Potential Change of Control of the Company" shall have the meaning set forth on Exhibit A.
"Pre-1998 RSUs" means Restricted Stock Units awarded prior to 1998.
"Pre-1998 Stock Options" means Stock Options awarded prior to 1998.
"Pre-1999 Stock Options" means Stock Options awarded prior to 1999.
"RSU Award Agreement" means an agreement between the Company and a Participant reflecting the terms and conditions relating to a grant of Restricted Stock Units to such Participant.
"Rabbi Trust" means the EDS Supplemental Plans Trust Agreement established by the Company on August 31, 1998, as amended from time-to-time.
"Restricted Stock Unit" shall mean a compensation award made by the Company to a Participant under the 1996 Stock Incentive Plan (or a predecessor plan) that provides for the transfer to the Participant, upon the fulfillment of certain conditions, of one share of Common Stock or the value of one share of Common Stock.
"Retention Period" is defined in Section 4.1.
"Retirement Age" means the age as of which, while the Participant is employed by the Company, the Participant has both attained age 55 and the sum of such participant's age and Years of Credited Service equals or exceeds 70.
"SERP" means the EDS 1998 Supplemental Executive Retirement Plan as established effective as of July 1, 1998, and as in effect on the Effective Date, or if more favorable to a Participant, on the date of termination of the Participant's employment with the Company.
"Specially Computed SERP Benefits" means those benefits payable to a Participant under the SERP who is eligible to receive such benefits, calculated in accordance with the eligibility and special computation provisions of Article V of this Plan.
"Stock Option" means the right granted by the Company under the 1996 Stock Incentive Plan as compensation to a Participant to purchase a share of Common Stock during a certain period for a stated exercise price.
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"Targeted 1998 Bonus" means the amount designated by the Committee and in effect as of the Effective Date as the Participant's "Target Bonus" for 1998.
"Years of Credited Service" shall have the meaning set forth in the SERP.
ARTICLE II
ADMINISTRATION OF THE PLAN
2.1 Committee. This Plan shall be administered by the Committee. The Committee man delegate administrative or ministerial duties necessary, appropriate or desirable to the operation of the Plan to any Committee member or Company officer or employee, but the Committee shall not delegate any duty to hear claims of a Participant or determination of issues relating to the existence of Good Reason or Competition as provided in Section 9.9 of this Plan.
2.2 Committee's Powers. Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions which are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of this Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan in the manner and to the extent the Committee deems necessary or desirable to carry it into effect, except that no such change that would adversely affect the rights of any Participant shall be made without the consent of such Participant.
2.3 Committee Liability. No member of the Committee (nor any person to whom the Committee delegates its duties under this Plan) shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by an officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.
ARTICLE III
ELIGIBILITY
3.1 Eligible Employees. Employees eligible for participation under this Plan are those Employees of the Company selected by the Committee and notified by the Committee or its designate in writing of their eligibility to participate and the benefits to which the Employees may become entitled under the Plan. An Employee shall not become a Participant until the Employee has executed an Award Agreement. Subject to the completion of the required Award Agreement, the Employees initially eligible to participate as of the Effective Date, together with their titles, are set forth on Exhibit B.
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ARTICLE IV
RETENTION BONUS
4.1 Retention Period. The Retention Period for a Participant shall commence, unless otherwise specified by the Committee in an Award Agreement, as of the Effective Date and shall end on January 31, 2001.
4.2 Retention Bonus. Unless otherwise specified by the Committee in an Award Agreement, a Participant's Retention Bonus is the greater of (i) two times the Participant's Targeted 1998 Bonus or (ii) either (1) the sum of the actual Annual Incentive Bonuses awarded to the Participant in respect of calendar years 1998, 1999 and 2000 (regardless of when any such award is actually scheduled to be paid) or (2) in the event a Participant's employment is terminated for any reason prior to the end of the Retention Period, then the sum of the Annual Incentive Bonuses actually awarded to the Participant during the Retention Period prior to such termination.
4.3. Payment of Retention Bonus.
(a) If the Participant has remained an Employee through the end of the Participant's Retention Period, a Participant's Retention Bonus shall be paid in a cash lump sum not later than fifteen days after the end of the Par- ticipant's Retention Period.
(b) If the Participant's employment with the Company is terminated by the Company prior to the expiration of the Participant's Retention Period for other than Cause or the Participant terminates employment with the Company for Good Reason, then the Participant shall be entitled to receive the Retention Bonus, which shall be paid within 15 days of termination of employment.
ARTICLE V
SPECIALLY COMPUTED SERP BENEFITS
5.1 Eligible Participants. A Participant who is eligible to participate in the EDS Retirement Plan as of the Effective Date (regardless of whether such individual is entitled to receive benefits thereunder), shall be entitled to receive Specially Computed SERP Benefits as provided in this Article V if, but only if:
(a) The Participant attains Retirement Age at or prior to the end of the Retention Period and the Participant remains employed by the Company through the end of the Retention Period; or
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(b) During the Retention Period, the Participant's employment is terminated by the Company without Cause or by Participant for Good Reason and the Participant has attained Retirement Age as of the date of such termination.
KEY EMPLOYEE RETENTION PLAN
The objective of this Key Employee Retention Plan (the "Plan") is to provide an incentive to certain key employees (the "Participants") to remain with the company throughout the Chapter 11 reorganization process, to support a smooth and successful operation of the ongoing business, and to develop a viable Plan of Reorganization for the Debtors.
Specific Participants are included based on a combination of factors, including job responsibilities, special skills, and an assessment of the impact their departure would have on the performance of the business, and the ability to complete a viable Plan of Reorganization.
The Plan should have three components. It should include a performance-based incentive payment opportunity. It should provide a monetary payment to a Participant who stays. Also, it should include a severance payment for a Participant who is involuntarily separated, for other than cause, as a direct consequence of the reorganization process. The amount of the payments should correlate to both the Participant's level of responsibility within the organization, and to any special, difficult-to-replace skills. The severance payment must represent a satisfactory level of financial security to the Participant. As a guideline, management has referred to a number of retention plans implemented by other companies who have been through the Chapter 11 reorganization process.
American Electric Power was the first utility to utilize 345KV transmission lines which took place in 1953.
PURPOSES OF THE PLAN AND DEFINITIONS
1.1 Purpose. The purpose of this Plan is to retain senior management of Electronic Data Systems Corporation, a Delaware corporation (the "Company" or "EDS"), and its subsidiaries during a critical period of transition from the present chief executive officer of the Company to a new chief executive officer of the Company.
1.2 Definitions.
"1996 Stock Incentive Plan" means the 1996 Incentive Plan of Electronic Data Systems Corporation.
"Annual Incentive Bonus" means the amount of annual bonus awarded to a Participant under the Annual Incentive Plan.
"Annual Incentive Plan" means the Company's annual performance bonus program for its executives for a calendar year.
"Award Agreement" means a written instrument signed by the Company and a Participant evidencing a Participant's participation in this Plan.
"Beneficiary" means the person, estate, trust or other legal entity that is designated by the Participant or otherwise entitled to receive benefits specified in the Plan (i) with respect to Restricted Stock Units or Stock Options, under the terms and procedures of the Company's 1996 Stock Incentive Plan and related agreements, (ii) with respect to the SERP, the spouse of the Participant, as provided in the SERP, and (iii) with respect to other benefits specified hereunder, including but not limited to the Retention Bonus, in the manner prescribed by the Committee.
"Board" means the Board of Directors of the Company.
"Cause" means (i) dishonesty by Participant which results in substantial personal enrichment at the expense of the Company or (ii) demonstrably willful repeated violations of Participant's obligations to the Company which are intended to result and do result in material injury to the Company.
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In the event the Company terminates a Participant for Cause, the Company shall so notify the Participant of that fact in writing at the time of the termination, specifying the acts or conduct claimed to constitute such Cause. Any acts or conduct not so specified by the Company shall not constitute Cause unless the Company establishes that the Participant deliberately concealed or obstructed discovery of such acts or conduct.
"Change of Control of the Company" shall have the meaning set forth in Exhibit A.
"COC Agreement" means an individualized contractual written agreement between a Participant and the Company providing for benefits or compensation to the Participant or with respect to the Participant by reason of a Change of Control of the Company or a Potential Change of Control of the Company, other than insurance or indemnification, contractual or otherwise, provided to the Participant to protect against liability for service as an employee, officer or director of the Company.
"Code" means the United States Internal Revenue Code of 1986, as amended from time to time.
"Committee" means the Compensation and Benefits Committee of the Board or such other committee of the Board as is designated by the Board to administer the Plan.
"Common Stock" means the Common Stock, par value $.01 per share, of the Company.
"Company" or "EDS" shall have the meaning set forth in Section 1.1.
"Competition" means engaging in any of the conduct described in subparagraphs (a)-(g) below, either directly or indirectly, individually or as an employee, contractor, consultant, partner, officer, director or stockholder (other than as a stockholder of less than 5% of the equity securities of a publicly traded corporation) or in any other capacity for any person, firm, partnership or corporation:
(a) perform duties as or for a competitor of EDS (i) which are the same
or similar to the duties performed by the Participant at any time
during the 12-month period preceding Participant's termination; or (ii)
which involve the use of any confidential information which the
Participant has received, obtained or acquired during, or as a
consequence of, his/her employment with EDS;
(b) participate in the direction of the business, affairs or policies
of such a competitor, whether by way of serving in a position as a
director or senior executive or by way of the exercise or potential
exercise of voting power of securities of such competitor;
(c) perform duties for any then current customer of EDS or for any
prospective customer of EDS with whom EDS is actively negotiating a
contract or arrangement;
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(d) participate in the inducement of or otherwise encourage EDS
employees, customers, or vendors to breach, modify, or terminate any
agreement or relationship that they have with EDS;
(e) participate voluntarily with or provide assistance or information
to any person or entity that is involved in (i) negotiations with EDS
involving a contract or services to be rendered by EDS; or (ii) a
potential or existing business or legal dispute with EDS, including,
but not limited to, litigation, except as may otherwise be required by
law;
(f) hire, attempt to hire or assist any other person or entity in
hiring or attempting to hire or engage any current employee,
independent contractor, or consultant of EDS or any person who was an
EDS employee within the 12-month period prior to the termination of
Participant's employment; or
(g) solicit, divert, or take away, in competition with EDS, the
business or patronage of any current EDS customer or any prospective
customer. Notwithstanding the foregoing, this restriction shall not
apply to any person or entity who is no longer a customer or
prospective customer at the time of any such solicitation by
Participant.
"Disability" means the absence of the Participant from the Participant's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Participant or the Participant's legal representative (such agreement as to acceptability is not to be withheld unreasonably).
"EDS Retirement Plan" shall mean the EDS defined benefit plan qualified under Section 401(a) of the Code.
"Earnings" shall have the meaning set forth in the SERP.
"Effective Date" means August 6, 1998.
"Employee" means an employee of the Company who is a corporate officer.
"Good Reason" with respect to a Participant means:
(a) an act of the Company which results in a substantive
diminution in the Participant's position or responsibilities
as of the Effective Date;
(b) the Company's requiring the Participant to be based at any
office or location other than such Participant's principal
work location as of the Effective Date;
(c) any reduction by the Company in either the Participant's
compensation (including salary, bonus opportunity, short-term
and long-term incentive compensation awards) or in the
benefits provided under or in eligibility for the
3
employee benefit plans, programs or practices as applicable to
the Participant as of the Effective Date, other than (i) an
isolated, unsubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Participant or
(ii) a change in employee benefit plans and programs (other
than this Plan) of the Company or its subsidiaries which
applies to all eligible employees generally or which is
required by law; or
(d) any event or condition described or provided for in a
contractual agreement (except for a COC Agreement) between the
Company and the Participant, including in an Award Agreement,
as Good Reason for termination of the Participant's employment
with the Company.
Provided, however, that in the event a Participant believes that Good Reason exists under the foregoing provisions of this definition of "Good Reason", such Participant shall give notice of that fact to the Company in writing (specifying the action or conduct constituting Good Reason) within a reasonable period of time after the Participant becomes aware of the act or conduct. After receipt of such notice, the Company may fully and promptly reverse or correct such act or conduct. In the event of a failure by the Participant to give such notice or in the event of such a full and prompt reversal or correction by the Company, the act or conduct shall not constitute Good Reason;
Provided further, however, that if an act or conduct constituting Good Reason occurs prior to the end of the Retention Period, then so long as a Participant complies with the requirements of giving notice within a reasonable time as specified herein, the fact that the notice is given after the end of the Retention Period or that the Company's failure to correct or reverse same occurs after the end of the Retention Period shall not impair Participant's right to terminate employment for Good Reason and receive benefits hereunder as if such termination had occurred on the date of such act or conduct;
And provided further, that if a Participant gives such notice and the Company fails to fully correct or reverse such act or conduct, the Participant may seek a determination from the Committee as to whether or not Good Reason exists under and in accordance with the provisions of Section 9.9 of this Plan;
And provided further, that no failure by the Company to effect such a reversal or correction shall be deemed to establish or create a presumption in and of itself that Good Reason does not exist or that Good Reason does exist, nor shall the giving of notice by a Participant that Good Reason exists in and of itself establish or create any presumption that Good Reason does exist.
"Monthly Salary Rate" means a Participant's rate of monthly base salary as then in effect as reflected in the Company's records.
"Option Award Agreement" means an agreement between the Company and a Participant reflecting the terms and conditions relating to a grant of Stock Options to such Participant.
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"Participant" means an Employee selected by the Committee pur- suant to Section 3.1.
"Plan" means the Electronic Data Systems Corporation Senior Management Retention Plan as set forth herein.
"Potential Change of Control of the Company" shall have the meaning set forth on Exhibit A.
"Pre-1998 RSUs" means Restricted Stock Units awarded prior to 1998.
"Pre-1998 Stock Options" means Stock Options awarded prior to 1998.
"Pre-1999 Stock Options" means Stock Options awarded prior to 1999.
"RSU Award Agreement" means an agreement between the Company and a Participant reflecting the terms and conditions relating to a grant of Restricted Stock Units to such Participant.
"Rabbi Trust" means the EDS Supplemental Plans Trust Agreement established by the Company on August 31, 1998, as amended from time-to-time.
"Restricted Stock Unit" shall mean a compensation award made by the Company to a Participant under the 1996 Stock Incentive Plan (or a predecessor plan) that provides for the transfer to the Participant, upon the fulfillment of certain conditions, of one share of Common Stock or the value of one share of Common Stock.
"Retention Period" is defined in Section 4.1.
"Retirement Age" means the age as of which, while the Participant is employed by the Company, the Participant has both attained age 55 and the sum of such participant's age and Years of Credited Service equals or exceeds 70.
"SERP" means the EDS 1998 Supplemental Executive Retirement Plan as established effective as of July 1, 1998, and as in effect on the Effective Date, or if more favorable to a Participant, on the date of termination of the Participant's employment with the Company.
"Specially Computed SERP Benefits" means those benefits payable to a Participant under the SERP who is eligible to receive such benefits, calculated in accordance with the eligibility and special computation provisions of Article V of this Plan.
"Stock Option" means the right granted by the Company under the 1996 Stock Incentive Plan as compensation to a Participant to purchase a share of Common Stock during a certain period for a stated exercise price.
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"Targeted 1998 Bonus" means the amount designated by the Committee and in effect as of the Effective Date as the Participant's "Target Bonus" for 1998.
"Years of Credited Service" shall have the meaning set forth in the SERP.
ARTICLE II
ADMINISTRATION OF THE PLAN
2.1 Committee. This Plan shall be administered by the Committee. The Committee man delegate administrative or ministerial duties necessary, appropriate or desirable to the operation of the Plan to any Committee member or Company officer or employee, but the Committee shall not delegate any duty to hear claims of a Participant or determination of issues relating to the existence of Good Reason or Competition as provided in Section 9.9 of this Plan.
2.2 Committee's Powers. Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions which are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of this Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan in the manner and to the extent the Committee deems necessary or desirable to carry it into effect, except that no such change that would adversely affect the rights of any Participant shall be made without the consent of such Participant.
2.3 Committee Liability. No member of the Committee (nor any person to whom the Committee delegates its duties under this Plan) shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by an officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.
ARTICLE III
ELIGIBILITY
3.1 Eligible Employees. Employees eligible for participation under this Plan are those Employees of the Company selected by the Committee and notified by the Committee or its designate in writing of their eligibility to participate and the benefits to which the Employees may become entitled under the Plan. An Employee shall not become a Participant until the Employee has executed an Award Agreement. Subject to the completion of the required Award Agreement, the Employees initially eligible to participate as of the Effective Date, together with their titles, are set forth on Exhibit B.
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ARTICLE IV
RETENTION BONUS
4.1 Retention Period. The Retention Period for a Participant shall commence, unless otherwise specified by the Committee in an Award Agreement, as of the Effective Date and shall end on January 31, 2001.
4.2 Retention Bonus. Unless otherwise specified by the Committee in an Award Agreement, a Participant's Retention Bonus is the greater of (i) two times the Participant's Targeted 1998 Bonus or (ii) either (1) the sum of the actual Annual Incentive Bonuses awarded to the Participant in respect of calendar years 1998, 1999 and 2000 (regardless of when any such award is actually scheduled to be paid) or (2) in the event a Participant's employment is terminated for any reason prior to the end of the Retention Period, then the sum of the Annual Incentive Bonuses actually awarded to the Participant during the Retention Period prior to such termination.
4.3. Payment of Retention Bonus.
(a) If the Participant has remained an Employee through the end of the Participant's Retention Period, a Participant's Retention Bonus shall be paid in a cash lump sum not later than fifteen days after the end of the Par- ticipant's Retention Period.
(b) If the Participant's employment with the Company is terminated by the Company prior to the expiration of the Participant's Retention Period for other than Cause or the Participant terminates employment with the Company for Good Reason, then the Participant shall be entitled to receive the Retention Bonus, which shall be paid within 15 days of termination of employment.
ARTICLE V
SPECIALLY COMPUTED SERP BENEFITS
5.1 Eligible Participants. A Participant who is eligible to participate in the EDS Retirement Plan as of the Effective Date (regardless of whether such individual is entitled to receive benefits thereunder), shall be entitled to receive Specially Computed SERP Benefits as provided in this Article V if, but only if:
(a) The Participant attains Retirement Age at or prior to the end of the Retention Period and the Participant remains employed by the Company through the end of the Retention Period; or
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(b) During the Retention Period, the Participant's employment is terminated by the Company without Cause or by Participant for Good Reason and the Participant has attained Retirement Age as of the date of such termination.
KEY EMPLOYEE RETENTION PLAN
The objective of this Key Employee Retention Plan (the "Plan") is to provide an incentive to certain key employees (the "Participants") to remain with the company throughout the Chapter 11 reorganization process, to support a smooth and successful operation of the ongoing business, and to develop a viable Plan of Reorganization for the Debtors.
Specific Participants are included based on a combination of factors, including job responsibilities, special skills, and an assessment of the impact their departure would have on the performance of the business, and the ability to complete a viable Plan of Reorganization.
The Plan should have three components. It should include a performance-based incentive payment opportunity. It should provide a monetary payment to a Participant who stays. Also, it should include a severance payment for a Participant who is involuntarily separated, for other than cause, as a direct consequence of the reorganization process. The amount of the payments should correlate to both the Participant's level of responsibility within the organization, and to any special, difficult-to-replace skills. The severance payment must represent a satisfactory level of financial security to the Participant. As a guideline, management has referred to a number of retention plans implemented by other companies who have been through the Chapter 11 reorganization process.