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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 7, 1996
ELECTRONIC DATA SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 01-11779 75-2548221
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5400 Legacy Drive
Plano, Texas 75024-3105
(Address of principal executive offices,
including zip code)
Registrant's telephone number, including area code (214) 604-6000
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ITEM 5. OTHER EVENTS.
On June 7, 1996, General Motors Corporation, a Delaware corporation
("GM") and formerly the holder of all of the outstanding shares of capital stock
of Electronic Data Systems Corporation, a Delaware corporation ("EDS"), and EDS
announced that GM had received the requisite consents from its common
stockholders to the split-off of EDS from GM (the "Split-off") and that the
Split-off was consummated on that date. As a result of the Split-off, (i) EDS
became an independent publicly held company with approximately 485 million
shares of its common stock, $.01 par value per share (the "Common Stock"),
outstanding and listed for trading on the New York Stock Exchange, (ii) each
share of GM Class E Common Stock, $.10 par value per share (the "Class E Common
Stock"), was converted into one share of EDS Common Stock and (iii) the
predecessor of EDS, Electronic Data Systems Corporation, a Texas corporation,
was merged with and into EDS and pursuant to such merger EDS, which was formerly
named Electronic Data Systems Holding Corporation, was renamed "Electronic Data
Systems Corporation." In connection with the Split-off, and in order to enable
the Board of Directors of GM to determine that the Split-off was fair to all
classes of GM stockholders, EDS effected a payment to GM in the amount of $500
million in cash.
EDS believes that the Split-off enables it to accomplish at least three
business objectives: (i) removal of limitations on EDS' ability to participate
in major strategic alliances (including mergers and acquisitions which can be
effected using Common Stock); (ii) removal of limitations on EDS' ability to
obtain additional business from and establish new customer relationships with
companies that compete with GM or its subsidiaries; and (iii) enhancement of
EDS' access to the capital necessary for investment in its future growth.
Immediately prior to the Split-off, EDS and GM entered into a new Master
Service Agreement (the "Master Services Agreement") that serves as a framework
for the negotiation and operation of service agreements between GM and EDS
related to certain "in-scope" information technology services to be provided by
EDS to GM on a worldwide basis (collectively, together with the Master Services
Agreement, the "IT Services Agreements"). The IT Services Agreements replaced
the Master Agreement that, prior to the Split-off, served as a framework for
individual services agreements between GM and EDS.
In addition to receipt of the requisite consents to the Split-off, GM has
also received the requisite consent of its common stockholders to the adoption
of the 1996 Incentive Plan of Electronic Data Systems Corporation.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS
The following documents are exhibits to this Current Report on Form
8-K.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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3(a) Restated Certificate of Incorporation of EDS
3(b) Amended and Restated Bylaws of EDS.
10(a) Master Service Agreement dated June 7, 1996 between General
Motors and EDS (portions of which are subject to a request for
confidential treatment filed with the Commission)
10(b) 1996 Incentive Plan of EDS.
10(m) Separation Agreement dated June 7, 1996 between General Motors
and EDS.
99(a) Joint Press Release of GM and EDS dated June 7, 1996
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ELECTRONIC DATA SYSTEMS
CORPORATION
By: /s/ D. Gilbert Friedlander
-------------------------------
Name: D. Gilbert Friedlander
Title: Vice President
June 10, 1996
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EXHIBIT 3(a)
RESTATED CERTIFICATE OF INCORPORATION
OF
ELECTRONIC DATA SYSTEMS CORPORATION
as amended through June 7, 1996
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INDEX
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(for convenience purposes only)
Page
----
Preamble 1
FIRST: [Name] 2
SECOND: [Registered Office Address] 2
THIRD: [Purpose] 2
FOURTH: [Stock - Number of Shares] 2
Section I. Preferred Stock 2
Section II. Common Stock 4
(1) Dividends 4
(2) Liquidation 4
(3) Voting 4
Section III. Capital Stock 5
(1) Regarding Preemptive Rights 5
(2) Cumulative Voting 5
FIFTH:
(1) In General 5
(2) Number, Election and Terms of Directors 6
(3) Removal of Directors 7
(4) Vacancies 8
SIXTH: [Methods of Action by Stockholders] 8
SEVENTH: [Liability of Directors] 9
EIGHTH: [Voting Rights on Various Matters] 9
NINTH: [Bylaws Amendments] 15
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RESTATED CERTIFICATE OF INCORPORATION
OF
ELECTRONIC DATA SYSTEMS CORPORATION
Under Sections 242 and 245 of the
Delaware General Corporation Law
(as amended through June 7, 1996)
ELECTRONIC DATA SYSTEMS CORPORATION (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, hereby certifies as follows:
1. The name of the Corporation is:
ELECTRONIC DATA SYSTEMS CORPORATION
The name under which the Corporation was originally incorporated was RGR
Holdings, Inc. The original Certificate of Incorporation of the Corporation (as
amended, the "Certificate of Incorporation") was filed with the Secretary of
State of the State of Delaware on March 25, 1994.
2. The restatement and amendment of the Certificate of Incorporation has
been duly adopted by a resolution of the Board of Directors of the Corporation
(the "Board of Directors") proposing and declaring advisable this Restated
Certificate of Incorporation, and the sole holder of all shares of the
Corporation's capital stock has duly approved and adopted this Restated
Certificate of Incorporation, all in accordance with the provisions of Sections
228, 242 and 245 of the General Corporation Law of the State of Delaware.
3. This Restated Certificate of Incorporation restates and amends the
Certificate of Incorporation of the Corporation.
4. The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated and amended to read in its entirety as follows
(hereinafter, this Restated Certificate of Incorporation, as it may be further
amended or restated from time to time, is referred to the "Restated Certificate
of Incorporation"):
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RESTATED CERTIFICATE OF INCORPORATION
OF
ELECTRONIC DATA SYSTEMS CORPORATION
First: The name of the Corporation is
ELECTRONIC DATA SYSTEMS CORPORATION
Second: The name and address of the registered office of the Corporation
in the County of New Castle in the State of Delaware is:
The Prentice-Hall Corporation System, Inc.
1013 Centre Road
Wilmington, Delaware 19805-1297
Third: The purpose of the Corporation is to engage in any lawful business,
act or activity for which corporations may be organized under the provisions of
the General Corporation Law of the State of Delaware, or any successor statute
(the "DGCL").
Fourth: The aggregate number of shares of capital stock that the
Corporation shall have authority to issue is Two Billion Two Hundred Million
(2,200,000,000), divided into classes as follows:
(1) Two Billion (2,000,000,000) shares of common stock, par value
$0.01 per share ("Common Stock"), and
(2) Two Hundred Million (200,000,000) shares of preferred stock, par
value $0.01 per share ("Preferred Stock").
Shares of any class or series of capital stock of the Corporation may be
issued for such consideration and for such corporate purposes as the Board of
Directors may from time to time determine.
The following is a statement of the powers, preferences and rights, and the
qualifications, limitations or restrictions, of the Preferred Stock and Common
Stock.
SECTION I. PREFERRED STOCK
Shares of Preferred Stock shall be issuable from time to time in one or
more series as may be determined by the Board of Directors. Each series shall
be distinctly designated. The Board of Directors is hereby expressly granted
the authority to fix, by resolution or resolutions adopted prior to and
providing for the issuance of any shares of each particular series of Preferred
Stock and incorporated in a certificate of designations filed with the Secretary
of State of the State of Delaware, the designation, powers (including voting
powers and voting rights, full or limited, or
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no voting powers) and preferences, and the relative, participating, optional or
other rights, if any, and the qualifications, limitations or restrictions
thereof, if any, of such series, including, without limiting the generality of
the foregoing, the following:
(1) the designation of, and the number of shares of Preferred Stock
which shall constitute, the series, which number may be increased (except
as otherwise fixed by the Board of Directors) or decreased (but not below
the number of shares thereof then outstanding) from time to time by action
of the Board of Directors;
(2) the rate and times at which (or the method of determination
thereof), and the terms and conditions upon which, dividends, if any, on
shares of the series shall be paid, the nature of any preferences or the
relative rights of priority of such dividends to the dividends payable, and
the qualifications, limitations or restrictions, if any, with respect to
such dividends payable, on any other shares of any class or classes of
capital stock of the Corporation or on any shares of other series of
Preferred Stock, and a statement whether or in what circumstances such
dividends shall be cumulative;
(3) whether shares of the series shall be convertible into or
exchangeable for shares of any class or series of capital stock or other
securities or property of the Corporation or of any other corporation or
entity, and, if so, the terms and conditions of such conversion or
exchange, including any provisions for the adjustment of the conversion or
exchange rate in such events as the Board of Directors shall determine;
(4) whether shares of the series shall be redeemable, and, if so, the
terms and conditions of such redemption (including whether redemption shall
be optional or mandatory), including the date or dates or event or events
upon or after the occurrence of which they shall be redeemable, and the
amount and type of consideration payable in case of redemption, which
amount per share may vary under different conditions and at different
redemption dates;
(5) the rights, if any, of holders of shares of the series upon the
voluntary or involuntary liquidation, merger, consolidation, distribution
or sale of assets, dissolution or winding-up of the Corporation, and the
relative rights of priority, if any, of payment of shares of the series;
(6) whether shares of the series shall have a sinking fund or purchase
account for the redemption or purchase of shares of the series, and if so,
the terms, conditions and amount of such sinking fund or purchase account;
(7) whether shares of the series shall have voting rights in addition
to the voting rights as shall be provided by law and, if so, the terms of
such voting rights, which may, without limiting the generality of the
foregoing, include (a) the right to more or less than one vote per share on
any or all matters voted upon by the stockholders of the Corporation and
(b) the right to vote, as a series by itself or together with other series
of Preferred Stock or together with all series of Preferred Stock as a
class and/or with the Common Stock as a class, upon such matters, under
such circumstances and upon such
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conditions as the Board of Directors shall determine, including, without
limitation, the right, voting as a series by itself or together with other
series of Preferred Stock or together with all series of Preferred Stock as
a class and/or with the Common Stock as a class, to elect one or more
Directors of the Corporation under such circumstances and upon such
conditions as the Board of Directors shall determine; and
(8) any other powers, preferences and relative, participating,
optional or other rights, and qualifications, limitations or restrictions
of shares of that series.
The relative powers, preferences and rights of each series of Preferred Stock in
relation to the powers, preferences and rights of each other series of Preferred
Stock shall, in each case, be as fixed from time to time by the Board of
Directors in the resolution or resolutions adopted pursuant to the authority
granted in this Section I of this Article Fourth, and the consent, by class or
series vote or otherwise, of holders of Preferred Stock of such of the series of
Preferred Stock as are from time to time outstanding shall not be required for
the issuance by the Board of Directors of any other series of Preferred Stock,
whether or not the powers, preferences and rights of such other series shall be
fixed by the Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in such resolution or
resolutions adopted with respect to any series of Preferred Stock that the
consent of holders of at least a majority (or such greater proportion as shall
be therein fixed) of the outstanding shares of such series voting thereon shall
be required for the issuance of shares of any or all other series of Preferred
Stock.
SECTION II. COMMON STOCK
(1) Dividends. Subject to any requirements with respect to
preferential or participating dividends as shall be provided by the express
terms of any outstanding series of Preferred Stock, holders of the Common
Stock shall be entitled to receive such dividends thereon, if any, as may
be declared from time to time by the Board of Directors.
(2) Liquidation. In the event of liquidation, dissolution or winding-
up of the Corporation, whether voluntary or involuntary, holders of the
Common Stock shall be entitled to receive such assets and properties of the
Corporation, tangible and intangible, as are available for distribution to
stockholders of the Corporation, after there shall have been paid or set
apart for payment the full amounts necessary to satisfy any preferential or
participating rights to which holders of each outstanding series of
Preferred Stock are entitled by the express terms of such series.
(3) Voting. Each share of Common Stock shall entitle the holder
thereof to one vote on each matter submitted to a vote of holders of shares
of Common Stock. Holders of shares of Common Stock shall be entitled to
vote on each matter submitted to a vote of stockholders of the Corporation,
except (a) as shall otherwise be provided with respect to the election of
one or more Directors of the Corporation by holders of shares of one or
more outstanding series of Preferred Stock under circumstances as shall be
provided by the Restated Certificate of Incorporation or by any provisions
established
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pursuant to Section I of this Article Fourth and (b) to the extent holders
of shares of one or more outstanding series of Preferred Stock are entitled
to vote separately as a class by law or under circumstances as shall be
provided by the Restated Certificate of Incorporation or by any provisions
established pursuant to Section I of this Article Fourth.
SECTION III. CAPITAL STOCK
(1) Regarding Preemptive Rights. No stockholder of the Corporation
shall by reason of his holding shares of any class or series of capital
stock of the Corporation have any preemptive or preferential right to
purchase, acquire, subscribe for or otherwise receive any additional,
unissued or treasury shares (whether now or hereafter acquired) of any
class or series of capital stock of the Corporation now or hereafter to be
authorized, or any notes, debentures, bonds or other securities convertible
into or carrying any right, option or warrant to purchase, acquire,
subscribe for or otherwise receive shares of any class or series of capital
stock of the Corporation now or hereafter to be authorized, whether or not
the issuance of any such shares, or such notes, debentures, bonds or other
securities, would adversely affect the dividends or voting or other rights
of such stockholder, and the Board of Directors may issue or authorize the
issuance of shares of any class or series of capital stock of the
Corporation, or any notes, debentures, bonds or other securities
convertible into or carrying rights, options or warrants to purchase,
acquire, subscribe for or otherwise receive shares of any class or series
of capital stock of the Corporation, without offering any such shares of
any such class, either in whole or in part, to the existing stockholders of
any such class.
(2) Cumulative Voting. Cumulative voting of shares of any class or
series of capital stock of the Corporation having voting rights is
prohibited.
Fifth:
(1) In General.
(a) The powers of the Corporation shall be exercised by or under
the authority of, and the business and affairs of the Corporation
shall be managed by or under the direction of, the Board of Directors.
In addition to the authority and powers conferred upon the Board of
Directors by the DGCL, the Restated Certificate of Incorporation or
the Bylaws of the Corporation, the Board of Directors is hereby
authorized and empowered to exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation,
subject to the provisions of the DGCL, the Restated Certificate of
Incorporation and any Bylaw of the Corporation adopted by the
stockholders of the Corporation; provided, however, that no Bylaw of
the Corporation hereafter adopted by the stockholders of the
Corporation, nor any amendment thereto, shall invalidate any prior act
of the Board of Directors that would have been valid if such Bylaw or
amendment thereto had not been adopted.
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(b) Except as otherwise provided by the Restated Certificate of
Incorporation or the Bylaws of the Corporation or to the extent
prohibited by Delaware law, the Board of Directors shall have the
right to establish the rights, powers, duties, rules and procedures
that (i) from time to time shall govern the Board of Directors,
including, without limiting the generality of the foregoing, the vote
required for any action by the Board of Directors and (ii) from time
to time shall affect the Directors' power to manage the business and
affairs of the Corporation.
(2) Number, Election and Terms of Directors.
(a) Subject to such rights of holders of shares of one or more
outstanding series of Preferred Stock to elect one or more Directors
of the Corporation under circumstances as shall be provided by the
Restated Certificate of Incorporation or by any provisions established
pursuant to Article Fourth hereof, the number of Directors of the
Corporation that shall constitute the Board of Directors shall not be
less than three (3) nor more than fifteen (15) and shall be fixed
from time to time exclusively by, and may be increased or decreased
from time to time exclusively by, the affirmative vote of at least a
majority of the Whole Board. The term "Whole Board" shall mean the
total number of Directors of the Corporation as so fixed, whether or
not there exist any vacancies in previously authorized directorships.
(b) Election of Directors of the Corporation need not be by
written ballot unless the Bylaws of the Corporation shall so provide.
(c) Each Director of the Corporation shall hold office for the
full term for which such Director is elected and until such Director's
successor shall have been duly elected and qualified or until his
earlier death, resignation or removal in accordance with the Restated
Certificate of Incorporation and the Bylaws of the Corporation.
(d) (i) The Directors of the Corporation, other than those who
may be elected by holders of shares of one or more outstanding
series of Preferred Stock under circumstances as shall be
provided by the Restated Certificate of Incorporation or by any
provisions established pursuant to Article Fourth hereof, shall
be divided into three classes: Class I, Class II and Class III.
Such classes shall be as nearly equal in number of Directors as
possible. Each Director of the Corporation shall serve for a
term ending on the third annual meeting following the annual
meeting at which such Director was elected; provided, however,
that the Directors of the Corporation first designated to Class I
shall serve for a term expiring at the annual meeting next
following the date of their designation as Class I Directors, the
Directors of the Corporation first designated to Class II shall
serve for a term expiring at the second annual meeting next
following the
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date of their designation as Class II Directors, and the
Directors of the Corporation first designated to Class III shall
serve for a term expiring at the third annual meeting next
following the date of their designation as Class III Directors.
(ii) At each annual election of Directors of the
Corporation, such Directors chosen to succeed those whose terms
then expire shall be of the same class as the Directors of the
Corporation they succeed, unless, by reason of any intervening
changes in the authorized number of Directors of the Corporation,
the Board of Directors shall designate one or more directorships
whose term then expires as directorships of another class in
order more nearly to achieve equality of number of Directors of
the Corporation among the classes.
(iii) Notwithstanding that the three classes of Directors
of the Corporation shall be as nearly equal in number of
Directors as possible, in the event of any change in the
authorized number of Directors of the Corporation, each Director
of the Corporation then continuing to serve as such shall
nevertheless continue as a Director of the class of which he is a
member until the expiration of his current term, or his prior
death, resignation or removal in accordance with the Restated
Certificate of Incorporation and the Bylaws of the Corporation.
If any newly created directorship may, consistent with the
provision that the three classes shall be as nearly equal in
number of Directors of the Corporation as possible, be allocated
to one or two or more classes, the Board of Directors shall
allocate it to that of the available classes whose terms of
office are due to expire at the earliest date following such
allocation.
(3) Removal of Directors.
(a) No Director of the Corporation shall be removed from such
office by vote or other action of the stockholders of the Corporation
or otherwise, except by the affirmative vote of holders of at least a
majority of the then outstanding Voting Stock (as defined below),
voting together as a single class. The term "Voting Stock" shall mean
all outstanding shares of all classes and series of capital stock of
the Corporation entitled to vote generally in the election of
Directors of the Corporation, considered as one class; and, if the
Corporation shall have shares of Voting Stock entitled to more or less
than one vote for any such share, each reference in the Restated
Certificate of Incorporation to a proportion or percentage in voting
power of Voting Stock shall be calculated by reference to the portion
or percentage of votes entitled to be cast by holders of such shares
generally in the election of Directors of the Corporation. No
Director of the Corporation shall be removed from such office by vote
or other action of the stockholders of the Corporation or otherwise,
except for cause, which shall be deemed to exist only if: (i) such
Director has been convicted, or such Director is granted immunity to
testify where another has been convicted, of a felony by a
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court of competent jurisdiction (and such conviction is no longer
subject to direct appeal); (ii) such Director has been found by a
court of competent jurisdiction (and such finding is no longer subject
to direct appeal) or by the affirmative vote of at least a majority of
the Whole Board at any regular or special meeting of the Board of
Directors called for such purpose to have been grossly negligent or
guilty of willful misconduct in the performance of his duties to the
Corporation in a matter of substantial importance to the Corporation;
(iii) such Director has been adjudicated by a court of competent
jurisdiction to be mentally incompetent, which mental incompetency
directly affects his ability to perform as a Director of the
Corporation; (iv) such Director has been found by a court of competent
jurisdiction (and such finding is no longer subject to direct appeal)
or by the affirmative vote of at least a majority of the Whole Board
at any regular or special meeting of the Board of Directors called for
such purpose to have breached such Director's duty of loyalty to the
Corporation or its stockholders or to have engaged in any transaction
with the Corporation from which such Director derived an improper
personal benefit; or (v) "cause" for removal otherwise exists under
Section 141(k)(1) of the DGCL. No Director of the Corporation so
removed may be nominated, re-elected or reinstated as a Director of
the Corporation so long as the cause for removal continues to exist.
(b) Notwithstanding paragraph 3(a) of this Article Fifth,
whenever holders of shares of one or more outstanding series of
Preferred Stock are entitled to elect one or more Directors of the
Corporation under circumstances as shall be provided by the Restated
Certificate of Incorporation or by any provisions established pursuant
to Article Fourth hereof with respect to the rights of holders of
shares of one or more outstanding series of Preferred Stock, any
Director of the Corporation so elected may be removed in accordance
with such provisions.
(4) Vacancies. Unless otherwise provided by the Restated Certificate
of Incorporation or by any provisions established pursuant to Article
Fourth hereof with respect to the rights of holders of shares of one or
more outstanding series of Preferred Stock, newly created directorships
resulting from any increase in the authorized number of Directors of the
Corporation and any vacancies on the Board of Directors resulting from
death, resignation or removal in accordance with the Restated Certificate
of Incorporation and the Bylaws of the Corporation shall be filled only by
the affirmative vote of at least a majority of the remaining Directors of
the Corporation then in office, even if such remaining Directors constitute
less than a quorum of the Board of Directors. Any Director of the
Corporation elected in accordance with the preceding sentence shall hold
office for the remainder of the full term of the class of Directors of the
Corporation in which the new directorship was created or the vacancy
occurred and until such Director's successor shall have been elected and
qualified or until his earlier death, resignation or removal in accordance
with the Restated Certificate of Incorporation and the Bylaws of the
Corporation. Unless otherwise provided by the Restated Certificate of
Incorporation or by any provisions established pursuant to Article Fourth
hereof with respect to the rights of holders of shares of one or more
outstanding series of Preferred
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Stock, no decrease in the number of Directors of the Corporation
constituting the Board of Directors shall shorten the term of any incumbent
Director of the Corporation.
Sixth: No action required to be taken or that may be taken at any annual
or special meeting of the stockholders of the Corporation may be taken without a
meeting, and the power of the stockholders of the Corporation to consent in
writing to the taking of any action by written consent without a meeting is
specifically denied, except for action by unanimous written consent, which is
expressly allowed. Unless otherwise provided by the DGCL, by the Restated
Certificate of Incorporation or by any provisions established pursuant to
Article Fourth hereof with respect to the rights of holders of one or more
outstanding series of Preferred Stock, special meetings of the stockholders of
the Corporation may be called at any time only by the Chairman of the Board of
Directors of the Corporation, or by the Board of Directors pursuant to a
resolution approved by the affirmative vote of at least a majority of the Whole
Board, and no such special meeting may be called by any other person or persons.
Seventh: No Director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a Director of the Corporation involving any act or omission of
any such Director; provided, however, that this Article Seventh shall not
eliminate or limit the liability of such a Director (1) for any breach of such
Director's duty of loyalty to the Corporation or its stockholders, (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the DGCL, as the same exists
or as such provision may hereafter be amended, supplemented or replaced, or (4)
for any transactions from which such Director derived an improper personal
benefit. If the DGCL is amended after the filing of the Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of Directors, then the liability of a Director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by such law, as so
amended. Any repeal or modification of this Article Seventh by the stockholders
of the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a Director of the Corporation existing
at the time of such repeal or modification.
Eighth:
(1) In addition to any other affirmative vote that may be required by
law, the Restated Certificate of Incorporation or the Bylaws of the
Corporation, and except as otherwise expressly provided by paragraph (2) of
this Article Eighth:
(a) any merger, consolidation or share exchange of the
Corporation or any subsidiary of the Corporation with (i) any Related
Person or (ii) any other Person (whether or not itself a Related
Person) which is, or after such merger, consolidation or share
exchange would be, an Affiliate of a Related Person; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition by the Corporation or any subsidiary of the
Corporation to, with or for the benefit of any Related Person or any
Affiliate of any Related Person, or by any
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Related Person or any Affiliate of any Related Person to the
Corporation or any subsidiary of the Corporation, of any assets or
properties having an aggregate Fair Market Value of $10,000,000 or
more; or
(c) any issuance or transfer by the Corporation or any subsidiary
of the Corporation of any securities of the Corporation or any
subsidiary of the Corporation to any Related Person or any Affiliate
of any Related Person (except (i) pursuant to the exercise, exchange
or conversion of securities exercisable for, exchangeable for or
convertible into shares of any class or series of capital stock of the
Corporation or any subsidiary of the Corporation, which securities
were acquired by the Related Person prior to becoming a Related
Person, or (ii) pursuant to a dividend or distribution paid or made,
or the exercise, exchange or conversion of securities exercisable for,
exchangeable for or convertible into shares of any class or series of
capital stock of the Corporation or subsidiary of the Corporation,
which security is distributed pro rata to all holders of shares of any
class or series of capital stock of the Corporation subsequent to the
time the Related Person became such, and provided in the case of this
clause (ii) that there is not an increase of more than 1% in the
Related Person's proportionate share of any class or series of capital
stock of the Corporation or of the outstanding Voting Stock as a
result of such dividend or distribution); or
(d) any adoption of any plan or proposal by the Corporation for
the liquidation or dissolution of the Corporation voluntarily caused
or proposed by or on behalf of a Related Person or any Affiliate of
any Related Person; or
(e) any reclassification of securities (including any reverse
stock split) or recapitalization of the Corporation, or any merger,
consolidation or share exchange of the Corporation with any of its
subsidiaries or any other transaction (whether or not with or into or
otherwise involving a Related Person) which has the effect, either
directly or indirectly, of increasing by more than 1% the
proportionate share of any outstanding shares of any class or series
of capital stock of the Corporation, or the securities convertible
into shares of any class or series of capital stock of the Corporation
or any subsidiary of the Corporation, that is Beneficially Owned by
any Related Person or any Affiliate of any Related Person or otherwise
increasing the voting power of any outstanding shares of any class or
series of capital stock of the Corporation or any subsidiary of the
Corporation possessed by any such Related Person or Affiliate; or
(f) any series or combination of transactions having, directly or
indirectly, the same effect as any of the foregoing; or
(g) any agreement, contract or other arrangement entered into by
the Corporation providing, directly or indirectly, for any of the
foregoing,
shall require the affirmative vote of holders of (x) at least 80% of the then
outstanding Voting Stock, voting together as a single class and (y) at least 66-
2/3% of the then outstanding Voting
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Stock not Beneficially Owned, directly or indirectly, by any Related Person with
respect to such Business Combination, voting together as a single class. Such
affirmative vote shall be required, notwithstanding the fact that no vote may be
required by, or that a lesser percentage or separate class vote may be specified
in, applicable law, any provision of the Restated Certificate of Incorporation
other than this Article Eighth, the Bylaws of the Corporation or any agreement
with any national securities exchange or otherwise.
(2) The provisions of paragraph (1) of this Article Eighth shall not
be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote that may be required
by applicable law, any provision of the Restated Certificate of
Incorporation other than this Article Eighth, the Bylaws of the Corporation
and any agreement with any national securities exchange or otherwise, if
all of the conditions specified in either of the following subparagraphs
(a) or (b) are met:
(a) the cash, property, securities or other consideration to be
received per share by holders of shares of each and every outstanding
class or series of capital stock of the Corporation in the Business
Combination is, with respect to each such class or series, either (i)
the same in form and amount per share as that paid by the Related
Person in a tender offer in which such Related Person acquired at
least 50% of the outstanding shares of capital stock of such class or
series and which was consummated not more than one year prior to the
date of such Business Combination or (ii) not less in amount (as to
cash) or Fair Market Value (as to consideration other than cash) as of
the date of the determination of the Highest Per Share Price (as to
property, securities or other consideration) than the Highest Per
Share Price applicable to such class or series of shares; provided,
however, that in the event of any Business Combination in which the
Corporation survives, any shares retained by holders thereof shall
constitute consideration other than cash for purposes of this
subparagraph (a); or
(b) at least a majority of all Continuing Directors shall have
expressly approved such Business Combination either in advance of or
subsequent to such Related Person's having become a Related Person.
In the case of any Business Combination with a Related Person to which
subparagraph (b) above does not apply, at least a majority of all Continuing
Directors, promptly following the request of a Related Person, shall determine
the Highest Per Share Price for shares of each class or series of capital stock
of the Corporation. Such determination shall be announced not less than five
(5) days prior to the meeting at which holders of shares vote on the Business
Combination. Such determination shall be final, unless the Related Person
becomes the Beneficial Owner of additional shares after the date of the earlier
determination, in which case at least a majority of all Continuing Directors
shall make a new determination as to the Highest Per Share Price for each class
or series of shares prior to the consummation of the Business Combination.
A Related Person shall be deemed to have acquired a share at the time
that such Related Person became the Beneficial Owner thereof. With respect to
shares owned by
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<PAGE>
Affiliates, Associates and other Persons whose ownership is attributable to a
Related Person, if the price paid by such Related Person for such shares is not
determinable by at least a majority of all Continuing Directors, the price so
paid shall be deemed to be the higher of (i) the price paid upon the acquisition
thereof by the Affiliate, Associate or other Person or (ii) the share price of
the shares in question at the time when the Related Person became the Beneficial
Owner thereof.
(3) For purposes of this Article Eighth:
(a) The term "Affiliate," used to indicate a relationship to a
specified Person, shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person.
(b) The term "Associate," used to indicate a relationship with a
specified Person, shall mean (i) any corporation, firm, partnership,
association or other organization (other than the Corporation or any
wholly owned subsidiary of the Corporation) of which such specified
Person is a director, officer or partner or is, directly or
indirectly, the Beneficial Owner of 10% or more of any class of equity
securities; (ii) any trust or other estate in which such specified
Person has a beneficial interest of 10% or more or as to which such
specified Person serves as trustee or in a similar fiduciary capacity;
(iii) any Person who is a director or officer of such specified Person
or any of its parents or subsidiaries (other than the Corporation or
any wholly owned subsidiary of the Corporation); and (iv) any relative
or spouse of such specified Person or of any of its Associates, or any
relative of any such spouse, who has the same home as such specified
Person or such Associate.
(c) A Person shall be a "Beneficial Owner" of any shares of any
class or series of capital stock of the Corporation (i) which such
Person or any of its Affiliates or Associates beneficially owns,
directly or indirectly; or (ii) which such Person or any of its
Affiliates or Associates has, directly or indirectly, (A) the right or
obligation to acquire (whether such right or obligation is exercisable
immediately or only after the passage of time or the occurrence of an
event), pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the beneficial owner of any stock
tendered pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such tendered
stock is accepted for purchase or exchange, or (B) the right to vote
or dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a
Person shall not be deemed the beneficial owner of any stock because
of such Person's right to vote such stock if the agreement,
arrangement or understanding to vote such stock arises solely from a
revocable proxy or consent given in response to a proxy or consent
solicitation made to ten (10) or more Persons pursuant to, and in
accordance with, the applicable provisions of the General Rules and
Regulations under the
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<PAGE>
Securities Exchange Act of 1934, as amended (the "Exchange Act");
or (iii) which is beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of its Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing of
such stock; or (iv) of which such Person would be the Beneficial Owner
pursuant to the terms of Rule 13d-3 of the General Rules and
Regulations under Exchange Act, as in effect on March 12, 1996.
Notwithstanding anything in this definition of "Beneficial Owner" to
the contrary, neither General Motors Corporation, a Delaware
corporation ("GM"), the board of directors of GM, any committee of
such board, any member of such board or committee, any pension plan or
employee benefit plan sponsored by GM or any of its Affiliates (other
than the Hourly Plan (as defined below)), nor any trustee of or other
fiduciary with respect to any such other plan (when acting in such
capacity) shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," any securities held for the benefit of the General
Motors Hourly-Rate Employees Pension Plan, or any trustee of or other
fiduciary with respect to such plan (when acting in such capacity)
(collectively, the "Hourly Plan"), or to be an Affiliate or Associate
of the Hourly Plan (and the Hourly Plan shall not be deemed to be an
Affiliate or Associate of any of the foregoing), solely by virtue of
the board of directors of GM or any committee thereof or the
management of GM acting under the authority thereof having the right
to appoint, or terminate the appointment of, trustees or investment
managers for the Hourly Plan or any such other pension plan or
employee benefit plan sponsored by GM or any of its Affiliates or to
cause any subsidiary of GM that provides investment management
services for the Hourly Plan or any such other pension plan or other
employee benefit plan sponsored by GM or any of its Affiliates to
appoint, or terminate the appointment of, such trustees or investment
managers. Stock shall be deemed "Beneficially Owned" by the Beneficial
Owner or Owners thereof.
(d) The term "Business Combination" shall mean any transaction
which is referred to in any one or more of subparagraphs (a) through
(g) of paragraph (1) of this Article Eighth.
(e) The term "Continuing Director" shall mean, with respect to a
Business Combination with any Related Person, any Director of the
Corporation, while a Director of the Corporation, (i) who is
unaffiliated with the Related Person, and (ii) who (A) was a Director
of the Corporation on or immediately before the date of consummation
of the Split-Off (as hereinafter defined), or (B) became a Director
of the Corporation prior to the time that the Related Person became
a Related Person, or (C) was recommended or nominated to become a
Director of the Corporation by at least a majority of all then
Continuing Directors, acting separately or as a part of any action
taken by the Board of Directors or any committee thereof. Without
limiting the generality of the foregoing, a Director of the
Corporation shall be deemed to be affiliated with a Related Person if
such Director (i) is or at any previous time has been an officer,
director, employee or general partner of such Related Person; (ii) is
or at any previous time has been an Affiliate or Associate of
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<PAGE>
such Related Person; (iii) is or at any previous time has been a
relative or spouse of such Related Person or of any such officer,
director, general partner, Affiliate or Associate; (iv) performs
services for, or is a member, employee, greater than 5% stockholder or
other equity owner of any organization (other than the Corporation and
its subsidiaries) that performs services for, such Related Person or
any Affiliate of such Related Person, or is a relative or spouse of
any such Person; or (v) was nominated for election as a Director of
the Corporation by such Related Person.
(f) The term "Fair Market Value" shall mean, in the case of
securities, the average of the closing sale prices during the thirty
(30)-day period immediately preceding the date in question of such
security on the principal United States securities exchange registered
under the Exchange Act on which such security is listed (or the
composite tape therefor) or, if such securities are not listed on any
such exchange, the average of the closing bid quotations with respect
to such security during the thirty (30)-day period preceding the date
in question on the NASDAQ National Market or any similar system then
in use or, if no such quotations are available, the fair market value
on the date in question of such security as determined in good faith
by at least a majority of all Continuing Directors; and in the case of
property other than cash or securities, the fair market value of such
property on the date in question as determined in good faith by at
least a majority of all Continuing Directors.
(g) The term "Highest Per Share Price" shall mean (i) as to
shares of any class or series of capital stock of the Corporation of
which the Related Person Beneficially Owns 10% or more of the
outstanding shares, the highest price that can be determined to have
been paid or agreed to be paid for any share or shares of that class
or series by such Related Person in a transaction that either (A)
resulted in such Related Person Beneficially Owning 10% or more
thereof or (B) was effected at a time when such Related Person
Beneficially Owned 10% or more thereof, (ii) as to shares of any class
or series of capital stock of the Corporation of which the Related
Person Beneficially Owns shares, but not 10% or more of the
outstanding shares, the highest price that can be determined to have
been paid or agreed to be paid at any time by such Related Person for
any share or shares of that class or series that are then Beneficially
Owned by such Related Person or (iii) as to shares of any other class
or series of capital stock of the Corporation, the amount determined
by at least a majority of all Continuing Directors, on whatever basis
they believe is appropriate, to be the per share price equivalent of
the highest price that can be determined to have been paid or agreed
to be paid at any time by the Related Person for shares of any such
other class or series of capital stock of the Corporation. In
determining the Highest Per Share Price, all purchases by the Related
Person and its Affiliates and Associates shall be taken into account
regardless of whether the shares were purchased before or after the
Related Person became a Related Person and the Highest Per Share Price
will be appropriately adjusted to take into account (W) distributions
paid or payable in stock, (X) subdivisions of outstanding stock, (Y)
combinations of
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<PAGE>
shares of stock into a smaller number of shares and (Z) similar
events. Additionally, for purposes of this subparagraph (g), the price
of any shares of Common Stock received by a stockholder from GM
pursuant to a transaction (the "Split-Off") in which outstanding
shares of Class E Common Stock, par value $0.10 per share, of GM ("GME
Stock") are converted into shares of Common Stock, shall be the price
paid for such GME Stock, as appropriately adjusted to account for the
number of shares of Common Stock so received for each share of GME
Stock.
(h) The term "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, association,
joint venture, trust, estate or other entity or organization.
(i) The term "Related Person" shall mean any Person (other than
the Corporation or any subsidiary of the Corporation and other than
any profit-sharing, employee stock ownership or other employee benefit
plan of the Corporation or any subsidiary of the Corporation or any
trustee of or fiduciary with respect to any such plan when acting in
such capacity) who or which (i) is the Beneficial Owner of 10% or more
of the aggregate voting power of all outstanding Voting Stock; or (ii)
is an Affiliate of the Corporation and, at any time within the two
(2)-year period immediately prior to the date in question, was the
Beneficial Owner of 10% or more of the aggregate voting power of all
outstanding Voting Stock; or (iii) is an assignee of or has otherwise
succeeded to any shares of any class or series of capital stock of the
Corporation which were at any time within the two (2)-year period
immediately prior to the date in question Beneficially Owned by any
Related Person, if such assignment or succession shall have occurred
in the course of a privately negotiated transaction rather than an
open market transaction. For the purposes of determining whether a
Person is a Related Person, the number of shares of any class or
series of capital stock of the Corporation deemed to be outstanding
shall include shares of such class or series of which the Person is
deemed the Beneficial Owner, but shall not include any other shares
which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, exchange rights,
warrants or options. Notwithstanding anything in this definition of
"Related Person" to the contrary, the Hourly Plan shall not be a
Related Person solely as a result of its becoming the Beneficial Owner
of any shares of Common Stock in the Split-Off but may thereafter
become a Related Person if the Hourly Plan or any Affiliate thereof
shall after the Split-Off purchase or otherwise become the Beneficial
Owner of additional shares of any class or series of capital stock of
the Corporation constituting 1% or more of the aggregate voting power
of all outstanding Voting Stock or any other Person (or Persons) who
is (or collectively are) the Beneficial Owner of shares of any class
or series of capital stock of the Corporation constituting 1% or more
of the aggregate voting power of all outstanding Voting Stock shall
become an Affiliate of the Hourly Plan, unless, in either case
referred to in this sentence, the Hourly Plan, together with all
Affiliates
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<PAGE>
thereof, is not then the Beneficial Owner of 10% or more of the
aggregate voting power of all outstanding Voting Stock.
(4) Nothing contained in this Article Eighth shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
Ninth:
(1) The Board of Directors is expressly empowered to adopt, amend or
repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of
the Bylaws of the Corporation by the Board of Directors shall require, in
addition to any other affirmative vote that may be required by law, the
Restated Certificate of Incorporation or the Bylaws of the Corporation, the
affirmative vote of at least a majority of the Whole Board. The
stockholders of the Corporation shall also have the power to adopt, amend
or repeal the Bylaws of the Corporation at any annual or special meeting,
by the affirmative vote of holders of at least 66-2/3% of the then
outstanding Voting Stock, voting together as a single class, in addition to
any other affirmative vote that may be required by law, the Restated
Certificate of Incorporation or the Bylaws of the Corporation.
(2) Notwithstanding any other provision of the Restated Certificate of
Incorporation or the Bylaws of the Corporation (and in addition to any
other affirmative vote that may be required by law, the Restated
Certificate of Incorporation or the Bylaws of the Corporation), there shall
be required to amend, alter, change or repeal, directly or indirectly, or
adopt any provision inconsistent with, the provisions of Article Fifth
hereof, Article Sixth, Article Seventh hereof, Article Eighth hereof or
this Article Ninth, the affirmative vote of holders of at least 80% of the
then outstanding Voting Stock, voting together as a single class.
IN WITNESS WHEREOF, the Corporation has caused the Restated Certificate of
Incorporation to be signed and attested by its duly authorized officer, this
7th day of June, 1996.
ELECTRONIC DATA SYSTEMS
CORPORATION
By: /s/ D. Gilbert Friedlander
---------------------------------
D. Gilbert Friedlander, Secretary
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EXHIBIT 3(b)
AMENDED AND RESTATED
BYLAWS
OF
ELECTRONIC DATA SYSTEMS CORPORATION
(Adopted as of June 7, 1996)
ARTICLE I
OFFICES
1.1 Registered Office. The registered office of Electronic Data Systems
-----------------
Corporation (the "Corporation") in the State of Delaware shall be 1013
Centre Road, Wilmington, Delaware 19805. The name of the registered agent
at such address is The Prentice-Hall Corporation System, Inc.
1.2 Other Offices. The Corporation may also have offices at such other places
-------------
both within and outside the State of Delaware as the Board of Directors of
the Corporation (the "Board of Directors") may determine from time to time
or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place of Meetings. Meetings of stockholders of the Corporation shall be
-----------------
held at such place within or outside the State of Delaware as may be
designated by the Board of Directors or the officer calling the meeting.
2.2 Annual Meeting. The annual meeting of the stockholders of the Corporation
--------------
shall be held on the third Tuesday of May in each year, at ten o'clock a.m.
or on such other date and at such other time as shall be determined by the
Board of Directors and set forth in the notice of meeting, and on any
subsequent day or days or later time to which such meeting may be
adjourned, for the purposes of electing Directors of the Corporation and
transacting such other business as may properly come before the meeting.
The Board of Directors shall designate the place for the holding of such
meeting, and at least 10 days' notice shall be given to the stockholders of
the Corporation of the place so fixed. If the day designated herein is a
legal holiday, the annual meeting shall be held on the first succeeding day
which is not a legal holiday. If for any reason the annual meeting shall
not be held on the day designated herein, the Board of Directors shall
cause the annual meeting to be held as soon thereafter as may be
convenient. Failure to hold an annual meeting at the designated time or
otherwise shall not work a dissolution of the Corporation.
<PAGE>
2.3 Special Meetings. Unless otherwise provided by the provisions of the
----------------
General Corporation Law of the State of Delaware, or any successor statute
(the "DGCL"), or by or pursuant to the Restated Certificate of
Incorporation of the Corporation, as it may be further amended or restated
from time to time, including pursuant to any resolution or resolutions
adopted in accordance therewith by the Board of Directors providing for the
establishment of one or more series of preferred stock of the Corporation
(the "Certificate of Incorporation"), special meetings of the stockholders
of the Corporation may be called at any time only by the Chairman of the
Board of Directors or by the Board of Directors pursuant to a resolution
approved by the affirmative vote of at least a majority of the Whole Board,
and no such special meeting may be called by any other person or persons
(the term "Whole Board" shall mean the total number of Directors of the
Corporation as fixed in accordance with the Certificate of Incorporation,
whether or not there exist any vacancies in previously authorized
directorships). Upon written request of any person or persons referenced
in the immediately preceding sentence who are authorized to call special
meetings of the stockholders of the Corporation and who have duly called
such a special meeting, it shall be the duty of the Secretary of the
Corporation to fix the date of the meeting to be held not less than 10 nor
more than 60 days after the receipt of the request and to give due notice
thereof. If the Secretary shall neglect or refuse to fix the date of the
meeting and give notice thereof, the person or persons calling the meeting
may do so. Every special meeting of the stockholders of the Corporation
shall be held at such place within or outside the State of Delaware as the
Board of Directors or the officer calling the meeting may designate.
2.4 Notice of Meeting. Unless otherwise provided by the DGCL, whenever
-----------------
stockholders of the Corporation are required or permitted to take any
action at a meeting, written or printed notice of the meeting, stating the
place, date and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be delivered
not less than 10 nor more than 60 days before the date of the meeting,
either personally or by mail, by or at the direction of the Chairman of the
Board, the Chief Executive Officer or the Secretary of the Corporation, to
each stockholder of the Corporation entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to a stockholder of the Corporation at such
stockholder's address as it appears on the stock transfer records of the
Corporation, with postage thereon prepaid. Notice of any meeting of
stockholders of the Corporation need not be given to any stockholder of the
Corporation if waived by him in writing in accordance with Section 7.3
hereof. In addition, attendance at a meeting of the stockholders of the
Corporation shall constitute a waiver of notice of such meeting, except
when a stockholder of the Corporation attends a meeting for the express
purpose of objecting (and so expresses such objection at the beginning of
the meeting) to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
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2.5 Registered Holders of Shares; Closing of Share Transfer Records; and Record
---------------------------------------------------------------------------
Date.
----
(a) Registered Holders as Owners. Unless otherwise provided by Delaware
----------------------------
law, the Corporation may regard the person in whose name any shares
issued by the Corporation are registered in the stock transfer records
of the Corporation at any particular time (including, without
limitation, as of a record date fixed pursuant to Section 2.5(b)
hereof) as the owner of such shares at that time for purposes of
voting such shares, receiving distributions thereon or notices in
respect thereof, transferring such shares, exercising rights of
dissent with respect to such shares, entering into agreements with
respect to such shares, or giving proxies with respect to such shares;
and neither the Corporation nor any of its officers, Directors,
employees or agents shall be liable for regarding that person to be
the owner of such shares at that time for those purposes, regardless
of whether that person possesses a certificate for such shares.
(b) Record Date. For the purpose of determining stockholders of the
-----------
Corporation entitled to notice of or to vote at any meeting of
stockholders of the Corporation or any adjournment thereof, or
entitled to receive a distribution by the Corporation (other than a
distribution involving a purchase or redemption by the Corporation of
any of its own shares) or a share dividend, or in order to make a
determination of stockholders of the Corporation for any other proper
purpose, the Board of Directors may fix in advance a date as the
record date for any such determination of stockholders of the
Corporation, such date in any case to be not more than 60 days, and in
the case of a meeting of stockholders of the Corporation, not less
than 10 days, prior to the date on which the particular action
requiring such determination of stockholders of the Corporation is to
be taken. The Board of Directors shall not close the books of the
Corporation against transfers of shares during the whole or any part
of such period.
2.6 Quorum of Stockholders; Adjournment. Unless otherwise provided by the DGCL
-----------------------------------
or the Certificate of Incorporation, a majority of the outstanding shares
of all classes or series of capital stock of the Corporation entitled to
vote, present in person or represented by proxy, shall constitute a quorum
at any meeting of the stockholders of the Corporation, and the stockholders
of the Corporation present at any duly convened meeting may continue to do
business at such meeting or at any adjournment thereof notwithstanding any
withdrawal from the meeting of holders of shares counted in determining the
existence of a quorum. Unless otherwise provided by the Certificate of
Incorporation or these Bylaws, any meeting of the stockholders of the
Corporation may be adjourned from time to time, without notice other than
by announcement at the meeting at which such adjournment is taken, and at
any such adjourned meeting at which a quorum shall be present any action
may be taken that could have been taken at the meeting
3
<PAGE>
originally called; provided, however, that if the adjournment is for more
than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the adjourned meeting.
2.7 Voting by Stockholders.
----------------------
(a) Voting on Matters Other Than the Election of Directors. With respect
------------------------------------------------------
to any matters as to which no other voting requirement is specified by
the DGCL, the Certificate of Incorporation or these Bylaws, the
affirmative vote required for stockholder action shall be that of at
least a majority of the shares present in person or represented by
proxy at the meeting (as counted for purposes of determining the
existence of a quorum at the meeting). In the case of a matter
submitted for a vote of the stockholders of the Corporation as to
which a stockholder approval requirement is applicable under the
stockholder approval policy of the New York Stock Exchange or any
other exchange or quotation system on which the shares of any class or
series of capital stock of the Corporation is traded or quoted, the
requirements of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any other rule
promulgated under the Exchange Act requiring a vote of stockholders,
or any provision of the Internal Revenue Code, in each case for which
no higher voting requirement is specified by the DGCL, the Certificate
of Incorporation or these Bylaws, the vote required for approval shall
be the requisite vote specified in such stockholder approval policy,
Rule 16b-3 or such other rule promulgated under the Exchange Act or
Internal Revenue Code provision, as the case may be (or the highest
such requirement if more than one is applicable). For the approval of
the appointment of independent public accountants (if submitted for a
vote of the stockholders of the Corporation), the vote required for
approval shall be at least a majority of the votes cast on the matter.
(b) Voting in the Election of Directors. Unless otherwise provided by or
-----------------------------------
pursuant to the Certificate of Incorporation or these Bylaws in
accordance with the DGCL, at a meeting of stockholders of the
Corporation at which a quorum is present, Directors of the Corporation
shall be elected by a plurality of the votes cast by holders of
outstanding shares of all classes or series of capital stock of the
Corporation entitled to vote in the election of Directors of the
Corporation.
2.8 Stockholder Proposals. At an annual meeting of stockholders of the
---------------------
Corporation, only such business shall be conducted, and only such proposals
shall be acted upon, as shall have been properly brought before such annual
meeting. To be properly brought before an annual meeting, business or
proposals must (i) be specified in the notice relating to the
4
<PAGE>
meeting (or any supplement thereto) given by or at the direction of
the Board of Directors in accordance with Section 2.4 hereof or (ii)
be properly brought before the meeting by a stockholder of the
Corporation who (A) is a stockholder of record at the time of the
giving of such stockholder's notice provided for in this Section 2.8,
(B) shall be entitled to vote at the annual meeting and (C) complies
with the requirements of this Section 2.8, and otherwise be proper
subjects for stockholder action and be properly introduced at the
annual meeting. For a proposal to be properly brought before an annual
meeting by a stockholder of the Corporation, in addition to any other
applicable requirements, such stockholder must have given timely
advance notice thereof in writing to the Secretary of the Corporation.
To be timely, such stockholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the
Corporation not less than 90 days nor more than 270 days prior to the
scheduled annual meeting date, regardless of any postponements,
deferrals or adjournments of such annual meeting to a later date;
provided, however, that if the scheduled annual meeting date differs
from the annual meeting date prescribed by these Bylaws as in effect
on the date of the next preceding annual meeting of stockholders of
the Corporation and if less than 100 days' prior notice or public
disclosure of the scheduled annual meeting date is given or made,
notice by such stockholder, to be timely, must be so delivered or
received not later than the close of business on the 10th day
following the earlier of the day on which the notice of such meeting
was mailed to stockholders of the Corporation or the day on which such
public disclosure was made. Any such stockholder's notice to the
Secretary of the Corporation shall set forth as to each matter such
stockholder proposes to bring before the annual meeting (i) a
description of the proposal desired to be brought before the annual
meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the
Corporation's books, of such stockholder proposing such business and
any other stockholders of the Corporation known by such stockholder to
be in favor of such proposal, (iii) the number of shares of each class
or series of capital stock of the Corporation Beneficially Owned (as
defined below) by such stockholder on the date of such notice and (iv)
any material interest of such stockholder in such proposal. A person
shall be the "beneficial owner" of any shares of any class or series
of capital stock of the Corporation of which such person would be the
beneficial owner pursuant to the terms of Rule 13d-3 promulgated under
the Exchange Act as in effect on March 12, 1996; stock shall be deemed
"Beneficially Owned" by the beneficial owner or owners thereof. The
presiding officer of the meeting of stockholders of the Corporation
shall determine whether the requirements of this Section 2.8 have been
met with respect to any stockholder proposal. If the presiding officer
determines that any stockholder proposal was not made in accordance
with the terms of this
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Section 2.8, he shall so declare at the meeting and any such proposal
shall not be acted upon at the meeting. At a special meeting of
stockholders of the Corporation, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have
been properly brought before such special meeting. To be properly
brought before such a special meeting, business or proposals must (i)
be specified in the notice relating to the meeting (or any supplement
thereto) given by or at the direction of the Board of Directors in
accordance with Section 2.4 hereof or (ii) constitute matters incident
to the conduct of the meeting as the presiding officer of the meeting
shall determine to be appropriate. In addition to the foregoing
provisions of this Section 2.8, a stockholder of the Corporation shall
also comply with all applicable requirements of the Exchange Act and
the rules and regulations promulgated thereunder with respect to the
matters set forth in this Section 2.8.
ARTICLE III
DIRECTORS
3.1 Number, Classification and Tenure.
---------------------------------
(a) The powers of the Corporation shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be
managed by or under the direction of, the Board of Directors. In
addition to the authority and powers conferred upon the Board of
Directors by the DGCL, the Certificate of Incorporation or these
Bylaws, the Board of Directors is hereby authorized and empowered to
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject to the provisions of the
DGCL, the Certificate of Incorporation and any Bylaw of the
Corporation adopted by the stockholders of the Corporation; provided,
however, that no Bylaw of the Corporation hereafter adopted by the
stockholders of the Corporation, nor any amendment thereto, shall
invalidate any prior act of the Board of Directors that would have
been valid if such Bylaw or amendment thereto had not been adopted.
(b) Except as otherwise provided by the Certificate of Incorporation or
these Bylaws or to the extent prohibited by Delaware law, the Board of
Directors shall have the right to establish the rights, powers,
duties, rules and procedures that (i) from time to time shall govern
the Board of Directors, including, without limiting the generality of
the foregoing, the vote required for any action by the Board of
Directors and (ii) from time to time shall affect the Directors' power
to manage the business and affairs of the Corporation.
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(c) Within the limits specified in the Certificate of Incorporation, and
subject to such rights of holders of shares of one or more outstanding
series of preferred stock of the Corporation to elect one or more
Directors of the Corporation under circumstances as shall be provided
by or pursuant to the Certificate of Incorporation, the number of
Directors of the Corporation that shall constitute the Board of
Directors shall be fixed from time to time exclusively by, and may be
increased or decreased from time to time exclusively by, the
affirmative vote of at least a majority of the Whole Board.
(d) Each Director of the Corporation shall hold office for the full term
for which such Director is elected and until such Director's successor
shall have been duly elected and qualified or until his earlier death,
resignation or removal in accordance with the Certificate of
Incorporation and these Bylaws.
(e) The Directors of the Corporation, other than those who may be elected
by holders of shares of one or more outstanding series of preferred
stock of the Corporation under circumstances as shall be provided by
or pursuant to the Certificate of Incorporation, shall be divided into
three classes as provided by the Certificate of Incorporation.
(f) Unless otherwise provided by or pursuant to the Certificate of
Incorporation, newly created directorships resulting from any increase
in the authorized number of Directors of the Corporation and any
vacancies on the Board of Directors resulting from death, resignation
or removal in accordance with the Certificate of Incorporation and
these Bylaws shall be filled only by the affirmative vote of at least
a majority of the remaining Directors of the Corporation then in
office, even if such remaining Directors constitute less than a quorum
of the Board of Directors. Any Director of the Corporation elected in
accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of Directors of the
Corporation in which the new directorship was created or the vacancy
occurred and until such Director's successor shall have been elected
and qualified or until his earlier death, resignation or removal in
accordance with the Certificate of Incorporation and these Bylaws.
Unless otherwise provided by or pursuant to the Certificate of
Incorporation, no decrease in the number of Directors of the
Corporation constituting the Board of Directors shall shorten the term
of any incumbent Director of the Corporation. The term "Voting Stock"
shall mean all outstanding shares of all classes and series of capital
stock of the Corporation entitled to vote generally in the election of
Directors of the Corporation, considered as one class; and, if the
Corporation shall have shares of Voting Stock entitled to more or less
than one vote for any such share, each reference in these Bylaws to a
proportion or percentage in voting power of Voting Stock
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shall be calculated by reference to the portion or percentage of votes
entitled to be cast by holders of such shares generally in the
election of Directors of the Corporation.
3.2 Qualifications. Directors of the Corporation need not be residents of the
--------------
State of Delaware or stockholders of the Corporation.
3.3 Nomination of Directors. Subject to such rights of holders of shares of
-----------------------
one or more outstanding series of preferred stock of the Corporation to
elect one or more Directors of the Corporation under circumstances as shall
be provided by or pursuant to the Certificate of Incorporation, only
persons who are nominated in accordance with the procedures set forth in
this Section 3.3 shall be eligible for election as, and to serve as,
Directors of the Corporation. Nominations of persons for election to the
Board of Directors may be made only at an annual meeting of the
stockholders of the Corporation at which Directors of the Corporation are
to be elected (i) by or at the direction of the Board of Directors or (ii)
by any stockholder of the Corporation who is a stockholder of record at the
time of the giving of such stockholder's notice provided for in this
Section 3.3, who shall be entitled to vote at such meeting in the election
of Directors of the Corporation and who complies with the requirements of
this Section 3.3. Any such nomination by a stockholder of the Corporation
shall be preceded by timely advance notice in writing to the Secretary of
the Corporation. To be timely, such stockholder's notice must be delivered
to, or mailed and received at, the principal executive offices of the
Corporation not less than 90 days nor more than 270 days prior to the
scheduled annual meeting date, regardless of any postponements, deferrals
or adjournments of such annual meeting to a later date; provided, however,
that if the scheduled annual meeting date differs from the annual meeting
date prescribed by these Bylaws as in effect on the date of the next
preceding annual meeting of stockholders of the Corporation and if less
than 100 days' prior notice or public disclosure of the scheduled meeting
date is given or made, notice by such stockholder, to be timely, must be so
delivered or received not later than the close of business on the 10th day
following the earlier of the day on which the notice of such meeting was
mailed to stockholders of the Corporation or the day on which such public
disclosure was made. Any such stockholder's notice to the Secretary of the
Corporation shall set forth (i) as to each person whom such stockholder
proposes to nominate for election or re-election as a Director of the
Corporation, (A) the name, age, business address and residence address of
such person, (B) the principal occupation or employment of such person, (C)
the number of shares of each class or series of capital stock of the
Corporation Beneficially Owned by such person on the date of such notice
and (D) any other information relating to such person that is required to
be disclosed in solicitations of proxies for election of Directors of the
Corporation, or is otherwise required, in each case pursuant to Regulation
14A promulgated under the Exchange Act (including, without limitation, the
written consent of such person to having such person's name placed in
nomination at the meeting and to serve as a Director of the Corporation if
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elected), and (ii) as to such stockholder giving the notice, (A) the name
and address, as they appear on the Corporation's books, of such stockholder
and any other stockholders of the Corporation known by such stockholder to
be in favor of such person being nominated and (B) the number of shares of
each class or series of capital stock of the Corporation Beneficially Owned
by such stockholder on the date of such notice. The presiding officer of
the meeting of stockholders of the Corporation shall determine whether the
requirements of this Section 3.3 have been met with respect to any
nomination or intended nomination. If the presiding officer determines
that any nomination was not made in accordance with the requirements of
this Section 3.3, he shall so declare at the meeting and the defective
nomination shall be disregarded. In addition to the foregoing provisions
of this Section 3.3, a stockholder of the Corporation shall also comply
with all applicable requirements of the Exchange Act and the rules and
regulations promulgated thereunder with respect to the matters set forth in
this Section 3.3.
3.4 Place of Meeting. Meetings of the Board of Directors, regular or special,
----------------
may be held either within or outside of the State of Delaware, at whatever
place is specified by the person or persons calling the meeting. In the
absence of specific designation, the meetings shall be held at the
principal office of the Corporation.
3.5 Regular Meetings. Regular meetings of the Board of Directors shall be held
----------------
at such place or places within or outside the State of Delaware, at such
hour and on such day as may be fixed by resolution of the Board of
Directors, without further notice of such meetings. The time or place of
holding regular meetings of the Board of Directors may be changed by the
Chairman of the Board or the Chief Executive Officer by giving written
notice thereof as provided by Section 3.7 hereof.
3.6 Special Meetings. Special meetings of the Board of Directors shall be
----------------
held, whenever called by the Chairman of the Board or the Chief Executive
Officer or Directors of the Corporation constituting at least a majority of
the Whole Board, at such place or places within or outside the State of
Delaware as may be stated in the notice of the meeting.
3.7 Attendance at and Notice of Meetings. Written notice of the time and place
------------------------------------
of, and general nature of the business to be transacted at, all special
meetings of the Board of Directors, and written notice of any change in the
time or place of holding the regular meetings of the Board of Directors,
shall be given to each Director of the Corporation personally or by mail or
by telegraph, telecopier or similar communication at least one day before
the day of the meeting; provided, however, that notice of any meeting need
not be given to any Director of the Corporation if waived by him in writing
in accordance with Section 7.3 hereof, or if he shall be present at such
meeting. Attendance at a meeting of the Board of Directors shall
constitute presence in person at such meeting, except when a Director of
the Corporation attends a meeting for the express purpose of objecting
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(and so expresses such objection at the beginning of the meeting) to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
3.8 Quorum of and Action by Directors. A majority of the Directors of the
---------------------------------
Corporation in office (i.e., excluding any directorships in which vacancies
may exist) shall constitute a quorum of the Board of Directors for the
transaction of business; but a lesser number may adjourn from day to day
until a quorum is present. Unless otherwise required by the Certificate of
Incorporation, the DGCL or these Bylaws, the affirmative vote of at least a
majority of the Directors of the Corporation present at a meeting at which
a quorum is present, shall be the act of the Board of Directors.
3.9 Board and Committee Action Without a Meeting. Unless otherwise restricted
--------------------------------------------
by the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at a meeting of the Board of Directors or any
committee thereof may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the Directors of the
Corporation or members of such committee, as the case may be, and shall be
filed with the Secretary of the Corporation.
3.10 Board and Committee Telephone Meetings. Subject to the provisions required
--------------------------------------
or permitted by the DGCL for notice of meetings, unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, Directors
of the Corporation, or members of any committee designated by the Board of
Directors, may participate in and hold a meeting of such Board of Directors
or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other, and participation in a meeting pursuant to this Section
3.10 shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting
(and so expresses such objection at the beginning of the meeting) to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
3.11 Compensation. Directors of the Corporation shall receive such compensation
------------
for their services as shall be determined by the Board of Directors.
3.12 Removal.
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(a) No Director of the Corporation shall be removed from such office by
vote or other action of the stockholders of the Corporation or
otherwise, except by the affirmative vote of holders of at least a
majority of the then outstanding Voting Stock, voting together as a
single class. No Director of the Corporation shall be removed from
such office by vote or other action of the stockholders of the
Corporation or otherwise, except for cause,
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which shall be deemed to exist only if: (i) such Director has been
convicted, or such Director is granted immunity to testify where
another has been convicted, of a felony by a court of competent
jurisdiction (and such conviction is no longer subject to direct
appeal); (ii) such Director has been found by a court of competent
jurisdiction (and such finding is no longer subject to direct appeal)
or by the affirmative vote of at least a majority of the Whole Board
at any regular or special meeting of the Board of Directors called for
such purpose to have been grossly negligent or guilty of willful
misconduct in the performance of his duties to the Corporation in a
matter of substantial importance to the Corporation; (iii) such
Director has been adjudicated by a court of competent jurisdiction to
be mentally incompetent, which mental incompetency directly affects
his ability to perform as a Director of the Corporation; (iv) such
Director has been found by a court of competent jurisdiction (and such
finding is no longer subject to direct appeal) or by the affirmative
vote of at least a majority of the Whole Board at any regular or
special meeting of the Board of Directors called for such purpose to
have breached such Director's duty of loyalty to the Corporation or
its stockholders or to have engaged in any transaction with the
Corporation from which such Director derived an improper personal
benefit; or (v) "cause" for removal otherwise exists under Section
141(k)(1) of the DGCL. No Director of the Corporation so removed may
be nominated, re-elected or reinstated as a Director of the
Corporation so long as the cause for removal continues to exist. Any
proposal by a stockholder of the Corporation to remove a Director of
the Corporation, in order to be validly acted upon at any meeting,
shall comply with Section 2.8 hereof.
(b) Notwithstanding Section 3.12(a) hereof, whenever holders of shares of
one or more outstanding series of preferred stock of the Corporation
are entitled to elect one or more Directors of the Corporation under
circumstances as shall be provided by or pursuant to the Certificate
of Incorporation, any Director of the Corporation so elected may be
removed in accordance with such provisions.
3.13 Committees of the Board of Directors.
------------------------------------
(a) The Board of Directors, by resolution adopted by the affirmative vote
of at least a majority of the Board of Directors, may designate and
appoint from among its members one or more committees, each of which
shall be comprised of one or more of its members, and may designate
one or more of its members as alternate members of any committee, who
may, subject to any limitations by the Board of Directors, replace
absent or disqualified members at any meeting of that committee. Any
such committee, to the extent provided by such resolution or in the
Certificate of Incorporation or
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these Bylaws, shall have and may exercise all of the authority of the
Board of Directors to the extent permitted by the DGCL.
(b) The Board of Directors shall have the power at any time to change the
membership of any committee of the Board of Directors and to fill
vacancies in it. A majority of the number of members of any such
committee (excluding any committee memberships in which vacancies may
exist) shall constitute a quorum of such committee for the transaction
of business unless a greater number is required by a resolution
adopted by the Board of Directors. The Board of Directors, or each
such committee in the absence of action by the Board of Directors, may
elect a chairman of such committee and appoint such subcommittees and
assistants as it may deem necessary. Unless otherwise provided by
resolution of the Board of Directors, meetings of any committee shall
be conducted (i) in accordance with Sections 3.9, 3.10 and 7.3 hereof
and (ii) in the same manner that Sections 3.5, 3.6, 3.7 and 3.8 hereof
apply to meetings of the Board of Directors. Any member of any such
committee designated or appointed by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best
interests of the Corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of a member of a committee
shall not of itself create contract rights.
(c) Any action taken by any committee of the Board of Directors shall
promptly be recorded in the minutes and filed with the Secretary of
the Corporation and shall be made available to any and all Directors
of the Corporation.
ARTICLE IV
OFFICERS
4.1 Officers. The officers of the Corporation shall consist of a Chief
--------
Executive Officer, a President, a Secretary, a Chief Financial Officer, a
Treasurer and a Controller, each of whom shall be elected or appointed by
the Board of Directors. Such other officers of the Corporation, including
a Chairman of the Board, a Vice Chairman of the Board, a Chief Operating
Officer, any number of Vice Presidents, assistant officers of the
Corporation, and agents as may be deemed necessary, may be elected or
appointed by the Board of Directors. Any two or more offices may be held
by the same person. Employees of the Corporation who serve in a capacity
with an officer's title for a Division, Strategic Business Unit, Strategic
Support Unit or a similar division or subdivision of the Corporation shall
not be deemed officers of the Corporation with respect to such capacity.
All officers and agents of the Corporation, as between themselves and the
Corporation, shall have such authority and perform such duties in the
management of the Corporation as is
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provided by these Bylaws, or as may be determined by resolution of the
Board of Directors not inconsistent with these Bylaws.
4.2 Vacancies. Whenever any vacancies shall occur in any office of the
---------
Corporation by death, resignation, removal, increase in the number of
offices of the Corporation, or otherwise, the same shall be filled by the
Board of Directors. If any such vacancy shall occur by death, resignation
or removal of an officer who was appointed by the Chief Executive Officer,
the Secretary, the Treasurer or the Controller in accordance with these
Bylaws, such vacancy may also be filled by the Chief Executive Officer, the
Secretary, the Treasurer or the Controller, as applicable. Any officer so
elected or appointed shall hold office until such officer's successor is
elected or appointed or until his earlier death, resignation or removal.
4.3 Removal. Any officer or agent elected or appointed by the Board of
-------
Directors or appointed by the Chief Executive Officer, the Secretary, the
Treasurer or the Controller may be removed by the Board of Directors
whenever in its judgment the best interests of the Corporation will be
served thereby. Any officer or agent appointed by the Chief Executive
Officer, the Secretary, the Treasurer or the Controller may be removed by
the officer (or such officer's successor) who appointed such officer or
agent whenever in the judgment of the appointing officer (or such officer's
successor) the best interests of the Corporation will be served thereby.
Any such removal shall be without prejudice to the contract rights, if any,
of the officer or agent so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
4.4 Chairman of the Board. The Board of Directors may elect or appoint, from
---------------------
among its members, a Chairman of the Board of the Corporation. The
Chairman of the Board, when present, shall preside at all meetings of the
stockholders of the Corporation and of the Board of Directors. The
Chairman of the Board shall perform, under the direction and subject to the
control of the Board of Directors, all duties incident to the office of
Chairman of the Board and such other duties as the Board of Directors may
assign to the Chairman of the Board from time to time. The Chairman of the
Board may execute (in facsimile or otherwise) and deliver certificates for
shares of the Corporation, any deeds, mortgages, bonds, contracts or other
instruments that the Board of Directors has authorized to be executed and
delivered, except in cases where the execution and delivery thereof shall
be expressly and exclusively delegated to one or more other officers or
agents of the Corporation by the Board of Directors or these Bylaws, or
where the execution and delivery thereof shall be required by law to be
executed and delivered by another person. The Chairman of the Board shall
have the power and authority to appoint one or more Vice Presidents of the
Corporation, which power shall not be exclusive of any right of the Board
of Directors, the Vice Chairman of the Board, the Chief Executive Officer
or the President to elect or appoint such officers.
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4.5 Vice Chairman of the Board. The Board of Directors may elect or appoint,
--------------------------
from among its members, a Vice Chairman of the Board of the Corporation.
The Vice Chairman of the Board shall perform, under the direction and
subject to the control of the Board of Directors and the Chairman of the
Board, all duties incident to the office of Vice Chairman of the Board and
such other duties as the Board of Directors or the Chairman of the Board
may assign to the Vice Chairman of the Board from time to time. In the
event of the death, disability or other absence of the Chairman of the
Board, the duties of the Chairman of the Board may be performed by the Vice
Chairman of the Board. The Vice Chairman of the Board may execute (in
facsimile or otherwise) and deliver certificates for shares of the
Corporation, any deeds, mortgages, bonds, contracts or other instruments
that the Board of Directors has authorized to be executed and delivered,
except in cases where the execution and delivery thereof shall be expressly
and exclusively delegated to one or more other officers or agents of the
Corporation by the Board of Directors or these Bylaws, or where the
execution and delivery thereof shall be required by law to be executed and
delivered by another person. The Vice Chairman of the Board shall have the
power and authority to appoint one or more Vice Presidents of the
Corporation, which power shall not be exclusive of any right of the Board
of Directors, the Chairman of the Board, the Chief Executive Officer or the
President to elect or appoint such officers.
4.6 Chief Executive Officer. The Chief Executive Officer in general shall
-----------------------
supervise and control all of the business and affairs of the Corporation,
under the direction and subject to the control of the Board of Directors,
the Chairman of the Board and such other officer or officers as the Board
of Directors or the Chairman of the Board may designate. The Chief
Executive Officer shall perform, under the direction and subject to the
control of the Board of Directors, the Chairman of the Board and such other
officer or officers as the Board of Directors or the Chairman of the Board
may designate, all duties incident to the office of Chief Executive Officer
and such other duties as the Board of Directors, the Chairman of the Board
or such other officer or officers may assign to the Chief Executive Officer
from time to time. The Chief Executive Officer may execute (in facsimile or
otherwise) and deliver certificates for shares of the Corporation, any
deeds, mortgages, bonds, contracts or other instruments that the Board of
Directors has authorized to be executed and delivered, except in cases
where the execution and delivery thereof shall be expressly and exclusively
delegated to one or more other officers or agents of the Corporation by the
Board of Directors or these Bylaws, or where the execution and delivery
thereof shall be required by law to be executed and delivered by another
person. The Chief Executive Officer shall have the power and authority to
appoint one or more Vice Presidents of the Corporation, which power shall
not be exclusive of any right of the Board of Directors, the Chairman of
the Board, the Vice Chairman of the Board or the President to elect or
appoint such officers.
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4.7 President. The President shall perform, under the direction and subject to
---------
the control of the Board of Directors, the Chairman of the Board and such
other officer or officers as the Board of Directors or the Chairman of the
Board may designate, all duties incident to the office of President and
such other duties as the Board of Directors, the Chairman of the Board or
such other officer or officers may assign to the President from time to
time. In the event of the death, disability or other absence of the
Chairman of the Board and the Vice Chairman of the Board, the duties of the
Chairman of the Board may be performed by the President. The President may
execute (in facsimile or otherwise) and deliver certificates for shares of
the Corporation, any deeds, mortgages, bonds, contracts or other
instruments that the Board of Directors has authorized to be executed and
delivered, except in cases where the execution and delivery thereof shall
be expressly and exclusively delegated to one or more other officers or
agents of the Corporation by the Board of Directors or these Bylaws, or
where the execution and delivery thereof shall be required by law to be
executed and delivered by another person. The President shall have the
power and authority to appoint one or more Vice Presidents of the
Corporation, which power shall not be exclusive of any right of the Board
of Directors, the Chairman of the Board, the Vice Chairman of the Board or
the Chief Executive Officer to elect or appoint such officers.
4.8 Chief Operating Officer. The Chief Operating Officer shall perform, under
-----------------------
the direction and subject to the control of the Board of Directors, the
Chairman of the Board and such other officer or officers as the Board of
Directors or the Chairman of the Board may designate, all duties incident
to the office of Chief Operating Officer and such other duties as the Board
of Directors, the Chairman of the Board or such other officer or officers
may assign to the Chief Operating Officer from time to time. The Chief
Operating Officer may execute (in facsimile or otherwise) and deliver any
deeds, mortgages, bonds, contracts or other instruments that the Board of
Directors has authorized to be executed and delivered, except in cases
where the execution and delivery thereof shall be expressly and exclusively
delegated to one or more other officers or agents of the Corporation by the
Board of Directors or these Bylaws, or where the execution and delivery
thereof shall be required by law to be executed and delivered by another
person.
4.9 Vice President. Each Vice President of the Corporation shall perform,
--------------
under the direction and subject to the control of the Board of Directors,
the Chairman of the Board and such other officer or officers as the Board
of Directors or the Chairman of the Board may designate, such duties as the
Board of Directors, the Chairman of the Board or such other officer or
officers may assign to such Vice President from time to time. Vice
Presidents of the Corporation may be further designated as Executive Vice
Presidents, Senior Vice Presidents, Assistant Vice Presidents or such other
similar title as the Board of Directors, the Chairman of the Board or such
other officer or officers as the Board of Directors or the Chairman of the
Board may designate.
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4.10 Secretary. The Secretary of the Corporation shall attend all meetings of
---------
the stockholders of the Corporation, the Board of Directors and committees
established by the Board of Directors (except where the committee has
appointed its own secretary) and shall record correctly the proceedings of
such meetings in a book suitable for such purposes. The Secretary shall
attest with a signature and the seal of the Corporation (in facsimile or
otherwise) all stock certificates issued by the Corporation and shall keep
a stock ledger in which all transactions pertaining to shares of all
classes and series of capital stock of the Corporation shall be correctly
recorded. The Secretary, or the President, shall also attest with a
signature and the seal of the Corporation (in facsimile or otherwise) all
deeds, conveyances or other instruments requiring the seal of the
Corporation. The Secretary shall have the power and authority on behalf
of the Corporation to execute any consents of stockholders, members,
partners or other owners and to attend, and to act and to vote in person or
by proxy in connection with, any meetings of the stockholders, members,
partners or other owners of any corporation, limited liability company,
partnership or other entity in which the Corporation may own stock,
membership interests, partnership interests or other securities, and in
connection with any such meeting, the Secretary shall possess and may
exercise any and all the rights and powers incident to the ownership of
such stock, membership interests, partnership interests or other securities
that the Corporation, as the owner thereof, may possess and exercise. This
power and authority shall not be exclusive of any right of the Board of
Directors to grant such power and authority to any other person. The
Chairman of the Board, the Chief Executive Officer or the Secretary shall
give, or cause to be given, notice of all meetings of the stockholders of
the Corporation and special meetings of the Board of Directors or
committees established by the Board of Directors. The Secretary is
authorized to issue certificates, to which the corporate seal may be
affixed, attesting to the incumbency of officers of the Corporation or to
actions duly taken by the stockholders of the Corporation, the Board of
Directors or any committee established by the Board of Directors. The
Secretary shall perform, under the direction and subject to the control of
the Board of Directors, the Chairman of the Board and such other officer or
officers as the Board of Directors or the Chairman of the Board may
designate, all duties incident to the office of Secretary and such other
duties as the Board of Directors, the Chairman of the Board or such other
officer or officers may assign to the Secretary from time to time. The
duties of the Secretary may also be performed by any Assistant Secretary of
the Corporation. The Secretary shall have the power and authority to
appoint one or more Assistant Secretaries of the Corporation, which power
shall not be exclusive of any right of the Board of Directors to elect or
appoint such officer.
4.11 Chief Financial Officer. The Chief Financial Officer of the Corporation in
-----------------------
general shall supervise all of the financial affairs of the Corporation,
under the direction and subject to the control of the Board of Directors
and the President. The Chief
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Financial Officer shall have the power and authority on behalf of the
Corporation to execute (in facsimile or otherwise) any consents of
stockholders, members, partners or other owners and to attend, and to act
and to vote in person or by proxy in connection with, any meetings of
stockholders, members, partners or other owners of any corporation, limited
liability company, partnership or other entity in which the Corporation may
own stock, membership interests, partnership interests or other securities,
and in connection with any such meeting, the Chief Financial Officer shall
possess and may exercise any and all the rights and powers incident to the
ownership of such stock, membership interests, partnership interests or
other securities that the Corporation, as the owner thereof, may possess
and exercise. This power and authority shall not be exclusive of any right
of the Board of Directors to grant such power and authority to any other
person. The Chief Financial Officer shall perform, under the direction and
subject to the control of the Board of Directors, the Chairman of the Board
and such other officer or officers as the Board of Directors or the
Chairman of the Board may designate, all duties incident to the office of
Chief Financial Officer and such other duties as the Board of Directors,
the Chairman of the Board or such other officer or officers may assign to
the Chief Financial Officer from time to time.
4.12 Treasurer. The Treasurer of the Corporation shall have the care and
---------
custody of all the funds, notes, bonds, debentures, stock and other
securities of the Corporation that may come into the hands of the
Treasurer, acting in such capacity. The Treasurer shall be responsible for
the investment and reinvestment of funds of the Corporation in accordance
with general investment policies determined from time to time by the
Corporation and shall ensure that the Corporation is adequately funded at
all times by arranging, under the direction and subject to the control of
the Board of Directors, for the issuance of debt, equity and other forms of
securities that may be necessary or appropriate. The Treasurer may endorse
(in facsimile or otherwise) checks, drafts, notes, bonds, debentures and
other instruments for the payment of money for deposit or collection when
necessary or appropriate and may deposit the same to the credit of the
Corporation in such banks or depositories as the Board of Directors may
designate from time to time, and the Treasurer may endorse (in facsimile or
otherwise) all commercial documents requiring endorsements for or on behalf
of the Corporation. The Treasurer may deliver instructions to financial
institutions by facsimile or otherwise. The Treasurer may execute (in
facsimile or otherwise) all receipts and vouchers for payments made to the
Corporation. The Treasurer shall render an account of the Treasurer's
transactions to the Board of Directors or its Audit Committee as often as
the Board of Directors or its Audit Committee shall require from time to
time. The Treasurer shall enter regularly in the books to be kept by the
Treasurer for that purpose, a full and adequate account of all monies
received and paid by the Treasurer on account of the Corporation. The
Treasurer shall have the power and authority on behalf of the Corporation
to execute (in facsimile or otherwise) any consents of stockholders,
members, partners or other owners and to attend, and to act and to vote in
person or by proxy in connection with, any
17
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meetings of stockholders, members, partners or other owners of any
corporation, limited liability company, partnership or other entity in
which the Corporation may own stock, membership interests, partnership
interests or other securities and in connection with any such meeting, the
Treasurer shall possess and may exercise any and all the rights and powers
incident to the ownership of such stock, membership interests, partnership
interests or other securities that the Corporation, as the owner thereof,
may possess and exercise. This power and authority shall not be exclusive
of any right of the Board of Directors to grant such power and authority to
any other person. If requested by the Board of Directors, the Treasurer
shall give a bond to the Corporation for the faithful performance of the
Treasurer's duties, the expense of which bond shall be borne by the
Corporation. The Treasurer shall perform, under the direction and subject
to the control of the Board of Directors, the Chairman of the Board and
such other officer or officers as the Board of Directors or the Chairman of
the Board may designate, all duties incident to the office of Treasurer and
such other duties as the Board of Directors, the Chairman of the Board or
such other officer or officers may assign to the Treasurer from time to
time. The duties of the Treasurer may also be performed by any Assistant
Treasurer of the Corporation. The Treasurer shall have the power and
authority to appoint one or more Assistant Treasurers of the Corporation,
which power shall not be exclusive of any right of the Board of Directors
to elect or appoint such officer.
4.13 Controller. The Controller of the Corporation shall be the chief
----------
accounting officer of the Corporation, shall maintain adequate records of
all assets, liabilities and transactions of the Corporation and shall be
responsible for the design, installation and maintenance of accounting and
cost control systems and procedures throughout the Corporation. The
Controller also shall keep in books belonging to the Corporation full and
accurate accounts of receipts of, and disbursements made by, the
Corporation. The Controller shall render an account of the Controller's
transactions to the Board of Directors or its Audit Committee as often as
the Board of Directors or its Audit Committee shall require from time to
time. If requested by the Board of Directors, the Controller shall give a
bond to the Corporation for the faithful performance of the Controller's
duties, the expense of which bond shall be borne by the Corporation. The
Controller shall perform, under the direction and subject to the control of
the Board of Directors, the Chairman of the Board and such other officer or
officers as the Board of Directors or the Chairman of the Board may
designate, all duties incident to the office of Controller and such other
duties as the Board of Directors, the Chairman of the Board or such other
officer or officers may assign to the Controller from time to time. The
duties of the Controller may also be performed by any Assistant Controller
of the Corporation. The Controller shall have the power and authority to
appoint one or more Assistant Controllers of the Corporation, which power
shall not be exclusive of any right of the Board of Directors to elect or
appoint such officer.
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4.14 Delegation of Authority. In the case of any absence of any officer of the
-----------------------
Corporation or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may delegate in writing some or all of
the powers or duties of such officer to any other officer or to any
Director, employee, stockholder or agent of the Corporation for whatever
period of time the Board of Directors deems appropriate.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates. The certificates representing shares of all classes or
------------------
series of capital stock of the Corporation shall be in such form or forms
as shall be approved by the Board of Directors, or the Corporation's stock
may be represented by uncertificated shares. In the case of certificated
shares, the Corporation shall deliver certificates representing shares to
which stockholders of the Corporation are entitled. Certificates
representing such certificated shares shall be signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a Vice
President and either the Treasurer, the Assistant Treasurer, the Secretary
or an Assistant Secretary, and may, but shall not be required to, bear the
seal of the Corporation or a facsimile thereof. The signatures of such
officers upon a certificate may be facsimiles. In the event the original
or facsimile signature on a certificate is of an officer who has ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer at the
date of its issuance.
ARTICLE VI
INDEMNIFICATION
6.1 General. Each person who at any time shall serve or shall have served as a
-------
Director, officer, employee or agent of the Corporation (including any
predecessor of the Corporation), or any person who is or was serving at the
written request of the Corporation (in accordance with written procedures
adopted from time to time by the Board of Directors) as a director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other
enterprise, shall be entitled to (a) indemnification and (b) the
advancement of expenses incurred by such person from the Corporation as,
and to the fullest extent, permitted by Section 145 of the DGCL or any
successor statutory provision, as from time to time amended. The foregoing
right of indemnification and to the advancement of expenses shall not be
deemed exclusive of any other rights to which those to be indemnified may
be entitled as a matter of law or under any agreement, vote of stockholders
or disinterested Directors of the Corporation, or other arrangement.
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6.2 Insurance. The Corporation may purchase and maintain insurance or another
---------
arrangement on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation or who is or was serving at the
written request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against
any liability asserted against and incurred by such person in such capacity
or arising out of such person's status in such capacity, whether or not the
Corporation would have the power to indemnify such person against that
liability under this Article VI or the DGCL.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Bylaw Amendments. The Board of Directors is expressly empowered to adopt,
----------------
amend or repeal these Bylaws. Any adoption, amendment or repeal of these
Bylaws by the Board of Directors shall require, in addition to any other
affirmative vote that may be required by law, the Certificate of
Incorporation or these Bylaws, the affirmative vote of at least a majority
of the Whole Board. The stockholders of the Corporation shall also have
the power to adopt, amend or repeal these Bylaws at any annual or special
meeting, by the affirmative vote of holders of at least 66-2/3% of the then
outstanding Voting Stock, voting together as a single class, in addition to
any other affirmative vote that may be required by law, the Certificate of
Incorporation or these Bylaws. Any proposal by a stockholder of the
Corporation to adopt, amend or repeal these Bylaws, in order to be validly
acted upon at any meeting, shall comply with Section 2.8 hereof.
7.2 Books and Records. The Corporation shall keep books and records of account
-----------------
and shall keep minutes of the proceedings of its stockholders, its Board of
Directors and each committee of its Board of Directors.
7.3 Waiver of Notice. Whenever any notice is required to be given to any
----------------
stockholder of the Corporation, any Director of the Corporation or any
member of any committee of the Board of Directors, under the provisions of
the DGCL, the Certificate of Incorporation or these Bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Neither the business transacted at, nor the purpose
of, any regular or special meeting of such stockholders, Directors or
committees need be stated in the written waiver of notice of such meeting.
7.4 Resignations. Any Director or officer of the Corporation may resign at any
------------
time. Such resignation shall be made in writing and shall take effect at
the time
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specified therein, or, if no time be specified, at the time of its receipt
by the Chairman of the Board, the Vice Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer or the
Secretary. The acceptance of a resignation shall not be necessary to make
it effective, unless expressly so provided by the resignation.
7.5 Seal. The seal of the Corporation shall be in such form as the Board of
----
Directors may adopt.
7.6 Fiscal Year. The fiscal year of the Corporation shall end on the 31st day
-----------
of December of each year or as otherwise provided by a resolution adopted
by the Board of Directors.
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EXHIBIT 10(A)
MASTER SERVICE AGREEMENT
BETWEEN
GENERAL MOTORS CORPORATION
AND
ELECTRONIC DATA SYSTEMS CORPORATION
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
RECITALS................................................................... 1
ARTICLE I. INTRODUCTORY PROVISIONS
Section 1.1 Scope of Agreement................................... 2
Section 1.2 Definitions.......................................... 3
Section 1.3 Agreement............................................ 7
Section 1.4 Term................................................. 10
Section 1.5 Applicability of Provisions.......................... 11
Section 1.6 Fundamental Principle of Good Faith and Fair Dealing. 11
ARTICLE II. SERVICE AGREEMENTS
Section 2.1 Service Agreements................................... 11
Section 2.2 Service Agreement Objectives......................... 15
Section 2.3 Competitiveness...................................... 16
Section 2.4 Continued Services to Divested Business Units........ 17
Section 2.5 Extension of Service Agreements...................... 17
Section 2.6 Payment Terms........................................ 18
Section 2.7 Removal of PRR and Similar Provisions................ 20
ARTICLE III. OPERATIONAL PROVISIONS
Section 3.1 GM/EDS Relationship.................................. 20
Section 3.2 IT Strategy and Architecture......................... 20
Section 3.3 Contract Administration.............................. 21
Section 3.4 Attestation by Independent Public Accountants........ 25
Section 3.5 Audit by GM Central Office........................... 25
Section 3.6 Price Level Detail................................... 25
Section 3.7 Co-Negotiation....................................... 26
ARTICLE IV. STRUCTURAL COST REDUCTIONS
Section 4.1 Delco Electronics Structural Cost Reductions......... 28
Section 4.2 General IT Structural Cost Reductions................ 29
ARTICLE V. MARKET TESTING AND RESOURCING
Section 5.1 Initial Market Testing and Resourcing by GMIO........ 31
Section 5.2 Later Market Testing and Resourcing by GM............ 32
Section 5.3 General Limitations and Requirements................. 35
ARTICLE VI. GENERAL PROVISIONS
Section 6.1 Termination of MSA................................... 40
Section 6.2 Insurance............................................ 42
Section 6.3 Foreign Subsidiaries................................. 43
Section 6.4 Compliance with Advance Agreement.................... 43
Section 6.5 Amendment or Modification............................ 44
Section 6.6 Incorporation of Exhibit A........................... 44
Section 6.7 Prior Master Agreement............................... 44
Section 6.8 Governing Law........................................ 45
</TABLE>
i
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<TABLE>
<CAPTION>
EXHIBIT A. STANDARD TERMS AND CONDITIONS RECOMMENDED
FOR INCORPORATION INTO SERVICE AGREEMENTS
<S> <C>
ARTICLE A-I. DEFINITIONS AND INTERPRETATION
Section A1.1 Definitions.......................................... A-1
Section A1.2 Interpretation....................................... A-5
ARTICLE A-II. CONTRACT ADMINISTRATION AND REVIEW
Section A2.1 Management and Administration........................ A-6
Section A2.2 Performance Review................................... A-7
ARTICLE A-III. GM ASSETS AND SPACE
Section A3.1 GM Assets............................................ A-7
Section A3.2 GM Space............................................. A-8
ARTICLE A-IV. SOFTWARE AND INTELLECTUAL PROPERTY
Section A4.1 Ownership of Software................................ A-8
Section A4.2 Software Rights and Licenses......................... A-10
Section A4.3 Changes and Upgrades to Software..................... A-15
Section A4.4 Third Party Software Developers...................... A-16
Section A4.5 Intellectual Property................................ A-16
ARTICLE A-V. DATA PROTECTION AND AUDIT RIGHTS
Section A5.1 GM Data.............................................. A-17
Section A5.2 Safeguarding of GM Data.............................. A-18
Section A5.3 Nondisclosure........................................ A-18
Section A5.4 Data Center Security................................. A-19
Section A5.5 Audit Rights......................................... A-19
ARTICLE A-VI. EMPLOYEES
Section A6.1 EDS' Employees....................................... A-20
Section A6.2 Notice to EDS' Employees............................. A-20
Section A6.3 Premise and Work Rules............................... A-21
Section A6.4 Right of Access...................................... A-21
Section A6.5 Key EDS Employees for Critical Projects.............. A-21
ARTICLE A-VII. EDS COMPENSATION
Section A7.1 Uniform Published Rates.............................. A-22
Section A7.2 Fixed Price Methodology.............................. A-24
Section A7.3 Cost-Plus Pricing.................................... A-26
Section A7.4 Pricing Detail....................................... A-30
Section A7.5 Tax Matters.......................................... A-31
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE A-VIII. BILLING AND PAYMENT PROCEDURES
<S> <C>
Section A8.1 Billing Procedures................................... A-33
Section A8.2 Time of Payment...................................... A-34
ARTICLE A-IX. DISPUTES AND TERMINATION
Section A9.1 Negotiation of Disputes.............................. A-36
Section A9.2 Resolution of Disputes............................... A-36
Section A9.3 Termination.......................................... A-37
Section A9.4 Cancellation of Services and Cancellation Charges.... A-38
Section A9.5 Termination Assistance and Transition................ A-41
ARTICLE A-X. WARRANTIES
Section A10.1 Software Warranty.................................... A-44
Section A10.2 Hardware Warranty.................................... A-44
Section A10.3 Pass-Through Warranties.............................. A-44
Section A10.4 Survival of Warranties............................... A-45
Section A10.5 Disclaimer of Warranties............................. A-45
ARTICLE A-XI. INDEMNITIES AND LIABILITY
Section A11.1 Cross Indemnity...................................... A-45
Section A11.2 Proprietary Rights Indemnity......................... A-46
Section A11.3 Hardware Damage Indemnity............................ A-46
Section A11.4 Software License Indemnity........................... A-47
Section A11.5 Limitation of Liability.............................. A-47
ARTICLE A-XII. SPECIAL PROVISIONS RELATING TO MSA SERVICES
Section A12.1 GM's IT Strategy and Architecture.................... A-48
Section A12.2 Competitiveness...................................... A-48
Section A12.3 Market Testing and Resourcing........................ A-49
Section A12.4 Co-Negotiation....................................... A-49
Section A12.5 Use of Independent Auditors.......................... A-49
ARTICLE A-XIII. MISCELLANEOUS
Section A13.1 Binding Nature and Assignment........................ A-50
Section A13.2 Notices.............................................. A-50
Section A13.3 Counterparts......................................... A-51
Section A13.4 Headings............................................. A-51
Section A13.5 Approvals and Similar Actions........................ A-51
Section A13.6 Force Majeure........................................ A-51
Section A13.7 Severability......................................... A-52
Section A13.8 Waiver............................................... A-52
Section A13.9 Relationship of Parties.............................. A-52
Section A13.10 Services for Others.................................. A-53
Section A13.11 Hiring of Employees.................................. A-53
Section A13.12 Compliance With Laws................................. A-53
Section A13.13 Media Releases....................................... A-53
Section A13.14 Survival............................................. A-54
Section A13.15 Entire Agreement..................................... A-54
Section A13.16 Amendment or Modification............................ A-54
Section A13.17 Good Faith and Fair Dealing.......................... A-54
</TABLE>
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EXHIBIT B. GM MAJOR SECTORS AS OF THE EFFECTIVE DATE
EXHIBIT C. MSA SERVICES AND MSA SCOPE DOCUMENTS
EXHIBIT D. PROCEDURES FOR NEGOTIATING SERVICE AGREEMENTS AND
RESOLVING IMPASSES
EXHIBIT E. GUIDELINES & METHODOLOGY FOR DETERMINING
ACHIEVEMENT OF IT STRUCTURAL COST REDUCTION TARGETS
EXHIBIT F. TERMINATION UPON CHANGE OF CONTROL
EXHIBIT G. CANCELLATION LOSSES ON THE DISPOSITION OF CAPITAL
ASSETS AND LONG-TERM LEASES
iv
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MASTER SERVICE AGREEMENT
------------------------
THIS MASTER SERVICE AGREEMENT (the "MSA"), effective as of June 7, 1996
(the "Effective Date"), is made and entered into by and between General Motors
Corporation, a Delaware corporation having its principal offices at 3044 West
Grand Boulevard, Detroit, Michigan 48202 ("GM Parent"), and Electronic Data
Systems Corporation, a Delaware corporation having its principal offices at 5400
Legacy Drive, Plano, Texas 75024 ("EDS Parent").
RECITALS
--------
WHEREAS, in order to implement the service relationship contemplated by the
acquisition of EDS Parent by GM Parent in 1984, GM Parent and EDS Parent entered
into a certain Master Agreement, dated effective as of September 1, 1985 (the
"Master Agreement"), which established certain standard terms and conditions
pursuant to which EDS Service Organizations would provide services to GM User
Organizations and set forth certain other understandings and agreements between
the parties;
WHEREAS, pursuant to the Master Agreement, GM User Organizations and EDS Service
Organizations have negotiated and entered into Service Agreements specifying the
services to be provided to the GM User Organizations and the amounts to be paid
to EDS for such services;
WHEREAS, on or about the Effective Date, GM Parent consummated a split-off and
related transactions pursuant to which EDS Parent ceased to be a subsidiary of
GM Parent and, in connection therewith, GM Parent and EDS Parent desire to
supersede and replace the Master Agreement with this MSA in order to (i) confirm
the continuation of EDS as the principal supplier to GM of information
technology services, (ii) confirm the understanding of GM and EDS that GM is to
continue to be the customer of EDS and will specify its IT strategy and
computing and communications architecture together with its business needs,
including reasonable performance levels, and that EDS will serve these
requirements, on a coordinated, integrated basis, by providing
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MSA Services which are competitive with respect to quality, service, price and
technology and which are appropriate for the stated business needs of GM, and
will be compensated fairly therefor, (iii) provide guidelines for GM to conduct
limited market testing with third party suppliers, (iv) implement certain
changes in the service relationships between GM User Organizations and EDS
Service Organizations governed by Service Agreements entered into prior to the
Effective Date, (v) facilitate the finalization of future Service Agreements,
(vi) provide a consistent basis for the interpretation of all Service
Agreements, and (vii) set forth certain other understandings and agreements
between the parties;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I. INTRODUCTORY PROVISIONS
-----------------------------------
1.1 Scope of Agreement. Subject to Section 1.3 below, this MSA establishes a
contractual framework for EDS' provision of MSA Services under Service
Agreements worldwide. In order to provide a uniform mechanism for
implementing the principles of this MSA, the provisions of this MSA, as
between EDS Parent and GM Parent, shall be applicable worldwide and shall
be implemented by GM Parent and EDS Parent, and their respective domestic
and foreign subsidiaries and business units, entering into Service
Agreements which incorporate the principles of the applicable provisions of
this MSA, modified as may be necessary by reason of local law or commercial
custom. GM Parent and EDS Parent each acknowledge and understand that their
respective subsidiaries are not parties to this MSA and will not be legally
bound by the provisions of this MSA unless and until they agree to be so
bound. However, during any period and to the extent that a locally
appropriate Service Agreement for any such MSA Services is not then
currently in effect, GM Parent and EDS Parent shall each remain obligated
to the other for the performance of the respective obligations of GM and
EDS stated herein.
2
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1.2 Definitions. Unless otherwise specified herein, the following terms shall
have the meanings set forth below wherever they are used in this MSA:
(a) The term "Agreement" shall mean (i) this MSA, or (ii) any Service
Agreement, including the applicable provisions of this MSA
incorporated therein.
(b) The term "Bid Revenue" shall mean, with respect to each competitive
bid that GM may conduct pursuant to Article V hereof, the aggregate
amount of revenue that GM would pay to EDS for the performance of the
MSA Services that are the subject of that competitive bid, during the
first full year that such MSA Services are to be performed, computed
as if the competitive bid were not conducted but GM nevertheless
obtained such MSA Services from EDS pursuant to the applicable Service
Agreements and other arrangements in place at the time of the
competitive bid.
(c) The term "Contracting Party" shall mean (i) with respect to this MSA,
GM Parent or EDS Parent, and (ii) with respect to any Service
Agreement, the GM User Organization receiving MSA Services pursuant to
the Service Agreement or the EDS Service Organization providing such
MSA Services.
(d) The term "Corporate Contract Manager" shall mean the individual
designated by GM Parent or EDS Parent, respectively, pursuant to
sub-Section 3.3(a) hereof.
(e) The term "EDS" shall mean, collectively, EDS Parent and the entities
and subsidiaries owned by EDS Parent. For purposes of this
definition, an entity or subsidiary will be deemed to be "owned by EDS
Parent" if EDS Parent, either directly or indirectly, (i) is the
beneficial owner of more than 50% of the equity of that entity or
subsidiary, or (ii) is the beneficial owner of more than 35% of the
equity of, and has management control of, that entity or subsidiary.
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(f) The term "EDS Major Sector" shall mean an EDS Service Organization
designated by EDS from time to time to coordinate the provision of MSA
Services by EDS to the GM User Organizations within a GM Major Sector.
(g) The term "EDS Service Organization" shall mean any functional entity,
division, subsidiary, department or group within EDS, including an EDS
Major Sector, which has been or shall be formed to provide MSA
Services to GM User Organizations.
(h) The term "GM" shall mean, collectively, GM Parent and the entities and
subsidiaries owned by GM Parent. For purposes of this definition, an
entity or subsidiary will be deemed to be "owned by GM Parent" if GM
Parent, either directly or indirectly, is the beneficial owner of:
(1) More than 65% of the equity of, and has management control of,
that entity or subsidiary and, as of August 1, 1995, EDS was
providing services under the Master Agreement pursuant to a
Service Agreement in support of the business operations of that
entity or subsidiary.
(2) 80% or more of the equity of that entity or subsidiary if, as of
August 1, 1995, EDS was not providing services under the Master
Agreement pursuant to a Service Agreement in support of the
business operations of that entity or subsidiary.
(i) The term "GM Central Office" shall mean the corporate headquarters of
GM Parent.
(j) The term "GM Major Sector" shall mean a GM User Organization
designated by GM from time to time to coordinate the receipt of MSA
Services from EDS by numerous GM User Organizations. As of the
Effective Date, the GM Major Sectors are listed in Exhibit B hereto.
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(k) The term "GM User Organization" shall mean any functional entity,
division, subsidiary, department or group within GM, including a GM
Major Sector, which has or shall have requirements for MSA Services
applicable to that functional entity, division, subsidiary, department
or group that this MSA provides are to be obtained from EDS. Each of
the following terms shall mean the GM User Organization indicated
below and any successors thereto:
(1) "Delco" means Delco Electronics Corporation.
(2) "Delphi" means Delphi Automotive Systems.
(3) "GMAC" means General Motors Acceptance Corporation.
(4) "GMIO" means GM International Operations.
(5) "MIC" means Motors Insurance Corporation.
(6) "NAO" means GM North American Operations.
(l) The term "IT" shall mean information technology consisting of computer
and information processing and communications.
(m) The term "Major Sector Contract Manager" shall mean the person
designated by either the GM Major Sector having responsibility for the
GM Contracting Party or the EDS Major Sector having responsibility for
the EDS Contracting Party, as applicable, pursuant to sub-Section
3.3(b) hereof.
(n) The term "Master Agreement" shall mean the Master Agreement, effective
as of September 1, 1985, made and entered into by and between GM
Parent and EDS Parent, as amended by the Addendum thereto dated May
29, 1987.
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(o) The term "MSA Scope Document" shall mean any document developed in
accordance with Section II of Exhibit C hereto.
(p) The term "MSA Services" shall mean those services described in Section
I of Exhibit C hereto.
(q) The term "Service Agreement" shall mean any written agreement, as
provided for in Section 2.1 hereof, that is entered into between a GM
User Organization and an EDS Service Organization for the provision of
MSA Services to that GM User Organization, whether entered into before
or after the Effective Date.
(r) The term "Software" shall mean the source code and object code
versions of any applications programs, operating system software,
computer software languages, utilities and other computer programs,
and documentation and supporting materials relating thereto, in
whatever form or media, including, but not limited to, the tangible
media upon which such applications programs, operating system
software, computer software languages, utilities and other computer
programs, and documentation and supporting materials relating thereto,
are recorded or printed, together with all corrections, improvements,
updates and releases thereof.
(s) The term "Unit Project Manager" shall mean any person designated
pursuant to sub-Section 3.3(c) hereof.
(t) The term "UPR Catalog" shall mean the catalog published by GM Parent
in accordance with Section A7.1 of Exhibit A hereto.
Other terms used in this MSA are defined in the context in which they are
used and, unless otherwise specified herein, shall have the meanings there
indicated wherever they are used in this MSA.
6
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1.3 Agreement. GM Parent and EDS Parent agree that, during the term of this
MSA and except as provided in Article V hereof and any other applicable
provision of this MSA, EDS shall supply to GM, and GM shall obtain from
EDS, GM's requirements for MSA Services, except that:
(a) With respect to any MSA Services reasonably requested from EDS by a GM
User Organization (which request shall not be unreasonably specific),
where it is mutually agreed that EDS lacks the technical proficiency
or resources to satisfactorily provide such MSA Services, either
directly or through a third party subcontract, within the timeframe
reasonably required by the GM User Organization, then the GM User
Organization may, with the prior approval of the GM Corporate Contract
Manager, obtain such MSA Services from a third party for so long as
EDS is unable to provide such MSA Services; provided, however, that
under no circumstances shall GM be required to cancel, renegotiate or
otherwise nullify a contract with a third party to obtain such MSA
Services during the period of time covered by that contract. In
addition, any MSA Services obtained by a GM User Organization from a
third party pursuant to this provision shall not count against either
the annual or aggregate limitations on competitive bidding and
resourcing set forth in Article V hereof.
(b) Unless agreed otherwise by GM Parent and EDS Parent, GM shall not be
required to obtain from EDS, and EDS shall not be required to provide
to GM, MSA Services for:
(1) Hughes Electronics Corporation, with the exception of its
subsidiary, Delco Electronics Corporation (including Delco
Systems Operations).
(2) Any other business or entity, or portion thereof, if and to the
extent that such business or entity, or portion thereof, was or
is acquired by GM Parent after January 1, 1985, except for (i)
GMAC Mortgage Corporation (but not
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including its subsidiary, Residential Funding Corporation), and
(ii) any other business or entity, or portion thereof, which
executed a Service Agreement prior to August 1, 1995. However, GM
Parent and EDS Parent acknowledge and agree that, unless it is
inappropriate in the circumstances, in the normal case it is
expected that EDS will be permitted to submit a bid to provide
MSA Services to businesses and entities, or portions thereof,
acquired by GM Parent after January 1, 1985. However, under no
circumstances shall the competitive bidding and resourcing of
such services count against either the annual or aggregate
limitations on competitive bidding and resourcing set forth in
Article V hereof.
(c) GM shall not be required to obtain from EDS, and EDS shall not be
required to provide to GM, services in any country to the extent and
for so long as the provision of those services by EDS to GM in that
country would violate any national law of that country.
(d) GM User Organizations outside of North America ("GM Overseas User
Organizations") shall not be required to obtain from EDS, and EDS
shall not be required to provide to GM Overseas User Organizations,
any MSA Services in any Emerging Market other than MSA Services that
(i) were being provided to a GM Overseas User Organization for the
same GM Major Business Function in the same GM Line of Business by an
EDS Service Organization in that Emerging Market prior to August 1,
1995, or (ii) are substantially similar to or a replacement of MSA
Services that were being provided to a GM Overseas User Organization
for the same GM Major Business Function in the same GM Line of
Business by an EDS Service Organization in that Emerging Market prior
to August 1, 1995. As used in this sub-Section 1.3(d):
(1) The term "Emerging Market" means any country other than
[Confidential information has been omitted.]
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Confidential treatment has been requested by EDS for the indicated portions of
this page.
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[Confidential information has been omitted.]
(2) The term "GM Line of Business" shall mean any of the GM Major
Sectors listed on Exhibit B hereto as of the Effective Date
modified to also designate each of the six divisional entities of
Delphi Automotive Systems Operations Outside of North America as
of the Effective Date as a separate GM Line of Business.
(3) The term "GM Major Business Function" shall mean any of the
following six (6) major business functions which may exist within
a GM Line of Business: (i) manufacturing, (ii) assembly, (iii)
distribution, (iv) sales and service, (v) administration, and
(vi) other. As applied to a specific facility or location, the
major business function of a specific facility or location shall
be based on the principal major business function conducted at
that facility or location. For example, the major business
function of a GM facility which manufactures and assembles
finished automobiles and also houses incidental administrative
activities is manufacturing.
(e) GM shall not be required to obtain from EDS, and EDS shall not be
required to provide to GM, any plant floor services other than (i)
plant floor services for all GM North American business units under
NAO and Delphi specifically set forth in the Plant Floor Systems
Services Agreement, entered into as of June 7, 1996, between GM and
EDS, but excluding Saturn Corporation, and (ii) plant floor services
being provided to GM Overseas User Organizations as of the Effective
Date to the extent that, prior to the Effective Date, those plant
floor services were mutually treated by the parties as within the
scope of Section 1.3 of the Master
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Agreement, including the plant floor services provided for (x) the
European Production Information Control System (EPICs), (y) the
Component Production Information Control Systems (CPICs), and (z)
Manufacturing Resource Planning Systems. As used in this sub-Section
1.3(e), the term "plant floor services" shall mean those IT services
that are specific to plant floor operations and shall not include any
such services when used in any context other than in conjunction with
plant floor operations.
(f) Any other arrangement or relationship between the parties may be
mutually agreed upon and approved by the GM and EDS Corporate Contract
Managers.
The GM and EDS Corporate Contract Managers will develop mutually acceptable
business procedures for (i) reviewing any additional IT services or goods
desired by GM and determining which are MSA Services based on the
definition of MSA Services contained in this MSA, and (ii) designating
which out-of-scope services, if any, EDS and GM may mutually desire to
bring into scope under this MSA.
1.4 Term.
(a) The term of this MSA shall commence as of the Effective Date and shall
continue until the expiration of an initial term of ten (10) years.
The term of this MSA may be extended for an additional term upon
mutual agreement by GM Parent and EDS Parent prior to the end of the
initial term.
(b) Service Agreement terms which extend beyond the term of this MSA shall
be subject to the approval of the Corporate Contract Managers
according to sub-Section A9.3(c) of Exhibit A hereto. If this MSA
expires or is terminated, GM Parent and EDS Parent will not enforce
any Service Agreement term which purports to extend beyond the
expiration or termination of this MSA unless such extension is or has
been mutually agreed upon by the Corporate Contract Managers. With
respect to
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any Service Agreement which survives expiration or termination of this
MSA (as a result of such approval by the Corporate Contract Managers),
the provisions of this MSA that have been incorporated into such
Service Agreement shall remain valid provisions of that Service
Agreement unless and until the Contracting Parties thereto otherwise
agree, notwithstanding termination of this MSA.
1.5 Applicability of Provisions. The provisions of Exhibit A hereto are
intended to be applicable to both this MSA and each Service Agreement and,
when used in connection with a Service Agreement, a reference to the
applicable provisions of this MSA shall be considered a reference to the
provisions of Exhibit A hereto, except, subject to the provisions of
Section A1.2 of Exhibit A hereto, (i) to the extent that any such
provisions are expressly modified or excluded therefrom in a Service
Agreement, or (ii) any GM Major Sector and the corresponding EDS Major
Sector may negotiate different or additional standard terms and conditions
that will be applicable to Service Agreements between GM User Organizations
within that GM Major Sector and EDS Service Organizations within that EDS
Major Sector.
1.6 Fundamental Principle of Good Faith and Fair Dealing. In entering into
this MSA, GM Parent and EDS Parent each acknowledge and agree that all
aspects of the worldwide business relationship and dealings between GM and
EDS contemplated by this MSA and each Service Agreement, including the
performance of all obligations and the exercise of all rights under this
MSA and each Service Agreement, will be governed by the fundamental
principle of good faith and fair dealing. GM Parent and EDS Parent shall
assure that each GM User Organization and EDS Service Organization,
respectively, complies with this principle of good faith and fair dealing.
ARTICLE II. SERVICE AGREEMENTS
-------------------------------
2.1 Service Agreements. As of the Effective Date, each GM User Organization and
the corresponding EDS Service Organization have agreed upon and entered
into or shall, as
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soon as practicable, agree upon and enter into one or more Service
Agreements for the performance of MSA Services for that GM User
Organization on mutually agreeable terms and conditions, subject to the
limitations set forth in this MSA.
(a) If and to the extent applicable, each such Service Agreement shall:
(1) Refer to this MSA, which reference shall be deemed to incorporate
into the Service Agreement the applicable provisions of this MSA.
(2) Designate the date as of which the provisions of the Service
Agreement will be effective and the term or period of time during
which EDS will perform MSA Services pursuant to the Service
Agreement.
(3) Describe the obligations of EDS related to the Service Agreement,
including any hardware or software to be delivered in conformance
with GM's IT architecture and any MSA Services to be performed by
EDS pursuant to the Service Agreement, together with the general
performance standards and related provisions agreed to by the
parties.
(4) Describe the obligations of GM related to the Service Agreement,
including without limitation any space, facilities, equipment, or
other support to be provided by GM.
(5) Specify the mutually agreed upon pricing structure, method and
amounts of payment to be made to EDS for the MSA Services
performed pursuant to the Service Agreement and, with respect to
the provision of any Software previously developed by EDS for GM,
exclude therefrom any amounts for the development of such
Software if and to the extent such amounts have previously been
paid to EDS by GM.
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(6) Identify any hardware, software, system or EDS facility to be
used by EDS which is designated, consistent with Section 3.2
hereof, as so critical to the business operations of the GM
Contracting Party that the EDS Contracting Party may not modify,
upgrade, enhance or move the same without notice to and the
approval of the GM Contracting Party.
(7) Specify the acceptance criteria, test period and procedures for
any hardware or software to be provided to the GM Contracting
Party, including appropriate restrictions on the use of any such
hardware or software by the GM Contracting Party until it has
accepted the same in writing.
(8) Specify the appropriate mailing address for invoices and the
name, address and telephone number of the applicable GM and EDS
Unit Project Managers and Major Sector Contract Managers.
(b) In addition to the provisions specified in sub-Section 2.1(a) above,
EDS Parent and GM Parent will recommend to their respective
Contracting Parties that the following provisions be reviewed and
considered for possible inclusion in an applicable Service Agreement.
If and to the extent mutually agreed to be desirable by the
Contracting Parties thereto, each such Service Agreement may:
(1) Identify (i) EDS expenses to be rebilled to GM without profit or
mark-up, and (ii) amounts to be retained by GM until acceptance
of deliverables provided by EDS.
(2) Specify the method and amounts of performance incentive payments,
such as portions of documented cost savings or profit
improvements experienced by the GM Contracting Party as a result
of the MSA Services performed by EDS, that are to be payable to
EDS. GM Parent and EDS Parent shall each
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encourage their respective Contracting Parties to provide for
such performance incentive payments where appropriate.
(3) Establish specific measurable standards of performance applicable
to EDS' performance under the Service Agreement, such as function
point analysis for application software development and hardware
and software availability standards, as well as related remedies
and rewards available if the EDS Contracting Party's performance
fails to meet or exceeds those performance standards. Any such
remedies and rewards shall be designed to incent and reward good
performance and not to distort the intended economic effects of
the Service Agreement.
(4) Allocate the respective obligations of EDS and GM in connection
with the transportation, insurance, delivery, relocation and/or
installation of any hardware being provided by EDS to GM and in
connection with any site preparation therefor and any ongoing
maintenance obligations applicable thereto.
(5) Describe all support services to be provided by EDS to GM in
connection with the delivery to GM of software provided by EDS,
including without limitation the number of user manuals, level of
consulting services, amount of training services, documentation,
and ongoing support and maintenance services to be provided in
connection therewith.
(6) Delineate the manner in which secretarial, custodial, and/or
other supporting services will be made available by GM to EDS.
(7) Describe any reports, in addition to those required under Exhibit
A hereto, and the frequency of submittal.
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(8) If and to the extent that the MSA Services provided by EDS
pursuant to the Service Agreement relate to U.S. Government
contracts or subcontracts held by the GM Contracting Party, (i)
provide for an equitable distribution of the profits otherwise
obtainable by EDS that are allocable to such contracts and
subcontracts, and (ii) take into account any related costs
incurred by EDS that are specified as unallowable in applicable
federal regulations.
(9) Identify any provisions of Exhibit A hereto that are expressly
excluded from the Service Agreement and any provisions of the
Service Agreement that shall supersede and prevail over any
conflicting or inconsistent provisions of Exhibit A hereto,
subject to the provisions of Section A1.2 of Exhibit A hereto.
(10) Include any other provisions deemed necessary or desirable by the
Contracting Parties to the Service Agreement, such as, but not
limited to, provisions enabling the Service Agreement to conform
to the requirements of any applicable government contracts,
subject to the provisions of Section A1.2 of Exhibit A hereto.
Notwithstanding anything to the contrary herein, any Service Agreement
executed by the Major Sector Contract Manager or other authorized
representative of each Contracting Party thereto shall conclusively be
deemed to satisfy the provisions of this Section 2.1 and neither EDS nor GM
may thereafter claim that the Service Agreement is invalid or defective as
a result of any failure to comply with the provisions of this Section 2.1.
2.2 Service Agreement Objectives. Each applicable GM User Organization and EDS
Service Organization will negotiate in good faith to agree upon and enter
into fixed-price Service Agreements which meet the Competitiveness Standard
established in Section 2.3 hereof.
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2.3 Competitiveness. As provided in this Section 2.3, the MSA Services to be
provided to GM by EDS under Service Agreements shall be competitive with
respect to quality, service, price and technology giving due consideration
to the GM requirements that GM expects EDS to meet and other relevant
factors (the "Competitiveness Standard"), all subject to the following
provisions:
(a) As used in this Section 2.3, the term "Competitiveness Event" shall
mean the negotiation or renegotiation by a GM User Organization and an
EDS Service Organization of (i) a new or replacement Service
Agreement, (ii) the terms and conditions applicable to a new or
replacement MSA Service that is proposed to be provided under a then-
current Service Agreement, or (iii) the pricing of any MSA Services
when and to the extent that the negotiation or renegotiation of such
pricing is contractually provided for in a then-current Service
Agreement.
(b) The Competitiveness Standard and methodology set forth in this Section
2.3 will apply to each Competitiveness Event and will govern the
resolution of any disagreement or negotiation impasse that may arise
between a GM User Organization and an EDS Service Organization in
connection with that Competitiveness Event.
(c) If a GM User Organization and an EDS Service Organization reach a
mutually acceptable agreement with respect to a particular
Competitiveness Event, that agreement will be deemed to satisfy the
Competitiveness Standard and methodology set forth in this Section 2.3
with respect to that Competitiveness Event for the duration of the
term of that agreement.
(d) If a Service Agreement provides a specific competitiveness mechanism
(such as a competitive assessment or benchmarking process) for use in
determining the competitiveness of specific MSA Services, (i) the
application of that specific competitiveness mechanism shall not in
and of itself constitute a Competitiveness
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Event as contemplated in this Section 2.3, and (ii) the specific
competitiveness mechanism shall be used to establish the
competitiveness of such specific MSA Services in lieu of the
Competitiveness Standard and methodology set forth in this Section
2.3. The above provisions notwithstanding, under no circumstances
shall such specific competitiveness mechanism preclude or otherwise
inhibit the occurrence of a Competitiveness Event pursuant to sub-
Section 2.3(a) hereof, or the utilization of the Competitiveness
Standard and methodology set forth in this Section 2.3, with regard to
MSA Services that the specific competitiveness mechanism was neither
designed nor intended to cover.
(e) If a GM User Organization and an EDS Service Organization are unable
to reach a mutually acceptable agreement with respect to a particular
Competitiveness Event, the methodology set forth in Exhibit D hereto
will be used to resolve that disagreement or negotiation impasse.
2.4 Continued Services to Divested Business Units. In any situation where an
existing Service Agreement does not accommodate the continued provision of
MSA Services to a divested GM business unit, EDS will negotiate in good
faith with the divested GM business unit to enter into an agreement
pursuant to which EDS will continue providing services to the divested GM
business unit on such terms and conditions as may be mutually agreed upon
by EDS and the divested GM business units.
2.5 Extension of Service Agreements. Notwithstanding any provision to the
contrary in any applicable existing Service Agreement, the terms of the GM
Major Sector Service Agreements, including the scopes of work thereunder,
in effect as of the Effective Date with respect to the following GM User
Organizations will be extended through the expiration date specified below
with respect to that GM User Organization:
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GM User Organization Expiration Date
-------------------- ---------------
NAO (including Corporate Staffs) December 31, 1999
GMAC (U.S. and Canada) December 31, 1999
MIC (U.S. and Canada) December 31, 1999
Delphi (U.S.) December 31, 1998
To the extent not completed prior to the Effective Date, GM Parent and EDS
Parent shall each cause their respective applicable Contracting Parties to
promptly amend each Service Agreement referred to above in order to extend
the term thereof as specified above. Additionally, to the extent not
completed prior to the Effective Date, GM Parent and EDS Parent shall
ensure that Allison Transmission, GM of Canada (including Delphi operations
in Canada), and GM de Mexico will promptly complete and execute Service
Agreements, which have been substantially negotiated prior to the Effective
Date, and which shall be coterminous with the NAO Service Agreement
referred to above.
2.6 Payment Terms. Notwithstanding any provision to the contrary in any
applicable Service Agreement, the time of payment for invoices submitted
pursuant to each Service Agreement in effect as of the Effective Date
shall be modified as indicated below; provided, however, that under no
circumstances shall there be an acceleration in the time of payment for a
Contracting Party when compared to the mutually agreed corresponding
payment terms applicable to that Contracting Party that are in effect just
prior to the Effective Date.
(a) Through December 31, 1996, each Contracting Party will pay the other
Contracting Party's invoices for each month in 1996 in accordance with
the payment terms of the applicable Service Agreement in effect just
prior to the Effective Date.
(b) As of January 1, 1997, each Service Agreement in effect as of the
Effective Date that does not provide for longer payment terms will
require each Contracting
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Party to pay the other Contracting Party's invoices for each month of
1997 by the thirtieth (30th) day of the month in which the invoiced
MSA Services were provided.
(c) As of January 1, 1998, each Service Agreement in effect as of the
Effective Date with Delco, Delphi, Allison Transmission, and the GM
Locomotive Group that does not provide for longer payment terms will
require each Contracting Party to pay the other Contracting Party's
invoices for each month in 1998 and thereafter by the twentieth (20th)
day of the month following the month in which the invoiced MSA
Services were provided.
(d) As of January 1, 1999, each remaining Service Agreement in effect as
of the Effective Date that does not provide for longer payment terms
will require each Contracting Party to pay the other Contracting
Party's invoices for each month in 1999 and thereafter by the
twentieth (20th) day of the month following the month in which the
invoiced MSA Services were provided.
The Contracting Parties will submit invoices on or before the first (1st)
day of the month in which the MSA Services are provided for each month
through December of 1998. For January of 1999 and each subsequent month
during the term of each Service Agreement referred to above, the
Contracting Parties will submit invoices on or before the first (1st) day
of the month following the month in which the MSA Services are provided, or
such other day as may be mutually agreed upon by the Contracting Parties if
the Contracting Parties are able to agree upon a day which will (i) allow
the invoicing Contracting Party to invoice actual amounts payable for the
month in which MSA Services were provided without having to invoice for
estimated amounts payable for that month, and (ii) allow the paying
Contracting Party to pay the invoice on the twentieth (20th) day of the
month following the month in which the invoiced MSA Services were provided.
To the extent not completed prior to the Effective Date, GM Parent and EDS
Parent shall each cause
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their respective Contracting Parties to amend each applicable Service
Agreement to reflect the foregoing payment terms.
2.7 Removal of PRR and Similar Provisions. To the extent not completed prior to
the Effective Date, GM Parent and EDS Parent shall each cause their
respective Contracting Parties to amend the NAO Service Agreement to remove
the Performance Reduction Requirement provision and to amend other
applicable Service Agreements in effect as of the Effective Date, with the
exception of those relating to GM Overseas User Organizations, to remove
provisions similar to the Performance Reduction Requirement provision in
the NAO Service Agreement.
ARTICLE III. OPERATIONAL PROVISIONS
------------------------------------
3.1 GM/EDS Relationship. GM Parent and EDS Parent will establish a group,
which will include the Corporate Contract Managers and other executives key
to the GM/EDS relationship as may be designated by each party, to ensure
that the parties are acting in a manner consistent with the principles of
this MSA, and to address any issues that may arise in connection with this
MSA.
3.2 IT Strategy and Architecture. The respective roles and responsibilities of
GM and EDS in connection with the performance of the MSA Services pursuant
to the Service Agreements will be governed by the following:
(a) GM will be responsible for, and will decide and direct, its IT
strategies and requirements, including GM's computing and
communications architecture. This includes GM's right (i) to develop,
maintain and publish technology standards that support the
implementation of GM's architecture, and architecture and technology
compliance processes, and (ii) to identify and select vendors of
hardware and software used by EDS to provide MSA Services that are
performed for GM on a dedicated basis. In this regard, EDS will
cooperate, as reasonably
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requested by GM, in preparing and updating any such strategies and
requirements. Upon receiving such a request for assistance from GM
which is outside the scope of the MSA Services then being performed
under any Service Agreement, EDS may submit a proposal to GM for
additional compensation. If GM decides to use EDS' assistance after
receiving the EDS proposal, then GM and EDS will negotiate an
appropriate agreement to cover such services.
(b) EDS will be responsible for, and will decide and direct, its
performance of the MSA Services in furtherance of GM's IT strategies
and requirements, and will retain specific responsibility for the
computing and communications architecture and technology for EDS'
Information Processing Centers (IPCs).
(c) When establishing its strategies and requirements for the MSA
Services, GM will consult with EDS and will avoid "micromanagement" by
GM of EDS' performance of its responsibilities.
(d) In managing its own functions and operations in performing the MSA
Services, EDS will consult with GM and take into account GM's
legitimate suggestions and concerns regarding the delivery of the MSA
Services.
(e) To the extent feasible, the roles and responsibilities that EDS and GM
respectively will have initially with respect to GM's IT strategies
and EDS' performance of the MSA Services will be described in the MSA
Scope Documents in a manner consistent with the foregoing provisions
of this Section 3.2.
3.3 Contract Administration. Applicable managers will be designated in
accordance with the following:
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(a) GM Parent and EDS Parent shall each designate a Corporate Contract
Manager who, in addition to the responsibilities and authorities
specified in Section A2.1 of Exhibit A hereto, shall be responsible
for, among other things:
(1) The implementation, management and enforcement of this MSA on
behalf of that Parent, including overall management of its
performance under this MSA.
(2) Supporting the implementation of the Service Agreements by the
Major Sector Contract Managers or Unit Project Managers for the
Contracting Parties thereto, including through the formulation of
guidelines for use by the Major Sector Contract Managers or Unit
Project Managers to implement the Service Agreements.
(3) Exercising day-to-day responsibility for achieving resolution of
corporate-wide issues relating to this MSA or the Service
Agreements.
(4) Working with the Major Sector Contract Managers or Unit Project
Managers for the User Organizations or Service Organizations, as
applicable, of that Parent to establish uniform policies
applicable to the MSA Services provided to GM by EDS.
(5) Interfacing with any committees or other bodies of that Parent
with responsibility for reviewing or approving any matters
relating to this MSA or the Service Agreements and otherwise
satisfying any administrative requirements internally required by
that Parent.
(6) Monitoring the activities of the Major Sector Contract Managers
or Unit Project Managers for the User Organizations or Service
Organizations, as applicable, of that Parent.
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(b) Promptly after the Effective Date and as required thereafter to
maintain the accuracy of such information, GM Parent will provide EDS
Parent with written notice of the GM Major Sectors and the GM User
Organizations within each GM Major Sector. To the extent not
previously designated, each GM Major Sector will designate a Major
Sector Contract Manager for that GM Major Sector, and each EDS Major
Sector will designate a Major Sector Contract Manager for that EDS
Major Sector. GM Parent and EDS Parent agree that the Major Sector
Contract Manager for a particular GM Major Sector or EDS Major Sector,
if not previously designated, shall be designated within a reasonable
period of time after the applicable GM Major Sector or EDS Major
Sector receives a written request for such designation.
(c) To the extent not previously designated, each GM User Organization
will designate a Unit Project Manager for that GM User Organization,
and each EDS Service Organization will designate a Unit Project
Manager for that EDS Service Organization. GM Parent and EDS Parent
agree that the Unit Project Manager for a particular GM User
Organization or EDS Service Organization, if not previously
designated, shall be designated within a reasonable period of time
after the applicable GM User Organization or EDS Service Organization
receives a written request for such designation.
(d) The GM and EDS Corporate Contract Managers shall mutually designate a
reasonable number of key EDS management positions, which will include
the EDS Corporate Contract Manager and the EDS Major Sector Contract
Managers, that are critical to the GM/EDS relationship and the
successful performance of the MSA Services.
(1) Before an EDS employee is assigned to one of these key EDS
management positions, EDS will notify the GM Corporate Contract
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Manager of the proposed assignment, will introduce the EDS
employee to the appropriate GM representatives, and will provide
GM with a resume and any other information about the EDS employee
reasonably requested by the GM Corporate Contract Manager. If the
GM Corporate Contract Manager reasonably and in good faith
objects to the proposed assignment within five (5) working days
following actual receipt of the aforementioned notification, then
EDS will not assign that EDS employee to that position. However,
EDS may appoint another EDS employee to serve in that position on
an interim basis until an EDS employee who is reasonably
acceptable to the GM Corporate Contract Manager can be assigned
to that position.
(2) No EDS employee assigned to one of these key EDS management
positions will be reassigned for a period of one (1) year from
the date of such assignment without the prior consent of the GM
Corporate Contract Manager, which consent will not be
unreasonably withheld, unless the employee voluntarily resigns
from EDS' employment, is dismissed from EDS' employment for
cause, fails to properly perform his or her duties in the
reasonable judgment of EDS, or is unable to work as a result of
death or disability.
(3) If GM reasonably and in good faith decides that any employee
assigned to one of these key EDS management positions should not
continue in that position, then the GM Corporate Contract Manager
may request the removal of that employee by providing written
notice to the EDS Corporate Contract Manager specifying the
reasons for such request. EDS shall promptly investigate the
matters specified in the request and, if it determines that the
concerns are reasonable and valid, shall promptly remove that
employee from that position.
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Subject to the provisions of this Section 3.3, (i) GM Parent and EDS Parent
may, at any time and from time to time, designate a new Corporate Contract
Manager by notifying the other party's Corporate Contract Manager of the
new designation, (ii) each GM Major Sector and each EDS Major Sector may,
at any time and from time to time, designate a new Major Sector Contract
Manager by notifying the other party's Corporate Contract Manager and Major
Sector Contract Manager of the new designation, and (iii) each GM User
Organization and each EDS Service Organization may, at any time and from
time to time, designate a new Unit Project Manager by notifying the other
party's Major Sector Contract Manager and Unit Project Manager of the new
designation.
3.4 Attestation by Independent Public Accountants. Upon request by GM Parent,
an annual special report shall be obtained by EDS Parent from its
independent certified public accounting firm expressing an opinion as to
whether the amounts billed to GM by EDS for the then preceding year for MSA
Services provided by EDS pursuant to this MSA or pursuant to Service
Agreements, are fairly presented in accordance with the provisions of the
applicable Agreement(s). Unless waived by EDS Parent, GM Parent shall
reimburse EDS Parent for the expenses incurred by EDS Parent in obtaining
any such report.
3.5 Audit by GM Central Office. With respect to any MSA Services for which EDS
is to be compensated in accordance with Section A7.3 of Exhibit A hereto,
the GM Central Office may, at its expense, audit the books and records of
EDS to the extent necessary to verify the applicability and accuracy of
EDS' charges for such MSA Services. Any such audit may be conducted at any
time during normal business hours, upon reasonable notice to EDS, with or
without a dispute as to such charges.
3.6 Price Level Detail. Whenever additional MSA Services not being provided
under a current Service Agreement are required by a GM User Organization
(e.g., under a Request for Information Systems Services ("RISS"), System
Development Agreement ("SDA"), or other method) and the GM User
Organization so requests, the applicable EDS Service Organization will
present to the GM User Organization a business proposal
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containing a breakdown of the proposed price in such detail as will provide
sufficient information to enable the GM User Organization to reasonably
understand and evaluate the proposed options and make an informed business
decision. When reasonably requested by the GM User Organization, the EDS
Service Organization will provide a reasonable number of alternative
proposals that demonstrate the impact with respect to content, quality,
service levels, price and technology of various alternatives in order to
aid the GM User Organization in the evaluation of value and GM cost drivers
and provide a platform for rational business decisions. The price detail
presented by the EDS Service Organization will [Confidential information
has been omitted.] In addition, the price detail will identify the price
and source or nature of the pricing methodology (e.g., UPR Catalog, fixed-
price, cost-plus, pass-through, specific pricing agreement or other
arrangement), will be sufficient to allow the GM User Organization to
perform a reasonable business analysis of value and competitiveness, and
will be consistent with the level of detail at which value judgments
related to additions, deletions, and modifications can reasonably be made.
3.7 Co-Negotiation. Upon GM's request, in situations where GM is willing to
make volume or other strategic commitments, EDS and GM will jointly
negotiate the GM price and terms with suppliers for items EDS will be
providing to GM under this MSA where the price and terms upon which EDS
will provide those items to GM are the GM price and terms, together with
any mark-up or additional fees which are mutually agreed upon, all in
accordance with and subject to the following:
(a) To the extent that the GM price and terms accepted by GM include GM
volume or strategic commitments to a supplier, GM shall make such
commitments to EDS.
(b) Following any such joint negotiation with a supplier that results in
price and terms that GM agrees to accept as the GM price and terms for
the applicable items, [Confidential information has been omitted.]
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[Confidential information has been omitted.]
(c) EDS may separately negotiate with suppliers for price and terms
applicable with respect to EDS, taking into account both GM's volume
and commitments, as well as EDS' additional volume and commitments,
under the following circumstances:
(1) EDS' total volume requirements (including volume requirements for
GM) are sufficiently greater than the GM volume so that, after
taking into account the particular supplier involved and the
items being purchased, it is reasonably to be expected that such
separate negotiations would result in an additional volume
discount; or
(2) After disclosing the potential terms to GM, EDS is willing to
agree to terms to which GM is unwilling to agree; provided,
however, that where there have previously been joint negotiations
with a supplier based on GM volumes and commitments, there shall
be no separate negotiations between EDS and the supplier based
solely on GM's volumes and commitments without GM's consent,
which will not be unreasonably withheld.
Regardless of the price and terms EDS negotiates for itself under
either of the above circumstances, EDS shall, unless GM otherwise
consents, remain obligated to [Confidential information has been
omitted.]
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(d) GM may initiate a joint renegotiation, with EDS and a supplier, of the
GM price and terms based on changes in volume, seasonal discounts,
market changes, price wars, or other similar opportunities presented
by changing market and economic conditions, as long as the
renegotiations are not materially detrimental to any prior volume or
strategic commitments GM has made to EDS.
(e) To the extent that the GM price and terms have been determined through
good faith co-negotiation with a supplier, GM may not subsequently
assert to EDS that such price and terms are non-competitive, but must
pursue any issue of non-competitiveness through joint renegotiation
with the supplier.
As used in this Section 3.7, the term "GM price and terms" means the price
and terms jointly negotiated and/or renegotiated by GM and EDS with a
supplier and accepted by GM.
ARTICLE IV. STRUCTURAL COST REDUCTIONS
---------------------------------------
4.1 Delco Electronics Structural Cost Reductions. GM Parent and EDS Parent
agree that, during 1996, EDS and Delco management shall work together to
achieve structural cost reductions in the MSA Services being provided to
Delco by EDS in the amount of $30 million. Such cost reductions shall be
measured [Confidential information has been omitted.] Subject to the above
restrictions, cost reductions related to changes in UPR Catalog rates and
volume usage (excluding reductions resulting from normal variations in
business usage) shall be included in determining the total structural cost
reductions achieved pursuant to this Section 4.1.
(a) The structural cost reduction target specified above represents firm
good faith business commitments on the part of both Delco and EDS, but
are not intended to be performance guarantees. In this regard, the
parties mutually agree to utilize their reasonable best efforts to
obtain such cost reductions, but recognize that
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there shall be no gain sharing or similar incentives for over
achievement, nor penalties or other liabilities in the event the
targeted reductions are not achieved.
(b) EDS shall also support the efforts of Delco management to reduce the
costs of "rebilled" commodities by a similar percentage during 1996
through changes in volume, selection of less expensive alternatives,
co-negotiation with third party vendors to secure price or cost
reductions, and similar actions.
(c) Similarly, EDS and Delco management shall commit to utilize their good
faith efforts to work together towards obtaining further structural
cost reductions on MSA Services throughout the remaining current term
of the Delco Electronics Service Agreement.
4.2 General IT Structural Cost Reductions. GM and EDS have established mutual
annual targets for IT structural cost reductions in base level MSA Services
provided to GM by EDS during calendar years 1996, 1997, 1998 and 1999 in
accordance with the following schedule:
Calendar Year Annual Target
------------- -------------
1996 $100,000,000
1997 $100,000,000
1998 $100,000,000
1999 $ 50,000,000
(a) The IT structural cost reduction targets specified above represent
firm good faith business commitments on the part of both EDS and GM,
but are not intended to be performance guarantees. In this regard, the
parties mutually agree to utilize their reasonable best efforts to
obtain such cost reductions, but recognize that there shall be no gain
sharing or similar incentives for over achievement, nor penalties or
other liabilities in the event the targeted reductions are not
achieved.
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(b) With regard to the annual target for 1996, the parties recognize that
achievement of the 1996 annual target will be more difficult in view
of the fact that the term of this MSA will not include a significant
portion of calendar year 1996. Nevertheless, EDS and GM agree to
strive in good faith to achieve the 1996 annual target; provided,
however, that any shortfall in achieving the 1996 annual target will
be carried over and added to the 1997 annual target.
(c) Cost reductions pursuant to this Section 4.2 will be calculated in
accordance with Exhibit E to this MSA. In this regard, Exhibit E
establishes the guidelines and methodology through which cost
reductions attributable to initiatives funded by GM, in whole or in
part, may be credited towards the achievement of annual targets. As
also set forth in Exhibit E, the parties have agreed on the amount
that will be credited towards the achievement of the 1996 annual
target for carry over amounts of savings initially realized in 1996
from 1995 cost reduction efforts pursuant to the Performance Reduction
Requirement provision of the NAO Service Agreement and similar
provisions of other Service Agreements in effect as of the Effective
Date.
(d) Cost reductions will be credited toward achievement of the annual
targets [Confidential information has been omitted.] in which the cost
reductions are realized, [Confidential information has been omitted.]
(e) The calculation of cost reductions to be credited toward achievement
of the annual targets pursuant to this Section 4.2 shall specifically
exclude (i) cost reductions achieved at GMIO or Delco, (ii) reductions
in the UPR Catalog rates or usage due to normal variations in business
usage, and (iii) reductions in GM's annual
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expenditures on new initiatives and application development. The above
provisions of this sub-Section notwithstanding, cost reductions
resulting from decreased usage of UPR Catalog items attributable to
process improvements or other efforts of EDS and cost reductions
resulting from the implementation of new initiatives and application
developments shall be credited towards the achievement of the annual
targets pursuant to this Section 4.2; provided, however, that such
inclusion is in accordance with the guidelines and methodology
established in Exhibit E hereto.
(f) GM will allocate the annual cost reduction target amounts among the GM
Major Sectors in North America (excluding Delco) roughly in proportion
to their relative charges for base level MSA Services and will reflect
the impact of the allocated cost reductions in the calendar year
commitments of those GM Major Sectors. GM will consult with EDS in
making these allocations. GM and EDS will each exert its good faith
efforts to achieve each GM Major Sector's allocated target, and, on
that basis, the parties agree that measurement of whether the
structural cost reductions have been achieved will be made on a GM
corporate basis taking into account over achievement of any particular
GM Major Sector's target, as well as any shortfall. With respect to
calendar year 1999, however, unless otherwise mutually agreed, the
entire annual cost reduction target amount shall be allocated to NAO,
and the achievement of such annual target shall be measured primarily
on the net IT structural costs reductions achieved within NAO.
ARTICLE V. MARKET TESTING AND RESOURCING
------------------------------------------
5.1 Initial Market Testing and Resourcing by GMIO. During each of 1996 and
1997, GMIO may expose to competitive bidding MSA Services so long as the
aggregate Bid Revenue associated with such MSA Services in each such year
does not exceed $30 million. Following such competitive bidding, GMIO, at
its discretion, may then source such MSA Services directly to third parties
or to EDS. In this regard, GMIO shall utilize its
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reasonable best efforts to complete such competitive bidding process during
each applicable year, but shall be allowed to complete the sourcing of MSA
Services associated with such bidding in the following year without regard
to the limitations in Section 5.2 hereof. The competitive bidding and the
sourcing of MSA Services to third parties described above, shall be subject
to the limitations and requirements set forth in this Section 5.1 and in
Section 5.3 hereof. With respect to any competitive bid that satisfies the
limitations on competitive bidding set forth in this Section 5.1 and
subject only to the aggregate limitations on resourcing set forth in sub-
Section 5.3(e) hereof, GMIO may accept any bid submitted in response to
that competitive bid regardless of whether or not the amount of the
accepted bid is greater or less than the Bid Revenue applicable to that
competitive bid.
(a) Excluded Services. In no event may GMIO expose to competitive
bidding, or resource, pursuant to this Section 5.1 the following MSA
Services:
(1) Any information processing resources listed on Attachment A, as
the same may be modified from time to time, to the Agreement for
Global Information Processing Resource Pricing, entered into as
of June 7, 1996, between GM Parent and EDS Parent.
(2) Any other MSA Services which are subject to a specific pricing
agreement entered into after February 1, 1996, so long as the
pricing term applicable to such MSA Services continues in force.
(b) No Further Limitation. Nothing in this Section 5.1 shall be
construed as a limitation or constraint on GMIO's ability to
participate in "Later Market Testing and Resourcing by GM" as
contemplated in Section 5.2.
5.2 Later Market Testing and Resourcing by GM. During the time periods
specified below, GM may expose MSA Services to competitive bidding and, at
its discretion, may then
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source such MSA Services directly to third parties or to EDS, subject to
the limitations and requirements set forth in this Section 5.2 and in
Section 5.3 hereof.
(a) Annual Limitations. During calendar year 1998 and each subsequent
calendar year during the term of this MSA, GM may expose to
competitive bidding MSA Services so long as the aggregate Bid Revenue
associated with such MSA Services does not exceed the applicable
percentage set forth below of the aggregate annual revenue paid to EDS
by GM for MSA Services performed pursuant to this MSA and Service
Agreements hereunder during the prior calendar year:
Calendar Year Percentage
------------- ----------
1998 5.75%
1999 6.125%
2000 6.375%
2001 2.6%
2002 2.5%
2003 2.5%
2004 2.4%
2005-06 2.2%
With respect to any competitive bid that satisfies the limitations on
competitive bidding set forth in this sub-Section 5.2(a) and subject
only to the aggregate limitations on resourcing set forth in sub-
Section 5.3(e) hereof, GM may accept any bid submitted in response to
that competitive bid regardless of whether or not the amount of the
accepted bid is greater or less than the Bid Revenue applicable to
that competitive bid.
(b) Commencement. The competitive bidding of MSA Services allowed during
any calendar year pursuant to this Section 5.2 may commence ninety
(90) days prior to
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the first of that year, but no resourcing to third parties which
results from such competitive bidding may be effective until the first
of that year.
(c) Excluded Services. In no event may GM expose to competitive bidding,
or resource, the following MSA Services:
(1) Any UPR Catalog items which are subject to a specific long-term
contract (such as (i) the information processing resources listed
on Attachment A, as the same may be modified from time to time,
to the Agreement for Global Information Processing Resource
Pricing, entered into as of June 7, 1996, between GM Parent and
EDS Parent, and (ii) the communications products and services
listed on Attachment A, as the same may be modified from time to
time, to the Agreement for U. S. Communications Product and
Service Pricing, entered into as of June 7, 1996, between GM
Parent and EDS Parent), for so long as such specific contract
continues in force.
(2) Any other MSA Services which are subject to a specific pricing
agreement entered into after February 1, 1996, so long as the
pricing term applicable to such MSA Services continues in force.
However, the exclusion set forth in this sub-Section 5.2(c)(2)
will not apply to the MSA Services being provided pursuant to (i)
the Service Agreement entered into as of June 7, 1996, between
EDS and Allison Transmission, (ii) the Service Agreement entered
into as of June 7, 1996, between EDS and GM of Canada, and (iii)
the Service Agreement entered into as of June 7, 1996, between
EDS and GM de Mexico (collectively the "Grandfathered Service
Agreements").
The above provisions notwithstanding, but subject to the other
limitations set forth in this Article V, during the final ninety (90)
days of any such contract or pricing agreement referred to in this
sub-Section 5.2(c), GM may commence
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competitive bidding of the MSA Services which are subject to that
contract or pricing agreement, but no resourcing to third parties
which results from such competitive bidding may be effective until the
expiration of that contract or pricing agreement.
5.3 General Limitations and Requirements. The competitive bidding, and
resourcing to third parties, of MSA Services by GM pursuant to Sections 5.1
and 5.2 hereof shall be subject to the following limitations and
requirements:
(a) Consultation. Prior to the commencement of any competitive bidding
pursuant to this Article V, GM shall consult with EDS regarding the
appropriateness and potential consequences of exposing any particular
MSA Services to competitive bidding and will give due regard to the
impact that such competitive bidding and any resulting resourcing may
have upon EDS. In this regard, EDS shall be obligated consistent with
sub-Section 5.3(h) hereof to promptly inform GM of any potential
impairment of EDS' ability to perform MSA Services as a result of such
resourcing to the extent EDS is then aware or reasonably should be
aware of such potential impairment. The final decision to proceed with
such competitive bidding and any resulting resourcing, however, shall
at all times be retained by GM.
(b) Estimate of Bid Revenue. Prior to the commencement of any competitive
bid that GM may conduct pursuant to this Article V, GM will develop a
good faith, reasonable estimate of the Bid Revenue associated with the
MSA Services that will be subject to that competitive bid, based upon
the amounts previously paid to EDS for those or similar MSA Services
provided under comparable circumstances, the EDS rates for applicable
resources then in effect, and other similar criteria. If GM so
requests, EDS will assist GM in developing the Bid Revenue estimate
and, in any event, GM will inform EDS of GM's proposed estimate of the
Bid Revenue prior to the commencement of the competitive bid.
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Promptly after being informed of the proposed estimate, EDS will
inform GM as to whether or not EDS is in agreement with the proposed
estimate and, if not, the basis for EDS' disagreement. If EDS is not
in agreement with the proposed estimate and GM so requests, EDS and GM
will work together in good faith to resolve the differences.
(c) Commencement of Competitive Bid. Upon finalization of GM's good
faith, reasonable estimate of the Bid Revenue associated with the MSA
Services that GM proposes to subject to a competitive bid pursuant to
this Article V and notwithstanding any disagreement by EDS with that
estimate, GM may proceed with the competitive bid for such MSA
Services if the amount of such GM final estimate of the Bid Revenue
for those MSA Services, when aggregated with the amounts of Bid
Revenue associated with all other competitive bids previously
commenced by GM during the applicable period, is less than the
applicable initial or annual bidding limitation set forth in Section
5.1 or 5.2 hereof.
(d) Right to Bid. No MSA Services shall be resourced to third parties
without the prior competitive bidding of such services in accordance
with this Article V. EDS shall have the right to bid on any MSA
Services exposed to competitive bidding pursuant to this Article V,
and its bid shall be fairly evaluated by GM along with all other bids
submitted by any third parties. In this regard, however, the exclusive
right to select the successful bidder shall at all times be retained
by GM.
(e) Aggregate Limitations. Following any competitive bidding of any MSA
Services allowed by this Article V, GM may source such MSA Services to
the successful bidder, whether EDS or a third party; provided,
however, that the amount of MSA Services which may be resourced to
third parties by GM shall be subject to the following aggregate
limitations:
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(1) Through calendar year 2000, in no single calendar year shall the
aggregate amount paid to third parties by GM for MSA Services
performed during that calendar year exceed fifteen percent (15%)
of the aggregate amount of revenue paid to EDS by GM for MSA
Services performed during the prior calendar year.
(2) After calendar year 2000, in no single calendar year shall the
aggregate amount paid to third parties by GM for MSA Services
performed during that calendar year exceed twenty-five percent
(25%) of the aggregate amount of revenue paid to EDS by GM for
MSA Services performed during the prior calendar year.
Commencing if and when GM resources any MSA Service to a third party,
GM shall provide to EDS, promptly after the end of each calendar year
during the remaining term of this MSA, a report of the amounts paid by
GM to third parties for MSA Services during that year. In addition,
upon request by EDS Parent, an annual special report shall be obtained
by GM Parent from its independent certified public accounting firm
expressing an opinion as to whether GM, for the then preceding year,
was in compliance with the provisions of this Article V. Unless waived
by GM Parent, EDS Parent shall reimburse GM Parent for the expenses
incurred by GM Parent in obtaining any such special report.
(f) Compliance with Limitations. GM shall not conduct competitive bidding
of any MSA Service, or source any MSA Service as a result of such
competitive bidding, if, at the time such bidding or sourcing would
otherwise occur, it is reasonably to be expected that the effect of
such bidding or sourcing would result in GM's exceeding any annual or
aggregate limitation provided in this Article V. Subject to the
foregoing, GM will not be required to cancel, renegotiate, or
otherwise nullify any contract for MSA Services previously entered
into with a third party in
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the event that any such limitation is reached or exceeded during the
terms of those contracts.
(g) Order of Precedence. The limitations set forth in this Article V
shall supersede any different or inconsistent rights which GM may have
pursuant to any Service Agreement, whether in effect as of or entered
into after the Effective Date, to conduct competitive bidding of, or
resource, any MSA Services, and GM Parent agrees that neither it nor
any of its Contracting Parties worldwide will enforce any provision of
any Service Agreement in a manner that would result in GM being in
violation of this Article V.
(h) Performance Excused. If, as a result of GM's resourcing of any MSA
Service, EDS is prevented or materially impaired from performing any
other MSA Services as a direct result of the performance or non-
performance of the third party providing the resourced MSA Service,
EDS will not be liable or otherwise held responsible for any failure
in the performance of those other MSA Services for so long as and to
the extent that EDS' performance is thus prevented or materially
impaired, provided that EDS gives GM prompt notice that such situation
is likely to occur as soon as EDS becomes aware or reasonably should
have become aware of that potential. In any such event, EDS shall,
upon GM's request, utilize its reasonable best efforts, in cooperation
with GM and the applicable third party, to develop and implement
suitable work around plans and any other actions that may be necessary
to eliminate the prevention or impairment of EDS' performance of the
MSA Services as expeditiously as reasonably possible. GM shall pay EDS
for additional work associated with EDS' implementation of any such
work around or related actions in accordance with the cost-plus
pricing methodology set forth in Section A7.3 of Exhibit A hereto or
as may be otherwise mutually agreed. In all such cases, EDS shall be
obligated to utilize its reasonable best efforts to perform the MSA
Services for which it is retaining responsibility regardless of the
performance or non-performance of the
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third party providing the resourced MSA Service. For purposes of this
sub-Section 5.3(h), EDS will be deemed "materially impaired" from
performing any MSA Services if EDS is not able to perform such MSA
Services without expending significant additional effort or expense.
(i) Plant Floor Exclusion. If GM terminates the Plant Floor Systems
Services Agreement, entered into as of June 7, 1996, between GM
and EDS on or before the end of the Probationary Period (as defined in
that agreement) as a result of a Material Failure (as defined in that
agreement) by EDS, then GM may competitively bid and resource any
plant floor services provided thereunder, other than any such plant
floor services that, prior to the Effective Date, were mutually agreed
by the parties to be within the scope of services described in Section
1.3 of the Master Agreement, and such competitive bidding and
resourcing shall not count against either the annual or the aggregate
limitations on competitive bidding and resourcing set forth elsewhere
in this Article V.
(j) Assistance and Cooperation. EDS will fully cooperate as necessary to
facilitate GM's exercise of the market testing rights under this
Article V, including, without limitation, by providing to GM and
designated third party vendors relevant information regarding the MSA
Services being exposed to market testing. The above provision
notwithstanding, EDS shall not be required to (i) provide any
information relating to EDS' costs, or (ii) disclose any other bona
fide EDS proprietary or trade secret information unless such other
proprietary or trade secret information is required to understand GM's
requirements and specifications and the recipient of such information
has provided EDS with a confidentiality agreement regarding such
information that is mutually acceptable to EDS and GM.
(k) Transition Services. In the event that GM awards or resources any MSA
Services to a third party pursuant to this Article V, then EDS shall
provide reasonable
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transition services to GM and such third party in accordance with the
provisions of Section A9.5 of Exhibit A hereto.
(l) Cancellation Charges. In the event that, pursuant to this Article V,
GM awards or sources, either to EDS or to a third party, any MSA
Services pursuant to a competitive bid that (i) results in the
cancellation of any MSA Services then being provided by EDS pursuant
to a Project Service Agreement (as defined below) executed on or
before February 1, 1996, or any of the Grandfathered Service
Agreements, or (ii) requires the disposition of any capital asset or
the cancellation of any long-term lease acquired or entered into prior
to February 1, 1996, then, in each such case, GM will pay to EDS any
wind-down expenses and cancellation charges, determined in accordance
with Section A9.4 of Exhibit A hereto, incurred by EDS in connection
with the sourcing of such MSA Services. Except as provided in this
sub-Section 5.3(l), EDS will not be entitled to wind-down expenses or
cancellation charges pursuant to such Section A9.4 with respect to the
bidding or sourcing of MSA Services pursuant to this Article V. For
purposes of this sub-Section 5.3(l), the term "Project Service
Agreement" shall mean a RISS, SDA, scope of work, or other Service
Agreement for a specified set of MSA Services, but specifically
excluding any GM Major Sector or similar "umbrella" type Service
Agreement except to the extent such Service Agreement is utilized to
authorize performance of a specified MSA Service without the creation
of another Service Agreement.
ARTICLE VI. GENERAL PROVISIONS
-------------------------------
6.1 Termination of MSA. This MSA may be terminated as follows:
(a) In the event either EDS Parent or GM Parent defaults in the
performance of any of its duties or obligations that are material in
the context of the overall relationship between GM and EDS (except for
a default in payments to EDS) and fails to cure such default within
forty-five (45) days after being given written notice specifying
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the default, or, with respect to any default which cannot reasonably
be cured within forty-five (45) days, if the defaulting party fails to
provide, promptly after being given written notice specifying the
default, a specific written action plan for curing the default as
expeditiously as reasonably possible, including a specified schedule
for the action plan and a mutually agreed upon end date by which the
action plan is to be completed and the default cured, and to proceed
utilizing its reasonable best efforts to cure the default in
accordance with and on the schedule specified in the action plan, then
the party not in default may, by giving written notice thereof to the
defaulting party, terminate this MSA as of a date specified in such
notice of termination. Additionally, in the event that the defaulting
party fails to cure the default by the mutually agreed upon end date
as set forth in the action plan, the party not in default may, by
giving written notice thereof to the defaulting party, immediately
terminate this MSA.
(b) In the event GM defaults in the payment when due of any amount due to
EDS that is material in the context of the overall relationship
between GM and EDS and fails to cure such default within ten (10) days
after being given written notice specifying the default, then the EDS
Corporate Contract Manager may, by giving written notice thereof to
GM, terminate this MSA as of a date specified in such notice of
termination. Notwithstanding the foregoing, the EDS Corporate
Contract Manager shall not be entitled to terminate this MSA for
failure to pay any amount that is reasonably and in good faith
disputed by GM if, within the ten (10) day period specified above, GM
pays such disputed amount into an escrow account established at a
mutually selected financial institution for that purpose. Upon
resolution of the dispute, any portion of the disputed amount that is
determined to be payable to EDS, together with interest earned
thereon, will be promptly paid to EDS from the escrow account and any
remaining amount in the escrow account will be paid to GM.
(c) In the event that either party is unable to pay its debts generally as
they come due or is declared insolvent or bankrupt, is the subject of
any proceedings relating to
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its liquidation, insolvency or for the appointment of a receiver or
similar officer for it, makes an assignment for the benefit of all or
substantially all of its creditors, or enters into an agreement for
the composition, extension, or readjustment of all or substantially
all of its obligations, then the other party hereto may, by giving
written notice thereof to such party, terminate this MSA as of a date
specified in such notice of termination.
(d) In the event that a Change of Control (as defined in Exhibit F hereto)
occurs, then GM Parent may terminate this MSA or any applicable
Service Agreement in accordance with and subject to the provisions of
Exhibit F hereto.
6.2 Insurance. EDS shall maintain, during the term hereof, all insurance
and/or bonds required by law or mutually agreed to be reasonably required
to protect GM's interests, including but not limited to: (1) Workers
Compensation insurance as prescribed by the law of the jurisdiction(s) in
which the applicable MSA Services are to be performed; (2) Employer's and
Occupational Disease Liability insurances with limits of at least Five
Million Dollars ($5,000,000) per occurrence; and (3) Comprehensive General
Liability insurance (including products liability, personal injury,
property damage or loss, and broad form contractual liability insurance or
its equivalent with limits of Twenty-Five Million Dollars ($25,000,000)
and, if the use of automobiles is required, Comprehensive Automobile
Liability insurance with combined single limits of at least Ten Million
Dollars ($10,000,000) for bodily injury, including death, and for property
damage. EDS insurance policies shall be issued by reputable insurance
company(ies) authorized to do business where the applicable MSA Services
are to be performed. The above policies shall be primary in coverage to any
other insurance or self insurance arrangements which may be available to
GM. EDS shall be prepared, prior to the start of the applicable MSA
Services to furnish, if requested by GM, certificates or adequate proof of
the foregoing insurance, which insurance shall name GM Parent as an
additional insured. Certificates furnished by EDS shall contain a clause
stating that GM is to be notified in writing at least thirty (30) days
prior to termination of, or any material change in, the policy. The
purchase of
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insurance coverage and furnishing of certificates pursuant to this Section
6.2 shall neither modify nor be in satisfaction of EDS' liability under
this MSA or any Service Agreement.
6.3 Foreign Subsidiaries. GM Parent and EDS Parent have recommended and shall
continue to recommend to their respective foreign subsidiaries (including
second and lower tier subsidiaries and foreign branches of U.S.
subsidiaries, including second and lower tier subsidiaries) that they enter
into locally appropriate agreements for the provision of MSA Services in
accordance with the principles set forth in the provisions of this MSA. GM
Parent and EDS Parent each acknowledge and understand that their respective
foreign subsidiaries are not parties to this MSA and will not be legally
bound by the provisions of this MSA unless and until they agree to be so
bound. However, during any period and to the extent that a locally
appropriate Service Agreement for any such MSA Services is not then
currently in effect, GM Parent and EDS Parent shall each remain obligated
to the other for the performance of the respective obligations of GM and
EDS stated herein.
6.4 Compliance with Advance Agreement. EDS and GM will continue to adhere to
the practices in effect as of the Effective Date that have been agreed upon
and put in place to carry out the provisions of the Advance Agreement,
concerning EDS profit and unallowable costs included in GM Central Office
allocations to the U.S. Government, that has been negotiated and agreed
upon by GM Parent, EDS Parent, and the United States Defense Department;
provided, however, that the parties' obligation to adhere to these
practices will continue only for so long as and to the extent that EDS'
charges to the GM Central Office are not accepted by the Defense Department
as market-based prices, fully allowable for U.S. Government contract
financial accounting purposes. In addition, for so long as the parties
continue to adhere to the Advance Agreement as provided in the preceding
sentence, EDS shall give GM an annual credit against EDS' charges to the GM
Central Office in the amount of $115,000 per year. GM Parent and EDS Parent
each agree to use all reasonable efforts to cause the Defense Department to
accept EDS' charges to the GM Central Office as market-based prices as soon
as feasible after the Effective Date.
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6.5 Amendment or Modification. This MSA may be amended or modified upon mutual
agreement of GM Parent and EDS Parent; provided, however, such amendment or
modification shall only be effective if made in writing by the Corporate
Contract Managers or other authorized representatives of GM Parent and EDS
Parent.
6.6 Incorporation of Exhibit A. The provisions of Exhibit A hereto, except for
and expressly excluding Section A9.3 thereof, are hereby incorporated into
and made a part of this MSA for all purposes. Notwithstanding anything to
the contrary in Exhibit A hereto, for purposes of these provisions as
incorporated into this MSA (i) the Effective Date shall mean the Effective
Date of this MSA, (ii) the Contracting Parties shall mean GM Parent and EDS
Parent, and (iii) the Major Sector Contract Managers and the Unit Project
Managers of the Contracting Parties shall mean the GM and EDS Corporate
Contract Managers.
6.7 Prior Master Agreement. This MSA amends, restates and supersedes in its
entirety the Master Agreement by and between GM and EDS and, effective as
of the Effective Date, the Master Agreement is hereby terminated and
replaced in all respects. Any Service Agreement in effect as of the
Effective Date, however, shall survive the aforementioned termination of
the Master Agreement, but GM Parent and EDS Parent shall, subject to
Section 1.5 hereof, cause their respective Contracting Parties thereto to
incorporate into that Service Agreement the provisions of Exhibit A to this
MSA in lieu of the corresponding provisions of Exhibit A to the Master
Agreement (with appropriate adjustments or exclusions necessary to
accommodate differences between this MSA and the Master Agreement, subject
to the provisions of Section A1.2 of Exhibit A hereto) as promptly as
reasonably practicable. Without limiting the generality of the foregoing,
GM Parent and EDS Parent shall, subject to Section 1.5 hereof, cause their
respective Contracting Parties, in connection with their incorporating into
any such Service Agreement the provisions of Exhibit A to this MSA, to make
the following adjustments and exclusions to those provisions as
incorporated into the Service Agreement:
44
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(a) GM Space. If the Contracting Parties did not expressly exclude
Section A3.2(b) of Exhibit A to the Master Agreement from the Service
Agreement, then the Service Agreement shall be amended to include such
Section A3.2(b) as it may have been modified in the Service Agreement.
(b) Time of Payment. If the payment terms applicable to the Service
Agreement have been modified, either pursuant to Section 2.6 hereof or
otherwise, so that such provisions are different from the provisions
of Section A8.2 of Exhibit A to the Master Agreement, then the Service
Agreement shall retain such modified payment terms in lieu of the
payment terms provided in Section A8.2 of Exhibit A to this MSA. In no
event, however, shall the payment terms applicable to any Service
Agreement be less favorable to the GM Contracting Party thereto than
the applicable payment terms described in Section 2.6 hereof.
GM Parent and EDS Parent each agree that, unless otherwise expressly agreed
by the Contracting Parties thereto in accordance with the provisions of
Section A1.2 of Exhibit A hereto, no Service Agreement in effect as of the
Effective Date will be enforced in a manner that is inconsistent with the
provisions of this Section 6.7.
6.8 Governing Law. This MSA shall be governed by the laws of the State of
Michigan without regard to the principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
representatives, have executed this MSA effective as of the Effective Date first
above written.
GENERAL MOTORS CORPORATION ELECTRONIC DATA SYSTEMS CORPORATION
By: /s/ Leon J. Krain By: /s/ Paul J. Chiapparone
----------------------- ------------------------
Leon J. Krain Paul J. Chiapparone
Vice President and Senior Vice President
Group Executive
45
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EXHIBIT A
STANDARD TERMS AND CONDITIONS
RECOMMENDED FOR INCORPORATION INTO SERVICE AGREEMENTS
-----------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE A-I. DEFINITIONS AND INTERPRETATION
Section A1.1 Definitions........................................... A-1
Section A1.2 Interpretation........................................ A-5
ARTICLE A-II. CONTRACT ADMINISTRATION AND REVIEW
Section A2.1 Management and Administration......................... A-6
Section A2.2 Performance Review.................................... A-7
ARTICLE A-III. GM ASSETS AND SPACE
Section A3.1 GM Assets............................................. A-7
Section A3.2 GM Space.............................................. A-8
ARTICLE A-IV. SOFTWARE AND INTELLECTUAL PROPERTY
Section A4.1 Ownership of Software................................. A-8
Section A4.2 Software Rights and Licenses.......................... A-10
Section A4.3 Changes and Upgrades to Software...................... A-15
Section A4.4 Third Party Software Developers....................... A-16
Section A4.5 Intellectual Property................................. A-16
ARTICLE A-V. DATA PROTECTION AND AUDIT RIGHTS
Section A5.1 GM Data............................................... A-17
Section A5.2 Safeguarding of GM Data............................... A-18
Section A5.3 Nondisclosure......................................... A-18
Section A5.4 Data Center Security.................................. A-19
Section A5.5 Audit Rights.......................................... A-19
ARTICLE A-VI. EMPLOYEES
Section A6.1 EDS' Employees........................................ A-20
Section A6.2 Notice to EDS' Employees.............................. A-20
Section A6.3 Premise and Work Rules................................ A-21
Section A6.4 Right of Access....................................... A-21
Section A6.5 Key EDS Employees for Critical Projects............... A-21
ARTICLE A-VII. EDS COMPENSATION
Section A7.1 Uniform Published Rates............................... A-22
Section A7.2 Fixed Price Methodology............................... A-24
Section A7.3 Cost-Plus Pricing..................................... A-26
Section A7.4 Pricing Detail........................................ A-30
Section A7.5 Tax Matters........................................... A-31
A-i
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ARTICLE A-VIII. BILLING AND PAYMENT PROCEDURES
Section A8.1 Billing Procedures.................................... A-33
Section A8.2 Time of Payment....................................... A-34
ARTICLE A-IX. DISPUTES AND TERMINATION
Section A9.1 Negotiation of Disputes............................... A-36
Section A9.2 Resolution of Disputes................................ A-36
Section A9.3 Termination........................................... A-37
Section A9.4 Cancellation of Services and Cancellation Charges..... A-38
Section A9.5 Termination Assistance and Transition................. A-41
ARTICLE A-X. WARRANTIES
Section A10.1 Software Warranty..................................... A-44
Section A10.2 Hardware Warranty..................................... A-44
Section A10.3 Pass-Through Warranties............................... A-44
Section A10.4 Survival of Warranties................................ A-45
Section A10.5 Disclaimer of Warranties.............................. A-45
ARTICLE A-XI. INDEMNITIES AND LIABILITY
Section A11.1 Cross Indemnity....................................... A-45
Section A11.2 Proprietary Rights Indemnity.......................... A-46
Section A11.3 Hardware Damage Indemnity............................. A-46
Section A11.4 Software License Indemnity............................ A-47
Section A11.5 Limitation of Liability............................... A-47
ARTICLE A-XII. SPECIAL PROVISIONS RELATING TO MSA SERVICES
Section A12.1 GM's IT Strategy and Architecture..................... A-48
Section A12.2 Competitiveness....................................... A-48
Section A12.3 Market Testing and Resourcing......................... A-49
Section A12.4 Co-Negotiation........................................ A-49
Section A12.5 Use of Independent Auditors........................... A-49
ARTICLE A-XIII. MISCELLANEOUS
Section A13.1 Binding Nature and Assignment......................... A-50
Section A13.2 Notices............................................... A-50
Section A13.3 Counterparts.......................................... A-51
Section A13.4 Headings.............................................. A-51
Section A13.5 Approvals and Similar Actions......................... A-51
Section A13.6 Force Majeure......................................... A-51
Section A13.7 Severability.......................................... A-52
Section A13.8 Waiver................................................ A-52
Section A13.9 Relationship of Parties............................... A-52
Section A13.10 Services for Others................................... A-53
Section A13.11 Hiring of Employees................................... A-53
Section A13.12 Compliance With Laws.................................. A-53
Section A13.13 Media Releases........................................ A-53
Section A13.14 Survival.............................................. A-54
Section A13.15 Entire Agreement...................................... A-54
Section A13.16 Amendment or Modification............................. A-54
Section A13.17 Good Faith and Fair Dealing........................... A-54
A-ii
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EXHIBIT A
STANDARD TERMS AND CONDITIONS
RECOMMENDED FOR INCORPORATION INTO SERVICE AGREEMENTS
-----------------------------------------------------
ARTICLE A-I. DEFINITIONS AND INTERPRETATION
-------------------------------------------
A1.1 Definitions. The following terms shall have the meanings set forth below
wherever they are used in the provisions of this Exhibit A:
(a) The term "Agreement" shall mean the agreement into which the
provisions of this Exhibit A are incorporated.
(b) The term "Contracting Party" shall mean (i) with respect to the MSA,
GM Parent or EDS Parent, and (ii) with respect to any Service
Agreement, the GM User Organization receiving MSA Services pursuant to
the Service Agreement or the EDS Service Organization providing such
MSA Services.
(c) The term "Corporate Contract Manager" shall mean the individual
designated by GM Parent or EDS Parent, respectively, pursuant to sub-
Section 3.3(a) of the MSA.
(d) The term "EDS" shall mean, collectively, EDS Parent and the entities
and subsidiaries owned by EDS Parent. For purposes of this
definition, an entity or subsidiary will be deemed to be "owned by EDS
Parent" if EDS Parent, either directly or indirectly, (i) is the
beneficial owner of more than 50% of the equity of that entity or
subsidiary, or (ii) is the beneficial owner of more than 35% of the
equity of, and has management control of, that entity or subsidiary.
(e) The term "EDS Cost" shall mean the costs of EDS, calculated pursuant
to sub-Section A7.3(b) hereof, in providing to GM the applicable MSA
Services.
A-1
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(f) The term "EDS Major Sector" shall mean an EDS Service Organization
designated by EDS from time to time to coordinate the provision of MSA
Services by EDS to the GM User Organizations within a GM Major Sector.
(g) The term "EDS Parent" shall mean Electronic Data Systems Corporation,
a Delaware corporation.
(h) The term "EDS Service Organization" shall mean any functional entity,
division, subsidiary, department or group within EDS, including an EDS
Major Sector, which has been or shall be formed to provide MSA
Services to GM User Organizations.
(i) The term "Effective Date" shall mean the date as of which the term of
the Agreement commences or the provisions of the Agreement otherwise
become effective.
(j) The term "GM" shall mean, collectively, GM Parent and the entities and
subsidiaries owned by GM Parent. For purposes of this definition, an
entity or subsidiary will be deemed to be "owned by GM Parent" if GM
Parent, either directly or indirectly, is the beneficial owner of:
(1) More than 65% of the equity of, and has management control of,
that entity or subsidiary and, as of August 1, 1995, EDS was
providing services under the Master Agreement pursuant to a
Service Agreement in support of the business operations of that
entity or subsidiary.
(2) 80% or more of the equity of that entity or subsidiary if, as of
August 1, 1995, EDS was not providing services under the Master
Agreement pursuant to a Service Agreement in support of the
business operations of that entity or subsidiary.
A-2
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(k) The term "GM Assets" shall mean all GM fixed and related assets, other
than Software and facilities, used in the performance of the MSA
Services and transferred to the management and control of EDS as of
January 1, 1985 or, by mutual agreement, at anytime thereafter.
(l) The term "GM Central Office" shall mean the corporate headquarters of
GM Parent.
(m) The term "GM Major Sector" shall mean a GM User Organization
designated by GM from time to time to coordinate the receipt of MSA
Services from EDS by numerous GM User Organizations. As of the
Effective Date of the MSA, the GM Major Sectors are listed in Exhibit
B to the MSA.
(n) The term "GM Parent" shall mean General Motors Corporation, a Delaware
corporation.
(o) The term "GM User Organization" shall mean any functional entity,
division, subsidiary, department or group within GM, including a GM
Major Sector, which has or shall have requirements for MSA Services
applicable to that functional entity, division, subsidiary, department
or group that the MSA provides are to be obtained from EDS.
(p) The term "Hardware" shall mean computers and related equipment,
including, but not limited to, central processing units and other
processors, controllers, modems, communications and telecommunications
equipment (voice, data and video), cables, storage devices, printers,
terminals, other peripherals and input and output devices, and other
tangible mechanical and electronic equipment intended for the
processing, input, output, storage, manipulation, communication,
transmission and retrieval of information and data.
A-3
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(q) The term "Invoice" shall mean an invoice prepared by EDS for GM
pursuant to the terms of the Agreement.
(r) The term "IT" shall mean information technology consisting of computer
and information processing and communications.
(s) The term "Major Sector Contract Manager" shall mean the person
designated by either the GM Major Sector having responsibility for the
GM Contracting Party or the EDS Major Sector having responsibility for
the EDS Contracting Party, as applicable, pursuant to sub-Section
3.3(b) of the MSA.
(t) The term "Master Agreement" shall mean the Master Agreement, effective
as of September 1, 1985, made and entered into by and between GM
Parent and EDS Parent, as amended by the Addendum thereto dated May
29, 1987.
(u) The term "MSA" shall mean the Master Service Agreement, effective as
of June 7, 1996, made and entered into by and between GM Parent
and EDS Parent.
(v) The term "MSA Services" shall mean those services described in Section
I of Exhibit C to the MSA.
(w) The term "Service Agreement" shall mean any agreement, as provided for
in Section 2.1 of the MSA, that is entered into between a GM User
Organization and an EDS Service Organization for the provision of MSA
Services to that GM User Organization, whether entered into before or
after the Effective Date of the MSA.
(x) The term "Site" or "Sites" shall mean the space within GM facilities
or entire GM facilities utilized in the performance of MSA Services.
A-4
<PAGE>
(y) The term "Software " shall mean the source code and object code
versions of any applications programs, operating system software,
computer software languages, utilities and other computer programs,
and documentation and supporting materials relating thereto, in
whatever form or media, including, but not limited to, the tangible
media upon which such applications programs, operating system
software, computer software languages, utilities and other computer
programs, and documentation and supporting materials relating thereto
are recorded or printed, together with all corrections, improvements,
updates and releases thereof.
(z) The term "Unit Project Manager" shall mean the person designated by
either Contracting Party pursuant to sub-Section 3.3(c) of the MSA.
Other terms used in this Exhibit A are defined in the context in which they
are used and, unless otherwise specified herein, shall have the meanings
there indicated wherever they are used in this Exhibit A.
A1.2 Interpretation. Unless expressly modified or excluded therefrom, the
provisions of this Exhibit A shall be deemed incorporated into the
Agreement and shall supersede and prevail over any conflicting or
inconsistent provisions of the Agreement, unless expressly provided
otherwise under the Agreement by:
(a) Mutual agreement of the Corporate Contract Managers with respect to
the provisions of Sections A1.1, A1.2, and A8.2 and Articles A-IX and
A-XII.
(b) Mutual agreement of the Major Sector Contract Managers with respect to
the provisions of Articles A-IV, A-V, A-X, A-XI, and A-XIII.
(c) Mutual agreement of the Unit Project Managers with respect to the
remaining provisions of this Exhibit A.
A-5
<PAGE>
The GM Contracting Party and the EDS Contracting Party with respect to the
Agreement shall be responsible for the performance of the obligations of GM
and EDS, respectively, under the Agreement.
ARTICLE A-II. CONTRACT ADMINISTRATION AND REVIEW
------------------------------------------------
A2.1 Management and Administration. The Unit Project Manager for each
Contracting Party, as designated pursuant to sub-Section 3.3(c) of the MSA,
under the supervision of the applicable Major Sector Contract Manager,
shall:
(a) Be responsible for the implementation, management and enforcement of
the Agreement on behalf of the Contracting Party.
(b) Supervise performance of that Contracting Party's obligations under
the Agreement.
(c) Have principal responsibility to resolve disputes between the GM and
EDS Contracting Parties.
(d) Ensure that the policies and procedures established with respect to
the Agreement are consistent with the policies and procedures of
general applicability established by the applicable Corporate Contract
Manager or Major Sector Contract Manager.
Each Major Sector Contract Manager or Unit Project Manager may delegate any
of his or her authority to a designated representative by notifying the
other Major Sector Contract Manager or Unit Project Manager of the
designated representative to whom such authority is delegated and the
extent of the authority delegated, which notice shall be confirmed in
writing if requested by the other Major Sector Contract Manager or Unit
Project Manager. Each Contracting Party shall be entitled to rely upon
instructions received from the Major Sector Contract Manager or Unit
Project Manager for the other Contracting Party with respect to all matters
relating to the Agreement and upon instructions received from any
A-6
<PAGE>
designated representative of the Major Sector Contract Manager or Unit
Project Manager for the other Contracting Party with respect to the MSA
Services and areas for which such designated representative is responsible
and each Major Sector Contract Manager or Unit Project Manager and
designated representative thereof shall make himself or herself reasonably
available for such purpose.
A2.2 Performance Review. The GM and EDS Major Sector Contract Managers and Unit
Project Managers for the Contracting Parties shall meet as often as shall
reasonably be requested by either Contracting Party to review the
performance of the EDS and GM Contracting Parties under the Agreement.
Written minutes of such meetings may be kept.
ARTICLE A-III. GM ASSETS AND SPACE
----------------------------------
A3.1 GM Assets. Commencing on the Effective Date, during the term of the
Agreement, GM shall provide the GM Assets used in the performance of the
MSA Services to EDS for EDS' use as provided herein.
(a) All GM Assets owned, leased or otherwise held by GM during the term of
this Agreement shall at all times remain the property of GM.
(b) EDS will have access to and use of the GM Assets and such ability to
manage the GM Assets as may be necessary or appropriate to enable EDS
to properly perform its obligations pursuant to the Agreement. Unless
otherwise mutually agreed, on a monthly basis, EDS will (i) pay on
behalf of GM to any third party, pursuant to the terms of any
agreements therefor, or (ii) reimburse GM for, the actual costs,
including depreciation, incurred by GM in connection with such GM
Assets.
(c) As and when such GM Assets are no longer required for the MSA
Services, EDS will arrange for the sale or disposal of such GM Assets
on such terms as EDS determines to be advantageous using the same
efforts as EDS uses with respect to
A-7
<PAGE>
its own similar assets and will advise GM of those terms. Upon GM's
approval, EDS will sell or dispose of such GM Assets on the terms
approved by GM and will forward to GM all proceeds of such sale or
disposal. In the event GM does not approve of the proposed terms of
sale, EDS shall return such GM Assets to GM.
A3.2 GM Space. Commencing on the Effective Date:
(a) EDS will have access to and use of the space at all Sites utilized in
the performance of MSA Services; and EDS shall have such right of
access to the GM facilities in which such Sites are located as is
appropriate to its responsibilities hereunder upon compliance with all
GM security and safety policies of general applicability in effect at
such facilities.
(b) Unless otherwise mutually agreed, such space and related facilities,
utilities and services will be provided by GM at no cost to EDS and
will be consistent with that provided at the Sites for employees of
EDS performing MSA Services as of the Effective Date or as otherwise
reasonably required by EDS. EDS shall comply with the terms of GM's
lease for such space to the extent that such terms are made known to
the EDS Contracting Party and are applicable to the EDS Contracting
Party's use of such space and shall indemnify GM from and against all
claims, losses or damages arising out of EDS noncompliance with such
terms.
ARTICLE A-IV. SOFTWARE AND INTELLECTUAL PROPERTY
------------------------------------------------
A4.1 Ownership of Software. GM and EDS agree that ownership of Software shall
be as follows:
(a) "GM Software" shall mean all Software owned, developed, leased,
licensed, or acquired by GM and used by EDS in providing MSA Services
to GM under the Agreement, but not including any Developed Software,
EDS Restricted Software,
A-8
<PAGE>
Software Development Tools, or Third Party Software. As between GM and
EDS, the GM Software shall be owned by and be the property of GM.
(b) "Developed Software" shall mean all Software developed by EDS, and EDS
agents or subcontractors, pursuant to the Agreement, including all
Software modifications and Software derivatives thereto, but not
including any Software that the parties have agreed or may agree will
be used to service other EDS customers in a service bureau environment
or on a multiple customer product or platform basis. The Developed
Software shall be owned by and be the property of GM. EDS hereby
assigns to GM the copyright in the Developed Software and agrees to
execute such documents as may be reasonably necessary to effect this
assignment.
(c) "EDS Restricted Software" shall mean all Software transferred to EDS
by GM pursuant to the Master Agreement and all Software developed or
acquired by EDS for GM under the Master Agreement. As between GM and
EDS, the EDS Restricted Software shall be owned by and be the property
of EDS.
(d) "Software Development Tools" shall mean all software development tools
utilized by EDS in creating Developed Software and not otherwise
embodied in such Developed Software. As between GM and EDS, the
Software Development Tools shall be owned by and be the property of
EDS.
(e) "EDS Software" shall mean all Software (i) owned by EDS as of the
effective date of the MSA or which EDS acquires ownership of after the
effective date of the MSA and which is used in connection with the MSA
Services performed under the Agreement, and/or (ii) developed by or on
behalf of EDS after the effective date of the MSA for use in
connection with the MSA Services performed under the Agreement, but
not including, in either case, any Developed Software,
A-9
<PAGE>
EDS Restricted Software, Software Development Tools, or Third Party
Software. The EDS Software shall be owned by and be the property of
EDS.
(f) "Third Party Software" shall mean all Software owned by a third party
that is licensed or leased from the third party by EDS, either in its
own name or in the name of GM, which is or will be used in the
performance of or in connection with the MSA Services performed under
the Agreement. All Third Party Software acquired primarily for use by
EDS in providing MSA Services to GM under the Agreement shall be
acquired in the name of GM, with EDS having access to and the right to
use such Software to the extent necessary to perform the MSA Services
pursuant to the Agreement.
A4.2 Software Rights and Licenses. GM and EDS agree to license Software as
follows:
(a) GM Software.
(1) GM grants to EDS a world-wide, non-exclusive, non-transferable,
fully paid, royalty-free license, with right to sublicense to the
extent permitted under third party license agreements, to use GM
Software for the limited purpose of providing MSA Services
pursuant to the Agreement. The license granted to EDS herein
includes the right to modify the licensed GM Software and to
develop software derivatives of or interfacing with the licensed
GM Software for the limited purpose as set forth herein.
(2) In the event GM ceases to obtain all or a portion of the MSA
Services from EDS, including upon the expiration or termination
of the Agreement, for any reason, the related license to the GM
Software granted under sub-Section A4.2(a)(1) hereof to EDS, and
any sublicense to such GM Software granted by EDS to any third
party, shall terminate to the extent such GM Software is used for
such ceased MSA Services, and EDS shall
A-10
<PAGE>
(i) deliver cost-free to GM a current copy of such GM Software in
the form in use as of the cessation of such MSA Services, and
(ii) unless such GM Software is the subject of a further license
granted under sub-Section A4.2(a)(1) hereof, promptly destroy or
erase all other copies of such GM Software in its possession,
except for copies retained by EDS for archival purposes only.
(b) Developed Software.
(1) GM grants to EDS a world-wide, non-exclusive, non-transferable,
fully paid, royalty-free license, with right to sublicense, to
use Developed Software for the limited purpose of providing MSA
Services pursuant to the Agreement. The license granted to EDS
herein includes the right to modify the licensed Developed
Software and to develop software derivatives of or interfacing
with the licensed Developed Software for the limited purpose as
set forth herein.
(2) In the event GM ceases to obtain all or a portion of the MSA
Services from EDS, including upon the expiration or termination
of the Agreement, for any reason, the related license to any
Developed Software granted under sub-Section A4.2(b)(1) hereof to
EDS, and any sublicense to such Developed Software granted by EDS
to any third party, shall terminate to the extent such Developed
Software is used for such ceased MSA Services, and EDS shall (i)
deliver cost-free to GM a current copy of such Developed Software
in the form in use as of the cessation of MSA Services, and (ii)
unless such Developed Software is the subject of a further
license granted under sub-Section A4.2(b)(1) or A4.2(b)(3)
hereof, promptly destroy or erase all other copies of such
Developed Software in its possession, except for copies retained
by EDS for archival purposes only.
A-11
<PAGE>
(3) In response to a request from EDS to license specified Developed
Software to use such Developed Software for the benefit of a
third party or to otherwise commercially exploit such Developed
Software, the parties shall in good faith determine restrictions,
if any, required to maintain the confidentiality of GM's
proprietary information [Confidential information has been
omitted.] including restrictions on delay of distribution of the
specified Developed Software [Confidential information has been
omitted.] GM shall license the specified Developed Software
subject to the determined restrictions [Confidential information
has been omitted.]
(c) EDS Restricted Software.
(1) EDS grants to GM a world-wide, non-exclusive, non-transferable,
fully paid, royalty-free, perpetual license, with right to
sublicense, solely for GM business activities, to use, modify,
enhance, develop software derivatives and interfaces, reproduce,
and distribute all EDS Restricted Software used in connection
with the MSA Services performed under the Agreement.
(2) EDS shall not use EDS Restricted Software for the benefit of a
third party, or sell or sublicense such Software to a third party
(other than to provide MSA Services to GM), without (i) the
parties first agreeing to restrictions, if any, required to
maintain the confidentiality of GM's proprietary information
[Confidential information has been omitted.] and (ii)
[Confidential information has been omitted.]
A-12
Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
[Confidential information has been omitted.] Notwithstanding the
foregoing, EDS may continue to exercise such rights in the EDS
Restricted Software following the effective date of the MSA to
the extent previously agreed to between GM and EDS.
(d) EDS Software. In the event GM shall at any time be properly entitled,
in accordance with the provisions of the MSA, to cease obtaining any
MSA Services from EDS and to commence performing such MSA Services for
itself or to obtain such MSA Services from a third party service
provider and shall elect to do so, then, if GM so requests in writing,
GM shall have, effective as of that time, a perpetual, irrevocable
(except in the event of a breach of the license herein), world-wide,
non-transferable, non-exclusive, fully paid, royalty-free license to
use, operate, maintain, copy, modify, create derivative works for use
of GM, and sublicense (as expressly provided in sub-Section A4.2(d)(4)
hereof) the application programs, documentation, and any other
materials that the Contracting Parties determine is necessary, of any
EDS Software then being used by EDS in providing the MSA Services to
GM and as to which EDS is entitled to grant such a license (such
application programs, documentation, and other materials being
hereinafter referred to as the "Licensed Software"), subject to the
following terms and conditions:
(1) Except with the prior written consent of EDS or to the extent
required by natural disaster or similar emergency, the Licensed
Software shall not be operated, directly or indirectly (i) by
persons other than bona fide employees of GM or an authorized
third party, or (ii) on equipment that is not under the control
of GM or an authorized third party. For purposes of this sub-
Section A4.2(d)(1), an "authorized third party" shall mean (x) a
third party provider of data processing services or other
supplier of services to GM to the extent such supplier requires
access to the Licensed Software in connection with the services
being provided to GM, or (y) any
A-13
Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
other third party (including dealers authorized to sell and
service GM vehicles) to the extent such third party requires
access to the Licensed Software in connection with the internal
business purposes of GM; provided, however, that any such
authorized third party shall have entered into an agreement with
EDS to comply with the provisions of this sub-Section A4.2(d) and
to not use the Licensed Software to compete in any manner, direct
or indirect, with EDS.
(2) Except with the prior written consent of EDS, the Licensed
Software shall be utilized only to support GM's business
activities.
(3) GM shall keep the Licensed Software confidential, shall not at
any time allow the Licensed Software, or any of the various
components thereof or any modifications thereto, to be disclosed
to third parties, sold, assigned, leased or commercially
exploited or marketed in any way, with or without charge, by GM
or its employees or agents and, except to the extent required for
normal operation of the Licensed Software as permitted herein,
shall not permit the Licensed Software to be copied or
reproduced, in whole or in part, by any person, firm or
corporation, at any time.
(4) GM may sublicense Licensed Software only to entities acquiring
all or any part of the business of GM. In the event such a
sublicense is granted, GM shall notify EDS and provide EDS with a
copy of any such sublicense. The sublicense shall limit use of
the Licensed Software to use in the business acquired, shall be
under terms no less restrictive than those set forth in this sub-
Section A4.2(d) and shall provide that EDS is an intended third
party beneficiary thereof.
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With the granting of the license to GM hereunder, EDS shall promptly
provide GM with a copy of the Licensed Software in the form being used
to provide MSA Services at the time such license becomes effective.
(e) Third Party Software. In the event GM ceases to obtain all or a
portion of the MSA Services from EDS in any situation where GM is
entitled to commence performing such MSA Services for itself or to
obtain such MSA Services from a third party service provider, then,
with respect to any Third Party Software then being used by EDS in
providing such MSA Services to GM, other than any such Third Party
Software acquired in GM's name, EDS shall either (i) grant GM a non-
exclusive, non-transferable, sublicense with right to sublicense for
GM business activities to use, modify, and enhance such Third Party
Software to the extent permitted by any applicable third party
agreements and subject to the provisions of sub-Section A9.5(e) of
this Exhibit A, or (ii) assist GM in obtaining from the applicable
third party a non-exclusive, non-transferable license with right to
sublicense for GM business activities to use, modify, and enhance such
Third Party Software. Notwithstanding the foregoing, in a situation
where GM is ceasing to obtain all or a portion of the MSA Services
from EDS as a result of resourcing such MSA Services to a third party
pursuant to Article V of the MSA, EDS shall not be required to grant
GM a sublicense to any Third Party Software then being used by EDS in
providing such MSA Services if and to the extent that such Third Party
Software is commercially available to such third party. With the
granting by EDS of a sublicense to GM hereunder, EDS shall promptly
provide GM with a copy of such Third Party Software in the form being
used to provide MSA Services at the time such sublicense becomes
effective.
A4.3 Changes and Upgrades to Software. Except as may be approved by GM, EDS
shall not make any changes or modifications to any Software then being used
by EDS in providing MSA Services to GM that would adversely materially
alter the functionality of the Software or any associated Hardware or
materially degrade the performance of the
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Software or any associated Hardware, except as may be necessary on a
temporary basis to maintain the continuity of the MSA Services being
provided under the Agreements.
A4.4 Third Party Software Developers. EDS shall fully cooperate with GM's third
party Software developers and upon GM's request, provide such third party
Software developers with all pertinent interface requirements for
applicable EDS Software, [Confidential information has been omitted.] and,
to the extent permitted by the applicable license agreements, Third Party
Software. EDS shall not be required to provide such interface requirements
[Confidential information has been omitted.] to a third party Software
developer unless EDS and the third party Software developer first enter
into a confidentiality agreement with respect to such interface
requirements. GM shall not request disclosure of such interface
requirements [Confidential information has been omitted.] to any third
party, except as required for normal operation of any licensed EDS Software
for GM business activities.
A4.5 Intellectual Property. GM and EDS agree that intellectual property shall
be treated as follows:
(a) "Intellectual Property" or "IP" shall mean inventions, designs, mask
works, and works of authorship, as those terms are understood under
United States law, conceived or fixed in tangible form by EDS pursuant
to work done under the Agreement. IP shall not include general skill
and knowledge of an EDS employee resulting from that employee's work
under the Agreement.
(b) EDS shall own all IP that relates to computer system implementation,
data processing and data communications ("EDS IP"). All other IP not
comprising EDS IP, including all IP that relates to core business
operations of GM and the GM Major Sectors (collectively, "GM IP"),
shall be owned by GM. EDS IP shall not include copyright in any
Developed Software.
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(c) GM and EDS shall each disclose promptly to the other sufficient
information to enable the other, at its cost, to protect its IP and,
in connection therewith, shall execute such documents or take such
other actions as may be reasonably required to enable the other to
file applications, to obtain patents and to otherwise perfect its IP
rights granted hereunder.
(d) GM and EDS shall each grant to the other a license, with no right to
sublicense, to make, have made, use, have used, sell and have sold
under the granting party's IP for the other's internal business
activities. To the extent EDS desires to use this license for the
benefit of a third party or to otherwise commercially exploit the
rights granted, [Confidential information has been omitted.]
ARTICLE A-V. DATA PROTECTION AND AUDIT RIGHTS
---------------------------------------------
A5.1 GM Data. GM Contracting Party data shall be and remain GM's property and,
upon the expiration or termination of the Agreement for any reason or, with
respect to any particular data, on such earlier date that the same shall be
no longer required by the EDS Contracting Party in order to render MSA
Services under the Agreement, all copies of such data shall, upon prior
notice to the GM Contracting Party, be either, at the election of the GM
Contracting Party, (i) deleted from the data files maintained by the EDS
Contracting Party or (ii) returned to the GM Contracting Party by the EDS
Contracting Party. GM Contracting Party data shall not be utilized by the
EDS Contracting Party for any purpose other than that of rendering services
to the GM Contracting Party nor shall GM Contracting Party data or any part
thereof be disclosed, sold, assigned, leased or otherwise disposed of to
third parties by the EDS Contracting Party or commercially exploited by or
on behalf of the EDS Contracting Party, its employees or agents. The EDS
Contracting Party agrees that GM Contracting Party data is the valuable
property of GM and that violation in any
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material respect of any provision of this Section A5.1 could cause GM
irreparable injury for which it would not have an adequate remedy at law.
A5.2 Safeguarding of GM Data. The EDS Contracting Party will establish and
maintain safeguards against the destruction, loss or alteration of GM
Contracting Party data in the possession of the EDS Contracting Party,
which safeguards shall be, unless otherwise mutually agreed upon between
the Contracting Parties, no less rigorous than those which were in effect,
or which EDS was contractually obligated to have in effect, as of the
Effective Date. In the event that additional safeguards for GM Contracting
Party data are reasonably requested by the GM Contracting Party (e.g., in
the event GM sells or otherwise divests a part of the business of the GM
Contracting Party) and upon mutual agreement as to reasonable charges
therefor, the EDS Contracting Party shall provide such additional
safeguards and the GM Contracting Party shall pay the EDS Contracting Party
such reasonable charges therefor as are mutually agreed to. The EDS
Contracting Party shall promptly notify the GM Contracting Party of any
information the EDS Contracting Party obtains as to any unauthorized
possession, use or disclosure of any GM Contracting Party data in the
possession of the EDS Contracting Party and will cooperate with the GM
Contracting Party in preventing any further unauthorized possession, use or
disclosure of such GM Contracting Party data and in instituting appropriate
legal proceedings relating to such unauthorized possession, use or
disclosure of GM Contracting Party data. The GM Contracting Party shall
have the right to establish backup security for data and to keep backup
data and data files in its possession if it so chooses; provided, however,
that the EDS Contracting Party will have the access to such backup data and
data files as is reasonably required by the EDS Contracting Party, subject
to the GM Contracting Party security restrictions, if any.
A5.3 Nondisclosure. The EDS Contracting Party and the GM Contracting Party each
acknowledge that it shall have access to information, technology, know how,
procedures, processes or other information ("Information") which the other
deems confidential, the disclosure of which could result in irreparable
harm to the other. The EDS Contracting
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Party and the GM Contracting Party each hereby agrees that all Information
communicated to it, whether before or after the Effective Date, shall be
and was received in strict confidence, shall be used only in connection
with the performance of the MSA Services requested hereunder by the GM
Contracting Party, and that no such Information shall be disclosed by it
except with the express written consent of the Major Sector Contract
Manager of the other. In addition, the EDS Contracting Party and the GM
Contracting Party shall each comply with all applicable data protection and
similar laws and regulations. This provision shall survive termination of
the Agreement for any reason.
A5.4 Data Center Security. The EDS Contracting Party will perform security
procedures at any data center or information processing center where MSA
Services are performed by the EDS Contracting Party for the GM Contracting
Party, which security procedures shall be, unless otherwise mutually agreed
upon between the Contracting Parties, no less rigorous than those which
were in effect, or which EDS was contractually obligated to have in effect,
as of the Effective Date. In the event that additional security procedures
are reasonably requested by the GM Contracting Party (e.g., in the event GM
sells or otherwise divests of a part of the business of the GM Contracting
Party) and upon mutual agreement as to reasonable charges therefor, the EDS
Contracting Party shall perform such additional security procedures and the
GM Contracting Party shall pay the EDS Contracting Party such reasonable
charges therefor as are mutually agreed to. Except as otherwise provided
in the Agreement, the GM Contracting Party personnel shall not operate the
equipment and systems to be utilized by the EDS Contracting Party under the
Agreement and shall not enter any room where any such equipment and systems
may be located or assist the EDS Contracting Party in any manner therein
without the prior consent of the EDS Contracting Party, which will not be
unreasonably withheld.
A5.5 Audit Rights. The EDS Contracting Party will provide such auditors or
inspectors as the GM Contracting Party may from time to time designate in
writing with reasonable access to any data center or information processing
center from which the EDS Contracting Party is performing MSA Services
under the Agreement for the limited purpose of performing
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audits or inspections of the GM Contracting Party and will provide to such
auditors or inspectors any assistance that they may reasonably require. The
GM Contracting Party shall also have the right to audit the documentation,
security and integrity of GM Contracting Party data being maintained by the
EDS Contracting Party hereunder at such times as will not unreasonably
interfere with the EDS Contracting Party's ability to perform its
obligations hereunder. In addition, whenever a government audit of any GM
User Organization is required, EDS will allow the government to audit EDS'
books and records as required to verify EDS charges to that GM User
Organization and shall cooperate to the extent necessary to support the
government's audit. If EDS is required to provide any services, other than
of a routine nature, in connection with any such audit or inspection, then
GM shall pay EDS for the resources utilized in providing such services at
the standard EDS rates generally applicable to GM or at such other rates as
the parties may negotiate and agree upon at that time.
ARTICLE A-VI. EMPLOYEES
-----------------------
A6.1 EDS' Employees. The staff provided by EDS to perform the MSA Services
shall be suitably trained and have the skill sets necessary to perform the
MSA Services. All persons utilized by EDS in performing the MSA Services
shall be considered solely EDS' employees or agents and EDS shall be
responsible for compliance with all laws, rules, and regulations involving,
but not limited to, employment of labor, hours of labor, working
conditions, payment of wages, and payment of taxes, such as unemployment,
social security and other payroll taxes, including applicable contributions
from such persons when required by law and GM shall have no responsibility
in relation thereto. With respect to such personnel, EDS shall have sole
responsibility for supervision, daily direction and control of the work by
its employees.
A6.2 Notice to EDS' Employees. To the extent applicable to the performance of
their duties, the EDS Contracting Party shall notify its employees of, and
require its employees to comply
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with, the nondisclosure, marketing restrictions, security obligations and
other similar requirements of EDS set forth in the Agreement.
A6.3 Premise and Work Rules. Both EDS Contracting Party and GM Contracting
Party employees, subcontractors and agents while on the premises of the
other, shall comply with all rules, regulations, and labor agreements
regarding personnel and professional conduct that are generally applicable
to personnel at that location, including, where required by U.S. Government
regulations, submission of satisfactory clearance from the U.S. Department
of Defense and other federal authorities concerned.
A6.4 Right of Access. Both the EDS Contracting Party and the GM Contracting
Party shall permit reasonable access, upon prior notice, to the other's
facilities in connection with MSA Services performed hereunder. No charge
shall be made for such access.
A6.5 Key EDS Employees for Critical Projects. With respect to each project
being supported by the EDS Contracting Party pursuant to the Agreement that
the GM and EDS Major Sector Contract Managers jointly identify as a
critical project with respect to which the continuity of key personnel is
especially important for the success of the project (a "Critical Project"),
the Contracting Parties agree as follows:
(a) The Unit Project Managers may jointly identify those EDS employees
(the "Key Employees") providing dedicated support for that Critical
Project that are key to the completion of that Critical Project. No
more than 10% of the total number of EDS employees providing dedicated
support for that Critical Project may be designated as Key Employees
except by mutual agreement of the Contracting Parties. The above
provision notwithstanding, the number of Key Employees on any Critical
Project shall not be less than one (1).
(b) For a period of [Confidential information has been omitted.] or the
duration of the applicable Critical Project, whichever is shorter, EDS
will not reassign any Key Employee for that Critical
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Project except with the GM Contracting Party's consent, which will not
be unreasonably withheld, unless the employee voluntarily resigns from
EDS' employment, is dismissed from EDS' employment for cause, fails to
properly perform his or her duties in the reasonable judgment of EDS,
or is unable to work as a result of death or disability.
(c) In the event any Key Employee is reassigned or otherwise removed from
a Critical Project before his or her service for that Critical Project
is completed, EDS shall promptly assign an appropriate replacement who
shall thereafter be designated as a Key Employee. Additionally, upon
mutual agreement of the Unit Project Managers, in appropriate
situations, in order to ensure a smooth transition between such Key
Employees, the parties shall jointly agree upon an appropriate overlap
period where both the Key Employee being reassigned or removed and the
replacement Key Employee are assigned to the Critical Project. In
this regard, the Unit Project Managers shall mutually agree upon the
financial considerations, if any, associated with the aforementioned
overlap period in a manner consistent with the underlying agreement
for the Critical Project.
(d) For a period of [Confidential information has been omitted.] following
completion of a Key Employee's participation in a Critical Project,
EDS will [Confidential information has been omitted.]
ARTICLE A-VII. EDS COMPENSATION
-------------------------------
A7.1 Uniform Published Rates. With respect to any MSA Services for which EDS is
to be compensated on the basis of Uniform Published Rates (as defined
below), including UPR Items (as defined below) for which the Agreement does
not specify an alternative method of compensation (except with respect to
personnel UPR Items as provided in sub-Section
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A7.1(b)(2) hereof), GM will compensate EDS for the resources utilized or
managed by EDS in the performance of those MSA Services as set forth below.
(a) The provisions of this Section A7.1 are applicable to "off-the-shelf"
commercially available items to be acquired in significant quantities
("UPR Items"), such as [Confidential information has been omitted.]
and other similar goods and services, (i) for which then-current
prices and rates, including lease rates for use where appropriate,
(the "Uniform Published Rates") have been proposed by EDS and approved
by GM Parent, and (ii) which the parties mutually agree to list,
together with the applicable Uniform Published Rates, in a catalog
(the "UPR Catalog") published by GM Parent. GM Parent and EDS Parent
will mutually agree upon a competitive assessment process which will
assist GM Parent and EDS Parent in mutually agreeing upon the Uniform
Published Rates. Except to the extent otherwise mutually agreed by GM
Parent and EDS Parent, the Uniform Published Rates shall be
established for and remain in effect during each calendar year,
subject to market condition changes which render such rates non-
competitive. Except to the extent otherwise mutually agreed by GM
Parent and EDS Parent, a Catalog of Uniform Published Rates may be
established in each country outside the United States by mutual
agreement of the local Contracting Parties.
(b) The Uniform Published Rates will be utilized according to the
following provisions:
(1) Except to the extent that the Contracting Parties may otherwise
mutually agree, the GM Contracting Party will compensate EDS for
all non-
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personnel UPR Items at the then-current Uniform Published Rates
for such UPR Items.
(2) To the extent that the Contracting Parties mutually agree, for
projects which are of a short-term, limited scope nature (e.g.,
studies or project start-up MSA Services where the scope of
services to be performed is unknown or difficult to specify) and
when personnel resources in connection with such projects are to
be provided on a time and materials basis, the GM Contracting
Party will compensate the EDS Contracting Party for such
personnel resources as UPR Items at the then-current Uniform
Published Rates for such UPR Items.
In addition to the foregoing, (i) the GM Contracting Party will
reimburse EDS for the actual cost of sales, use and similar taxes, any
specific travel, freight to the GM destination, and similar out-of-
pocket expenses incurred by EDS as a direct result of providing the
UPR Items to the GM Contracting Party (at the express request or with
the prior approval of the GM Contracting Party) in connection with the
UPR Items for which EDS is compensated pursuant to this Section A7.1,
and (ii) the GM Contracting Party will pay EDS for any installation,
maintenance, or training services required by the GM Contracting Party
and related to such UPR Items at the rates therefor set forth in the
UPR Catalog or, to the extent that such rates are not set forth in the
UPR Catalog, at rates to be negotiated and agreed upon by the
Contracting Parties.
A7.2 Fixed Price Methodology. The fixed price methodology may be used in
instances where the scope of work and deliverables can be well-defined and
the pricing and terms are mutually agreed by the Contracting Parties.
Included in the definition of fixed price methodology are fixed unit or
transaction-based pricing. Examples of instances in which the fixed price
methodology may be used include systems maintenance and operations, systems
integration projects performed on a turnkey basis, unit prices for GMAC
loan
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applications, transaction pricing for transactions processed against
employee benefit eligibility files, and fixed pricing for new systems
development based on a defined scope of work. With respect to any MSA
Services for which EDS is to be compensated pursuant to a fixed price
methodology, the following provisions shall be applicable:
(a) GM shall pay, or reimburse EDS for, the reasonable out-of-pocket
expenses, including, but not limited to, travel and travel-related
expenses, incurred by EDS in connection with the performance of the
Agreement at the express request or with the prior approval of the GM
Contracting Party.
(b) In the event that the GM Contracting Party relocates any of its
business premises being provided MSA Services by EDS under the
Agreement or establishes any additional business premises which shall
require MSA Services, GM shall reimburse EDS for any expenses
reasonably incurred by EDS as a result thereof.
(c) GM shall pay the reasonable charges of EDS for any reruns in excess of
the level reasonably expected that are necessitated by incorrect or
incomplete data or erroneous instructions supplied to EDS by the GM
Contracting Party and for correction of programming, operator and
other processing errors caused by the GM Contracting Party, its
employees or agents. EDS shall perform, at no cost to GM, any reruns
resulting from the acts or omissions of EDS, its employees or agents.
(d) If, during the term of the Agreement, the Index (as defined below) at
any anniversary of the Effective Date (the "Current Index") is higher
than the Index one year prior thereto (the "Base Index"), then,
effective as of such anniversary, all monetary amounts then payable to
EDS pursuant to the Agreement, as previously adjusted pursuant to this
sub-Section A7.2(d), shall be increased thereafter by [Confidential
information has been omitted.] Current Index [Confidential information
has been omitted.] Base Index. For purposes of this sub-Section
A7.2(d), (i) with respect to amounts payable to EDS in the United
States, the term "Index" shall mean the
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Consumer Price Index for All Urban Consumers, U.S. City Average, for
All Items (1982-84=100), as published by the Bureau of Labor
Statistics of the Department of Labor, and (ii) with respect to
amounts payable to EDS in any other country, the term "Index" shall
mean a comparable index reflecting changes in the cost of living in
that country published by a mutually agreeable source and the
adjustments contemplated by this sub-Section A7.2(d) shall be made on
such more frequent basis as may be appropriate for that country. In
the event that the publisher of the Index stops publishing the Index
or substantially changes the content or format thereof, the
Contracting Parties shall substitute therefor another comparable
measure published by a mutually agreeable source; provided, however,
that if such change is merely to redefine the base year for the Index,
the parties shall continue to use the Index but shall, if necessary,
convert either the Base Index or the Current Index to the same basis
as the other by multiplying such Index by the appropriate conversion
factor.
(e) There shall be added to any charges under the Agreement, or separately
billed to GM, and GM shall pay to EDS, amounts equal to any taxes,
however designated or levied, based upon such charges, or upon the
Agreement or the MSA Services, Software or other materials provided
under the Agreement, or their use, including state and local sales,
use, privilege, value added, telecommunications or excise taxes, and
any taxes or amounts in lieu thereof paid or payable by EDS in respect
of the foregoing, exclusive, however, of franchise taxes and taxes
based on income of EDS and any fines, interest or penalties due as a
result of EDS' failure to pay any such taxes in a timely manner.
A7.3 Cost-Plus Pricing. Except as otherwise provided in Exhibit D to the MSA
regarding Competitiveness Events (as defined in Section 2.3 of the MSA), in
the event that the Contracting Parties are unable to reach mutual agreement
on the price or other terms of any fixed price negotiation and the
Contracting Parties mutually agree or in other circumstances where the
Contracting Parties mutually agree to utilize such cost-plus
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pricing, EDS will be compensated on the basis of the cost-plus pricing
methodology as provided in this Section A7.3. In accordance with sub-
Section 2.1(a)(3) of the MSA, although there may be some uncertainty in the
extent of the MSA Services to be provided on a cost-plus basis under the
Agreement, the Contracting Parties will use all reasonable efforts to
develop a description of the MSA Services to be provided on a cost-plus
basis under the Agreement and the schedule for completion of those MSA
Services. With respect to any MSA Services for which EDS is to be
compensated on the basis of the cost-plus pricing methodology specified in
this Section A7.3 (excluding UPR Items for which EDS is to be compensated
at the Uniform Published Rates pursuant to Section A7.1 hereof and MSA
Services for which EDS is to be compensated on the basis of a fixed price
methodology pursuant to Section A7.2 hereof), the following provisions will
be applicable:
(a) The GM Contracting Party shall pay EDS monthly according to the terms
of the Agreement for the EDS Cost of such MSA Services and resources
provided by EDS, plus a markup on the EDS Cost of [Confidential
information has been omitted.] thereof.
(b) The EDS Cost for any MSA Services provided to the GM Contracting Party
will include all verifiable costs that are directly related to the MSA
Services or that are portions of EDS overhead expenses which are
properly allocable to the MSA Services, as specified in sub-Section
A7.3(b)(11) hereof. EDS Cost will not include markups for profit by
any EDS internal business or support unit. With respect to the items
listed below, EDS Cost will be determined as follows:
(1) With respect to EDS personnel, EDS Cost shall mean all
reasonable, direct salary, wages or other compensation payable
and all costs of fringe benefits directly attributable to such
EDS personnel. With respect to any such EDS personnel who spend
less than substantially all of their time on GM Contracting Party
matters, such amounts payable shall be determined
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on a prorata basis for the amount of time spent directly on GM
Contracting Party matters.
(2) With respect to GM Assets, EDS Cost shall mean all reasonable,
direct expenses incurred by EDS with respect to GM Assets,
whether paid to GM or any third party.
(3) With respect to all other fixed and related assets (except as
described in sub-Section A7.3(b)(8) hereof), EDS Cost shall mean
all reasonable amounts payable and expenses incurred by EDS with
respect to such assets, including depreciation computed on the
straight-line basis used by EDS for its accrual basis books and
interest expenses for debt relating to capital expenditures for
such assets.
(4) With respect to the Sites, EDS Cost shall mean all amounts
payable by EDS with respect to EDS' use of such space, whether
paid to GM or any third party.
(5) With respect to all other space (except as described in sub-
Section A7.3(b)(8) hereof), EDS Cost shall mean all reasonable
amounts payable and expenses incurred by EDS in connection with
such space, including depreciation computed on the straight-line
basis used by EDS for its accrual basis books and interest
expenses for debt relating to capital expenditures for such
space.
(6) With respect to all telecommunication (including voice, data and
video) capabilities (except as described in sub-Section
A7.3(b)(8) hereof), EDS Cost shall mean all reasonable, direct
costs and expenses incurred by EDS in connection with such
capabilities.
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(7) With respect to all subcontracted services directly attributable
to the GM Contracting Party, EDS Cost shall mean all reasonable
amounts payable and expenses incurred by EDS in connection with
such subcontracted services.
(8) With respect to resources utilized by EDS to provide services to
the GM Contracting Party and other EDS customers on a shared
basis (including without limitation such of those resources as
may be utilized at an EDS Information Processing Center), EDS
Cost shall mean all reasonable amounts determined in accordance
with EDS' then-current cost allocation methodology, utilizing the
resource management system or systems then utilized by EDS. Upon
reasonable request by the GM Corporate Contract Manager, EDS will
review the then-current cost allocation methodology with the GM
Corporate Contract Manager.
(9) With respect to all other expenses incurred by EDS allocable to
the GM Contracting Party, including all EDS-supplied expendables,
all start-up expenses such as staffing and corporate
developmental standardization, all foreign service related
expenses such as foreign service premiums and expatriate bonuses
and allowances, and all travel, travel-related and relocation
expenses, EDS Cost shall mean all reasonable amounts payable and
expenses incurred by EDS in connection with such other expenses.
(10) With respect to taxes, EDS Cost will include all applicable taxes
attributable to the MSA Services and/or associated property
provided by EDS to the GM Contracting Party or the resources
utilized therefor, including property, sales, use, privilege,
excise, value added, franchise, gross receipts and similar taxes;
but excluding any income or profits taxes imposed upon EDS by any
taxing authority; provided, however, that there will be no markup
with respect to any sales or use tax collected by EDS on
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behalf of a state or local taxing authority. Sales, use, excise
and similar taxes collected by EDS with respect to MSA Services
and/or associated property provided by EDS to GM will be
separately displayed in accordance with, and in the aggregate
categories described in, sub-Section A8.1(d) hereof.
(11) With respect to overhead expenses, EDS Cost will include that
portion of EDS overhead expenses as is properly allocable to the
GM Contracting Party pursuant to the methodology used
consistently throughout EDS, i.e., all expenses that cannot be
reasonably charged to specific profit centers are allocated to
all EDS profit centers on the basis of the ratio of the direct
expenses charged to a particular profit center to the total
direct expenses charged to all EDS profit centers; [Confidential
information has been omitted.] Upon reasonable request by the GM
Corporate Contract Manager, EDS will review the then-current
overhead expense allocation methodology with the GM Corporate
Contract Manager.
(c) In order to provide verification of amounts charged to GM by EDS under
this Section A7.3, (i) for MSA Services for which EDS is to be
compensated pursuant to this Section A7.3, in support of each Invoice
therefor, the EDS Contracting Party will provide to the GM Contracting
Party a reasonable breakdown of EDS Cost on an ongoing basis in
accordance with the standard formats and procedures agreed upon
between the GM Central Office (or the applicable GM Major Sector) and
EDS, and (ii) the charges will be subject to audit according to
Section 3.5 of the MSA.
A7.4 Pricing Detail. In connection with any MSA Services to be performed by the
EDS Contracting Party pursuant to the Agreement, the EDS Contracting Party
will provide to
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the GM Contracting Party a reasonable level of pricing detail and input to
the price structure preferred, technology content detail, and support
services detail, in each case as outlined in Section 3.6 of the MSA, in
order to assist the GM Contracting Party in making informed purchase
decisions. EDS will not be required to disclose its costs of doing business
to the GM Contracting Party, except as otherwise expressly provided in the
Agreement. The GM Contracting Party shall keep confidential the prices it
is charged by EDS, as well as any EDS cost information supplied on a
confidential basis to the GM Contracting Party by EDS.
A7.5 Tax Matters. With respect to the Contracting Parties' respective
obligations relating to the collection and payment of sales, use, value
added and similar taxes imposed by applicable taxing authorities, as well
as other taxes payable by the GM Contracting Party pursuant to the
Agreement, the Contracting Parties agree as follows:
(a) Each Contracting Party shall provide and make available to the other
any applicable resale certificates, information regarding out-of-state
sales or use of equipment, materials or services, and other exemption
certificates or information reasonably requested by the other
Contracting Party.
(b) The Contracting Parties agree to utilize reasonable efforts to
structure the provision and receipt of MSA Services, as the case may
be, in such a fashion as to minimize, to the extent legally
permissible, any sales, use, value added, withholding, and similar
taxes payable by the GM Contracting Party.
(c) In the event that the EDS Contracting Party is entitled to claim a
foreign tax credit benefit with regard to withholding taxes associated
with cross border payments under this Agreement, the Contracting
Parties agree that the GM Contracting Party shall not be charged or
otherwise billed for such taxes.
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(d) The Contracting Parties shall reasonably cooperate with each other in
connection with the other Contracting Party's efforts to minimize its
liability for sales, use, value added and similar taxes, to the extent
legally permissible, and to support the other Contracting Party upon
audit by applicable taxing authorities in the following manner:
(1) The EDS Tax Department will, at least annually, and more
frequently if reasonably requested by GM, provide the GM Tax
Staff with a taxability matrix which depicts the taxability
positions taken with respect to the collection of Taxes (as
defined in sub-Section A8.1(d) of this Exhibit A). The parties
will work together to ensure that the taxability positions are
jointly discussed. Further, EDS agrees to allow the GM Tax
Staff, [Confidential information has been omitted.] if reasonably
requested by GM, and at GM's expense, to [Confidential
information has been omitted.] relating to Taxes collected by EDS
from GM under the Agreement.
(2) In the event EDS has previously collected Taxes from GM and
remitted such Taxes to the applicable taxing authority, and such
Taxes pertain to the items described in sub-Section [Confidential
information has been omitted.] of this Exhibit A, EDS shall
disclose to GM, if reasonably requested by GM, the type of Taxes,
the applicable taxing authority, and the amount of such Taxes.
(3) In the event that a taxing authority within the United States
does not agree to audit the charges payable in connection with
the Agreement for sales and use tax purposes as part of EDS'
sales and use tax audits and proposes to assess sales and use
taxes directly against GM on the aggregate charges described in
sub-Section [Confidential information has been omitted.] of this
Exhibit A, EDS shall work directly with the taxing authority to
address audit concerns as they pertain to the charges or sales
and use taxes payable in connection with the Agreement. In the
event that the taxing authority requires any
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documentation to be submitted directly by GM, EDS agrees to
cooperate with GM in providing the necessary documentation.
ARTICLE A-VIII. BILLING AND PAYMENT PROCEDURES
----------------------------------------------
A8.1 Billing Procedures. EDS will submit Invoices to GM for the amounts payable
to EDS pursuant to the Agreement in accordance with the following
provisions:
(a) On a monthly basis, EDS will submit to the GM Contracting Party an
Invoice or Invoices, in accordance with mutually agreeable procedures,
for the amounts payable to EDS pursuant to the Agreement for such
month. Each Invoice shall be based upon a standard format and
procedure to be developed and agreed upon by the GM Central Office (or
the applicable GM User Organization or GM Major Sector) and EDS.
(b) EDS shall provide with each Invoice such documentation and verifying
materials in such detail as required by procedures agreed upon by the
GM Contracting Party and EDS to allow the GM Contracting Party to
verify the amounts reflected on each such Invoice.
(c) In the event all or any portion of an Invoice is disputed by the GM
Contracting Party, GM shall promptly notify EDS within ten (10) GM
business days after receipt of the Invoice; provided, however, that
the undisputed portion of any such Invoice shall remain due and
payable in accordance with the provisions of Section A8.2 hereof.
(d) With respect to any sales, use or similar taxes imposed by and
collected on behalf of any state or local taxing authorities within
the United States or any United States Federal telecommunications
excise taxes (collectively, "Taxes"), EDS shall segregate the charges
on each Invoice into aggregate charges for each of the
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following categories: (i) services provided to the GM Contracting
Party for which Taxes are collected; (ii) services provided to the GM
Contracting Party for which Taxes are not collected; [Confidential
information has been omitted.]
(e) If the applicable GM Contracting Party and EDS Contracting Party are
unable to resolve a dispute arising in connection with any Invoice
within a reasonable period of time, then upon the written request of
the applicable GM Unit Project Manager, the GM Central Office may, at
its expense, audit the books and records of EDS to the extent
necessary to verify the applicability and accuracy of EDS' charges to
the GM Contracting Party pursuant to the Agreement. The GM Central
Office shall report to the GM and EDS Contracting Parties any variance
from the amounts reflected on the disputed Invoice that is discovered
by the GM Central Office audit. If EDS disputes the existence or
scope of any such variance, then EDS may, at its expense, engage an
independent public accounting firm reasonably acceptable to GM to
audit the applicable EDS books and records and either verify the
accuracy and validity of the disputed EDS charges or confirm the
existence and scope of any variance. Unless the parties otherwise
agree to the resolution of the dispute, the findings of such
accounting firm shall be binding upon the parties. If a variance from
what has been invoiced to the GM Contracting Party shall be
discovered, then the GM Contracting Party shall be entitled to a
credit, or shall pay to EDS, as appropriate, the amount of such
variance.
A8.2 Time of Payment. Except as otherwise mutually agreed by the Corporate
Contract Managers, amounts payable under the Agreement shall be due and
payable as follows:
(a) On or before the first (1st) day of each month or such other day as
may be mutually agreed by the Contracting Parties, the EDS Contracting
Party will submit to the GM Contracting Party an Invoice for the
amounts reasonably
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estimated by the EDS Contracting Party to be payable to the EDS
Contracting Party pursuant to the Agreement for MSA Services received
from the EDS Contracting Party in the immediately preceding month,
together with any credits or additional amounts necessary to reconcile
the estimated amounts invoiced for previous months with the actual
amounts payable for such previous months. Each such Invoice will be
due and payable by the twentieth (20th) day of the month following the
month in which the MSA Services were provided.
(b) On or before the first (1st) day of each month or such other day as
may be mutually agreed by the Contracting Parties, the GM Contracting
Party will submit to the EDS Contracting Party an invoice for the
amounts reasonably estimated by the GM Contracting Party to be payable
to the GM Contracting Party pursuant to the Agreement for services
received from the GM Contracting Party under the Agreement in the
immediately preceding month, together with any credits or additional
amounts necessary to reconcile the estimated amounts invoiced for
previous months with the actual amounts payable for such previous
months. Each such invoice will be due and payable by the twentieth
(20th) day of the month following the month in which such services
were provided.
(c) Any payments due to either Contracting Party from the other
Contracting Party for which the amount cannot be reasonably estimated
or for which a time of payment has not otherwise been specified will
be invoiced in arrears and will be due and payable on the twentieth
(20th) day of the month if received by the fifteenth (15th) day of the
preceding month.
(d) Any amount payable under the Agreement that is not paid when due shall
bear interest thereafter until paid at a rate per annum equal to the
base rate established from time to time by Citibank, N.A., or a
comparable financial institution mutually selected by GM and EDS, but
in no event to exceed the maximum rate of interest allowed by
applicable law.
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ARTICLE A-IX. DISPUTES AND TERMINATION
--------------------------------------
A9.1 Negotiation of Disputes. In the event of any dispute or disagreement
between the Contracting Parties to the Agreement with respect to the
interpretation of any provision of the Agreement or the performance of the
EDS Contracting Party or the GM Contracting Party under the Agreement, upon
the written request of either Contracting Party, the applicable GM and EDS
Unit Project Managers, or a designated representative of either of them,
will meet for the purpose of resolving such dispute or negotiating an
adjustment or modification to such provision of the Agreement. The GM and
EDS Unit Project Managers or designated representatives shall meet as often
as the Contracting Parties reasonably deem necessary in order to furnish to
the other all information with respect to the matter in issue which the
Contracting Parties believe to be appropriate and germane in connection
with its resolution. The GM and EDS Unit Project Managers or designated
representatives will discuss the problem and negotiate in good faith
without the necessity of any formal proceeding relating thereto. During
the course of such negotiation, all reasonable requests made by one
Contracting Party to the other for information will be honored in order
that each of the Contracting Parties may be fully advised in the premises.
The specific format for such discussion will be left to the discretion of
the GM and EDS Unit Project Managers or designated representatives but may
include the preparation of agreed upon statements of fact or written
statements of position furnished to the other Contracting Party. In the
event the Unit Project Managers or their designated representatives are
unable to amicably resolve the dispute within ten (10) days, the formal
proceedings for the resolution of such dispute in accordance with Section
A9.2 hereof shall be commenced.
A9.2 Resolution of Disputes. Any dispute relating to the Agreement which cannot
be resolved by the respective GM and EDS Unit Project Managers or their
designated representatives pursuant to Section A9.1 hereof shall be
referred to the GM and EDS Major Sector Contract Managers or their
designated representatives for resolution. Any such dispute which cannot
be resolved by the respective GM and EDS Major Sector Contract Managers or
their
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designated representatives within twenty (20) days shall be referred to the
GM and EDS Corporate Contract Managers for resolution. Without prejudice to
the Contracting Parties' ability to mutually agree upon mediation,
arbitration, or any other alternative dispute resolution process with
respect to the dispute, no litigation or other formal proceeding for the
resolution of such dispute may be commenced until either Corporate Contract
Manager concludes in good faith that amicable resolution of the dispute
through continued negotiation does not appear likely.
A9.3 Termination. The Agreement may be terminated as follows:
(a) In the event either Contracting Party to the Agreement defaults in the
performance of any of its material duties or obligations (except for a
default in payments to EDS) and fails to cure such default within
forty-five (45) days after being given written notice specifying the
default, or, with respect to any default which cannot reasonably be
cured within forty-five (45) days, if the defaulting party fails to
provide, promptly after being given written notice specifying the
default, a specific written action plan for curing the default as
expeditiously as reasonably possible, including a specified schedule
for the action plan and a mutually agreed upon end date by which the
action plan is to be completed and the default cured, and to proceed
utilizing its reasonable best efforts to cure the default in
accordance with and on the schedule specified in the action plan, then
the party not in default may, by giving written notice thereof to the
defaulting Contracting Party, terminate the Agreement as of a date
specified in such notice of termination. Additionally, in the event
that the defaulting party fails to cure the default by the mutually
agreed upon end date as set forth in the action plan, the party not in
default may, by giving written notice thereof to the defaulting party,
immediately terminate the Agreement.
(b) In the event the GM Contracting Party defaults in the payment when due
of any amount due to the EDS Contracting Party under the Agreement and
fails to cure such default within ten (10) days after being given
written notice specifying the
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default, then the EDS Major Sector Contract Manager may, by giving
written notice thereof to the GM Contracting Party, terminate the
Agreement as of a date specified in such notice of termination.
Notwithstanding the foregoing, the EDS Major Sector Contract Manager
shall not be entitled to terminate the Agreement for failure to pay
any amount that is reasonably and in good faith disputed by the GM
Contracting Party if, within the ten (10) day period specified above,
the GM Contracting Party pays such disputed amount into an escrow
account established at a mutually selected financial institution for
that purpose. Upon resolution of the dispute, any portion of the
disputed amount that is determined to be payable to EDS, together with
interest earned thereon, will be promptly paid to EDS from the escrow
account and any remaining amount in the escrow account will be paid to
GM.
(c) Unless the Corporate Contract Managers otherwise agree in writing, if
the MSA expires or is terminated for any reason, then the Agreement
shall, without the necessity of any separate notice, terminate as of
the same date upon which the MSA expires or is terminated.
A9.4 Cancellation of Services and Cancellation Charges.
(a) Cancellation. In addition to any other rights to terminate or reduce
MSA Services that it may have pursuant to the Agreement, the GM
Contracting Party may at its option cancel any MSA Services no longer
required by the GM Contracting Party, in whole or in part, at any time
and for any reason, upon at least thirty (30) days prior written
notice to EDS.
(b) Entitlement to Cancellation Charges. EDS shall be entitled to
cancellation charges only in the following circumstances:
(1) Cancellation pursuant to sub-Section A9.4(a) hereof.
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(2) GM's termination of the MSA or the Agreement pursuant to the
provisions of sub-Section 6.1(d) of the MSA subject to the
provisions of Exhibit F to the MSA.
(3) GM's exercise of its market testing rights pursuant to Article V
of the MSA subject to the provisions of sub-Section 5.3(l) of the
MSA.
(c) Computation of Cancellation Charges. The GM Contracting Party and EDS
will mutually agree on a wind-down period which will in all cases be
of sufficient duration to reasonably effect an orderly wind-down of
the MSA Services. During the wind-down period, the GM Contracting
Party and EDS shall cooperate with and assist each other in
effectuating an orderly wind-down of work affected by the cancellation
or termination, and the GM Contracting Party shall compensate EDS, in
accordance with Section A7.3 hereof or as otherwise mutually agreed,
for all services provided during such wind-down period that are not
otherwise covered by the Agreement. After the wind-down period, the
GM Contracting Party shall pay to EDS the following amounts, without
duplication:
(1) The agreed price for all MSA Services which have been completed
in accordance with the Agreement and have not previously been
paid for.
(2) [Confidential information has been omitted.] (i) are reasonable
in amount and are properly allocable or apportionable under
generally accepted accounting principles to the cancelled MSA
Services, (ii) have not already been directly paid for by GM, and
(iii) cannot be reduced by (x) transferring such work or
materials to GM or GM's designee upon GM's request, or (y) if GM
does not so request, use of such work or materials elsewhere
within EDS.
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(3) [Confidential information has been omitted.] associated with the
wind-down of MSA Services, including but not limited to systems
development expenses and personnel expenses. Personnel expenses
shall be limited to relocation expenses (actually incurred), and
severance pay [Confidential information has been omitted.] EDS
will act in good faith using all reasonable efforts to mitigate
such relocation expenses and severance pay. Further, GM will be
required to pay such expenses only for personnel who (i) are
directly affected by the cancellation, and (ii) with respect to a
cancellation resulting from a termination of the Agreement or
from a transfer of MSA Services to a third party as a result of a
resourcing pursuant to Article V of the MSA, [Confidential
information has been omitted.]
(4) EDS' losses on the disposition of capital assets or cancellation
of long-term lease commitments and the like, which are not
otherwise transferred to GM pursuant to Section A9.5 hereof. The
above provision notwithstanding, all such losses will be handled
in accordance with the principles set forth in Exhibit G to the
MSA.
At the request of the GM Contracting Party and upon receipt of
necessary information from the GM Contracting Party, EDS will provide
a good faith estimate of EDS' expenses as described above as promptly
as practically possible. EDS will act reasonably and in good faith in
attempting to avoid or minimize any such cancellation charges,
including by, upon GM's request, transferring assets to, [Confidential
information has been omitted.] GM or its designee or, if GM does not
so request, redeploying such assets [Confidential information has been
omitted.] within EDS. EDS shall credit to the GM Contracting Party the
reasonable value or cost (whichever is higher) of goods or materials
used or sold by EDS with the GM Contracting Party's written consent
and the cost of any damaged or destroyed goods or materials.
Additionally, in order to facilitate a full and complete business case
review by GM of situations involving the replacement of assets,
including, but not limited to, equipment and technology
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upgrades, EDS shall utilize its reasonable best efforts to promptly
bring to the attention of the GM Contracting Party a good faith
estimate of any and all cancellation charges which might be incurred
with regard to the disposition of existing capital assets and/or the
cancellation of long-term leases as a result of such replacement of
assets.
No later than the date therefor mutually agreed upon by the applicable
Contracting Parties in connection with each such cancellation of MSA
Services, EDS shall submit a comprehensive cancellation claim to GM,
with sufficient supporting data to permit GM to verify the same, and
shall thereafter promptly furnish such supplemental and supporting
information as GM shall request. GM or its agents shall have the
right to audit and examine such books, records, facilities, work,
material, inventories, and other items relating to any cancellation
claim of EDS to the extent necessary to verify the cancellation claim.
A9.5 Termination Assistance and Transition. In the event the GM Contracting
Party ceases to obtain all or a portion of the MSA Services from EDS in a
situation in which the GM Contracting Party is entitled to provide the MSA
Services itself, such as upon the expiration or termination of the
Agreement, or in which the GM Contracting Party is entitled to obtain the
MSA Services from a third party, including upon the expiration or
termination of the Agreement or in accordance with Article V of the MSA,
then EDS will, upon the GM Contracting Party's request, continue to provide
the MSA Services which were provided by EDS prior thereto and any new
services requested by the GM Contracting Party that may be required to
facilitate the transfer of the affected MSA Services to the GM Contracting
Party or a third party service provider, as applicable, including providing
to GM or third party personnel training in the performance of the affected
MSA Services (collectively, the "Transition Services") in accordance with
the following:
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(a) At no additional cost, EDS shall provide to GM and any designated
third party service provider (i) in writing, to the extent available,
applicable requirements, standards and policies relating to the
affected MSA Services, and (ii) necessary access to the systems and
sites from which the affected MSA Services were provided.
(b) If requested by the GM Contracting Party, EDS will assist the GM
Contracting Party in developing a plan which shall specify the tasks
to be performed by the parties in connection with the Transition
Services and the schedule for the performance of such tasks.
(c) EDS will provide the Transition Services for a period of up to
[Confidential information has been omitted.] as may be reasonably
required by the GM Contracting Party for the orderly transition of the
affected MSA Services (the "Transition Period"), at the rates
[Confidential information has been omitted.] or otherwise agreed upon
by the Contracting Parties, except to the extent that resources
included in the fees otherwise being paid by the GM Contracting Party
to EDS can be used to provide the Transition Services. If the MSA
Services are being terminated as a result of the GM Contracting
Party's default, non-payment, or insolvency, EDS will be entitled to
reasonable assurances that GM will pay all amounts due and payable to
EDS, including payments for Transition Services.
(d) Following the Transition Period, EDS shall (i) answer questions from
the GM Contracting Party regarding the MSA Services on an "as needed"
basis at EDS' then standard commercial billing rates, and (ii) deliver
to the GM Contracting Party any remaining GM-owned reports and
documentation still in the EDS Contracting Party's possession.
(e) Upon request from the GM Contracting Party, EDS will, to the extent
permitted by third party contracts:
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(1) Make available any Hardware owned or leased by EDS and dedicated
to the performance of the affected MSA Services by allowing the
GM Contracting Party or its designee to (i) purchase
[Confidential information has been omitted.] any such Hardware
owned by EDS, and (ii) assume the lease of any such Hardware
leased by EDS.
(2) Transfer or assign, upon the GM Contracting Party's request, any
third party contracts applicable to the affected MSA Services for
maintenance, disaster recovery services or other necessary third
party services being used by EDS and dedicated to the performance
of the affected MSA Services, to the GM Contracting Party or its
designee, on terms and conditions acceptable to all applicable
parties.
(3) License to the GM Contracting Party, or assist the GM Contracting
Party in obtaining a license to, Software then being used by EDS
in providing the EDS services in accordance with the provisions
of sub-Sections A4.2(d) and A4.2(e) hereof.
GM shall be responsible for the payment of any transfer fee or non-
recurring charge imposed by the applicable third parties, but EDS
shall use its reasonable best efforts (without being required to incur
any additional expenses) to eliminate or minimize the amount of any
such fee or charge, both at the time that it enters into any such
lease, license or third party contract and at the time of the transfer
to the GM Contracting Party or its designee.
(f) Notwithstanding the provisions of Section [Confidential information
has been omitted.] hereof, upon request from the GM Contracting Party,
EDS will allow the GM Contracting Party or its designee [Confidential
information has been omitted.]
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ARTICLE A-X. WARRANTIES
-----------------------
A10.1 Software Warranty. EDS warrants that it has the right to grant to the GM
Contracting Party any license to use the EDS Software provided hereunder.
EDS further warrants that the EDS Software, EDS Restricted Software, and
Software Development Tools utilized in the provision of the MSA Services,
including any modifications to the Software by EDS or any third party on
behalf of EDS, will not infringe the copyright or patent or
misappropriate the trade secrets or other proprietary rights of a third
party and that when installed the Software will conform with all
applicable written specifications therefor mutually agreed upon by the
EDS and GM Contracting Parties and set forth in or incorporated by
reference into the Agreement.
A10.2 Hardware Warranty. With respect to all Hardware sold to the GM
Contracting Party pursuant to the Agreement, EDS warrants that it can and
shall deliver good and marketable title, free from any claim or
encumbrance except as otherwise mutually agreed. With respect to all
Hardware leased to the GM Contracting Party pursuant to the Agreement,
EDS warrants that it has the authority to enter into a lease of the
Hardware. With respect to all such Hardware sold or leased to the GM
Contracting Party pursuant to the Agreement, EDS warrants that, upon
delivery, all such Hardware will conform with the written specifications
mutually agreed upon by the EDS and GM Contracting Parties and set forth
in or incorporated by reference into the Agreement.
A10.3 Pass-Through Warranties. With respect to all Hardware and Software sold,
leased or licensed, as applicable, to the GM Contracting Party pursuant
to the Agreement, EDS shall assign to the GM Contracting Party joint
rights, including rights to recoveries, it obtains under warranties or
indemnifications given by its subcontractors, vendors, suppliers or
agents in connection with the Hardware and Software provided under the
Agreement to the extent such rights are assignable. EDS shall, at the GM
Contracting Party's request and expense, enforce any such warranties that
are not assignable. EDS shall notify the GM
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Contracting Party of each warranty given by its subcontractors, vendors,
suppliers or agents applicable to such Hardware and Software and shall
deliver to the GM Contracting Party any documents issued by the warrantor
evidencing such warranty.
A10.4 Survival of Warranties. The warranties set forth in this Article A-X
shall survive acceptance of and payment for the applicable MSA Services,
Software, or Hardware.
A10.5 Disclaimer of Warranties. WITHOUT IN ANY WAY DEROGATING ANY OF THE
EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE A-X, EDS MAKES NO OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
ALL OF WHICH OTHER WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
ARTICLE A-XI. INDEMNITIES AND LIABILITY
---------------------------------------
A11.1 Cross Indemnity. The EDS and GM Contracting Parties each shall
indemnify, defend and hold harmless the other, its directors, officers
and employees, from any and all claims, actions, damages, liabilities,
costs and expenses, including reasonable attorneys' fees and expenses,
for:
(a) The death or personal injury of third parties, including but not
limited to invitees or employees of the indemnitor, arising out of,
or in any way resulting from, the negligent or willful acts or
omissions of the indemnitor or any of its agents, employees or
representatives.
(b) The damage, loss or destruction of real or tangible personal
property of the other party or third parties, including but not
limited to invitees or employees of the indemnitor, arising out of,
or in any way resulting from, the negligent or willful acts or
omissions of the indemnitor or its agents, employees or
representatives.
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A11.2 Proprietary Rights Indemnity. The EDS and GM Contracting Parties each
shall indemnify the other against any claim that any MSA Services,
Hardware, Software, or information provided by the indemnitor or its
agents and utilized in the provision of MSA Services constitutes an
infringement of a third party's patent, copyright, or trademark, or
constitutes an unlawful disclosure, use, or misappropriation of a third
party's confidential information, all in accordance with and subject to
the following:
(a) The indemnitor will bear the expense of defending such claim and pay
any damages and attorney's fees finally awarded by a court of
competent jurisdiction, provided that the indemnitee gives the
indemnitor prompt notice of the existence of the claim, reasonable
assistance in defending such claim, and full opportunity to control
the response thereto and the defense thereof, including any
agreement relating to the settlement thereof. The indemnitor shall
not be responsible for any settlement or compromise of a claim made
without its consent.
(b) The indemnitor shall have no responsibility under this Section A11.2
for (i) any claims of infringement [Confidential information has
been omitted.] or (ii) any infringement [Confidential information
has been omitted.]
(c) If any Software provided by the indemnitor becomes, or in the
indemnitor's opinion is likely to become, the subject of a claim of
infringement, the indemnitor will, at its option, either (i) attempt
to procure for the indemnitee the right to continue using the
Software, or (ii) replace or modify the Software to make its use
hereunder non-infringing.
A11.3 Hardware Damage Indemnity. The GM Contracting Party shall indemnify and
reimburse EDS for any damages, liabilities, costs and expenses incurred
by EDS as a result of the
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damage, destruction or loss of any EDS Hardware which, in accordance with
the provisions of the Agreement, is in the care or custody of, or is
located in premises controlled by, the GM Contracting Party; provided,
however, that the foregoing provisions of this Section A11.3 shall not
apply to normal wear and tear or to damage caused by EDS or its
employees, agents, or representatives.
A11.4 Software License Indemnity. With respect to any Software licensed or
otherwise obtained from a third party by EDS to be used by or for the GM
Contracting Party, GM shall comply with the terms of EDS' agreement with
the third party for such Software to the extent that such terms are made
known to the GM Contracting Party and are applicable to the use of such
Software by or for the GM Contracting Party and shall indemnify EDS from
and against all claims, losses or damages arising out of GM noncompliance
with such terms.
A11.5 Limitation of Liability. The parties' liability under the Agreement
shall be subject to the following:
(a) In addition to the limitation under sub-Section A11.5(b), any
liabilities of [Confidential information has been omitted.] EDS
arising out of or relating to its performance under the Agreement,
whether based on an action or claim in contract, equity, negligence,
tort or otherwise, for all events, acts or omissions shall not
exceed in the aggregate an amount equal to two times the average of
the monthly fees paid by the GM Contracting Party to EDS under the
Agreement during the six (6) months immediately preceding the latest
such event, act or omission. Additionally, the measure of damages
for any such liability of EDS shall not include any amounts for
damages which could have been avoided had GM complied with whatever
procedures are reasonable under the circumstances to verify the data
furnished by EDS before utilization thereof.
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(b) Neither GM nor EDS shall be liable for, nor will the measure of
damages include, any indirect, incidental, special, consequential or
punitive damages arising out of or relating to its performance under
the Agreement.
(c) [Confidential information has been omitted.]
In connection with the conduct of any litigation with third parties
relating to any liability of one Contracting Party to the other or to
such third parties, each Contracting Party shall have all rights
(including the right to accept or reject settlement offers and to
participate in such litigation) which are appropriate to its potential
responsibilities or liabilities.
ARTICLE A-XII. SPECIAL PROVISIONS RELATING TO MSA SERVICES
----------------------------------------------------------
A12.1 GM's IT Strategy and Architecture. Unless otherwise mutually agreed by
the Corporate Contract Managers, the Agreement shall be subject to, and
the EDS Contracting Party will comply with, GM's IT strategy and
architecture requirements published in accordance with the provisions of
Section 3.2 of the MSA.
A12.2 Competitiveness. Unless otherwise mutually agreed by the Corporate
Contract Managers, the Agreement shall be subject to the provisions of
Section 2.3 of the MSA regarding Competitiveness.
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Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
A12.3 Market Testing and Resourcing. Unless otherwise mutually agreed by the
Corporate Contract Managers, the Agreement shall be subject to the
provisions of Article V of the MSA regarding Market Testing and
Resourcing. All such market testing and resourcing activities pursuant to
Article V of the MSA shall be coordinated through the GM Corporate
Contract Manager.
A12.4 Co-Negotiation. Unless otherwise mutually agreed by the Corporate
Contract Managers, the Agreement shall be subject to the provisions of
Section 3.7 of the MSA regarding Co-negotiation. All such co-negotiation
activities pursuant to Section 3.7 of the MSA shall be coordinated
through the GM Corporate Contract Manager.
A12.5 Use of Independent Auditors. Unless otherwise mutually agreed by the
Corporate Contract Managers, in any situation in which the GM Contracting
Party has the right to review, inspect or audit the books, records or
other information or materials of the EDS Contracting Party pursuant to
Section 3.5 of the MSA, Section A7.3, A8.1, or A9.4 of this Exhibit A,
Exhibit D to the MSA, Exhibit G to the MSA, or, unless otherwise mutually
agreed by the Contracting Parties, any similar provision of the Agreement
not set forth in the MSA or the Exhibits to the MSA, such audits will be
performed by the GM Audit Staff or GM's public accounting firm unless the
EDS Corporate Contract Manager reasonably and in good faith believes that
disclosure of any information requested by GM or by its public accounting
firm will result in the disclosure of confidential or proprietary
information of EDS. In such event, the Contracting Parties shall mutually
agree upon an alternative independent "big six" public accounting firm
which will be engaged by the GM Contracting Party to perform such
services, but which shall report its findings to both Contracting
Parties. In this regard, such independent public accounting firm shall
disclose only such information as may be necessary to verify and validate
those findings and, to the extent reasonably possible, will do so in a
way that will not disclose any confidential or proprietary information of
EDS. The cost of such independent public accounting firm will be borne
equally by both the GM Contracting Party and the EDS Contracting Party.
Additionally, the parties mutually agree that,
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<PAGE>
unless otherwise mutually agreed by the Corporate Contract Managers, the
scope and breadth of the audit rights contemplated in Section 3.5 of the
MSA, and Sections A7.3, A8.1 and A9.4 of this Exhibit A, and Exhibit G to
the MSA shall be consistent with the specific description of audit rights
in sub-Section D3.3(b) of Exhibit D to the MSA. The public accounting
firm and each of the auditors performing the audit will execute a
reasonable confidentiality agreement acceptable to GM and EDS in form and
content.
ARTICLE A-XIII. MISCELLANEOUS
-----------------------------
A13.1 Binding Nature and Assignment. The Agreement shall be binding on the
Contracting Parties and their respective successors and assigns, but
neither Contracting Party may, or shall have the power to, assign the
Agreement without the prior written consent of the Major Sector Contract
Manager of the other, which consent shall not be unreasonably withheld.
A13.2 Notices. Wherever under the Agreement one Contracting Party is required
or permitted to give notice to the other, such notice shall be deemed
given when delivered in hand or when mailed by a reliable national mail
service, registered or certified mail, return receipt requested, postage
prepaid, and addressed as follows:
in the case of the EDS Contracting Party, to the EDS Unit Project
Manager, with copies to the EDS Major Sector Contract Manager, to the EDS
Corporate Contract Manager, and to:
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024
Attention: President
in the case of the GM Contracting Party, to the GM Unit Project Manager,
with copies to the GM Major Sector Contract Manager, to the GM Corporate
Contract Manager and to:
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<PAGE>
General Motors Corporation
3044 West Grand Boulevard
Detroit, Michigan 48202
Attention: President
Either Contracting Party may from time to time change its address for
notification purposes by giving the other prior written notice of the new
address and the date upon which it will become effective.
A13.3 Counterparts. The Agreement may be executed in one or more counterparts,
all of which taken together shall constitute one single agreement between
the Contracting Parties.
A13.4 Headings. The Article and Section headings and the Table of Contents, if
any, used in the Agreement are for reference and convenience and shall
not enter into the interpretation of the Agreement.
A13.5 Approvals and Similar Actions. Where agreement, approval, acceptance,
consent or similar action by either Contracting Party is required by any
provision of the Agreement, such action shall not be unreasonably delayed
or withheld.
A13.6 Force Majeure. Each Contracting Party shall be excused from performance
under the Agreement for any period and to the extent that it is prevented
from performing any services pursuant to the Agreement, in whole or in
part, as a result of delays caused by the other Contracting Party (where
such other Contracting Party is notified in writing of the impact of such
delays) or an act of God, war, civil disturbance, court order, labor
dispute, or other cause beyond its reasonable control, including failures
or fluctuations in electrical power, heat, light, air conditioning or
telecommunications equipment, and such nonperformance shall not be a
default under the Agreement.
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<PAGE>
A13.7 Severability. If any provision of the Agreement is declared or found to
be illegal, unenforceable or void, then both Contracting Parties shall be
relieved of all obligations arising under such provision, but only to the
extent that such provision is illegal, unenforceable or void, it being
the intent and agreement of the Contracting Parties that the Agreement
shall be deemed amended by modifying such provision to the extent
necessary to make it legal and enforceable while preserving its intent
or, if that is not possible, by substituting therefor another provision
that is legal and enforceable and achieves the same objective. If such
illegal, unenforceable or void provision does not relate to the payments
to be made under the Agreement and if the remainder of the Agreement
shall not be affected by such declaration or finding and is capable of
substantial performance, then each provision not so affected shall be
enforced to the extent permitted by law.
A13.8 Waiver. No delay or omission by either Contracting Party to exercise any
right or power under the Agreement shall impair such right or power or be
construed to be a waiver thereof. A waiver by either of the Contracting
Parties of any of the covenants to be performed by the other or any
breach thereof shall not be construed to be a waiver of any succeeding
breach thereof or of any other covenant contained in the Agreement. All
remedies provided for in the Agreement shall be cumulative and in
addition to and not in lieu of any other remedies available to either
party at law, in equity or otherwise.
A13.9 Relationship of Parties. EDS, in furnishing services to GM under the
Agreement, is acting only as an independent contractor. EDS does not
undertake by the Agreement or otherwise to perform any obligation of GM,
whether regulatory or contractual. EDS has the sole right and obligation
to supervise, manage, contract, direct, procure, perform or cause to be
performed, all work to be performed by EDS under the Agreement unless
otherwise provided in the Agreement. Except as may be otherwise
specifically agreed, EDS shall be solely responsible for all work done by
its subcontractors and agents.
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<PAGE>
A13.10 Services for Others. GM understands and agrees that EDS may perform
data processing for others at any data center or information processing
center that EDS may utilize for the processing of GM's data.
A13.11 Hiring of Employees. The EDS and GM Contracting Parties each agree
that, during the term of the Agreement and for three (3) years
thereafter, it shall not, except with the prior consent of the other,
offer employment to or employ any person employed then or within the
preceding twelve months by the other.
A13.12 Compliance With Laws. Each of the Contracting Parties shall comply with
all laws, rules and regulations in all jurisdictions applicable to the
Agreement, including but not limited to those governing the export or
import of computer equipment, software or technical data. To the extent
that the Agreement is applicable to MSA Services provided to the GM
Contracting Party in connection with United States Government
procurements, now or in the future, EDS agrees to (i) provide such
information as is necessary to enable the GM Contracting Party to comply
with the terms of such procurements, any contracts resulting therefrom,
and applicable laws and regulations, and (ii) comply with all applicable
laws and regulations.
A13.13 Media Releases. All media releases, public announcements and public
disclosures by either Contracting Party or its employees or agents
relating to the Agreement or the subject matter of the Agreement,
including without limitation promotional or marketing material, but not
including any announcement intended solely for internal distribution at
such Contracting Party or any disclosure required by legal, accounting or
regulatory requirements beyond the reasonable control of such Contracting
Party, shall be coordinated with and approved by the other Contracting
Party prior to the release thereof, which approval shall not be
unreasonably withheld.
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<PAGE>
A13.14 Survival. Each Contracting Party's obligations under Articles A-IV, A-V,
A-X and A-XI and Sections A7.5, A9.1, A9.2, A9.4, A9.5, A13.11, A13.13
and A13.14 hereof shall survive the termination or expiration of the
Agreement.
A13.15 Entire Agreement. The Agreement, including any schedules or exhibits
referred to in the Agreement and attached to the Agreement, each of which
is incorporated into the Agreement for all purposes, constitutes the
entire agreement between the Contracting Parties with respect to the
subject matter of the Agreement and there are no representations,
understandings or agreements relative to the Agreement which are not
fully expressed in, or incorporated by reference into, the Agreement. No
change, waiver, or discharge of the Agreement shall be valid unless in
writing and signed by an authorized representative of the Contracting
Party against which such change, waiver, or discharge is sought to be
enforced.
A13.16 Amendment or Modification. The Agreement may be amended or modified
upon mutual agreement of the Contracting Parties; provided, however, such
amendment or modification shall only be effective if made in writing by
the Major Sector Contract Managers or other authorized representatives of
the Contracting Parties.
A13.17 Good Faith and Fair Dealing. The Contracting Parties shall abide by a
standard of good faith and fair dealing in all aspects of their business
relationship and dealings with each other, including with respect to the
performance of their respective obligations and the exercise of their
respective rights under the Agreement.
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<PAGE>
EXHIBIT B
GM MAJOR SECTORS AS OF THE EFFECTIVE DATE
-----------------------------------------
<PAGE>
EXHIBIT B
GM MAJOR SECTORS AS OF THE EFFECTIVE DATE
-----------------------------------------
Allison Transmission Division
Delphi Automotive Systems (North America)
Delphi Automotive Systems Operations Outside of North America
GM Locomotive Group
Delco Electronics Corporation (Worldwide)
General Motors Acceptance Corporation (U.S. and Canada)
GMAC Operations Outside of U.S. and Canada
General Motors International Operations, including:
GM Europe
GM's Latin American Operations
GM's Asian Pacific Operations
Motors Insurance Corporation
North American Operations, including:
GM's Central Office Staffs
GM of Canada
GM de Mexico
Saturn Corporation
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EXHIBIT C
MSA SERVICES AND MSA SCOPE DOCUMENTS
------------------------------------
<PAGE>
EXHIBIT C
MSA SERVICES AND MSA SCOPE DOCUMENTS
------------------------------------
GM Parent and EDS Parent have agreed upon the description of MSA Services
contained in Section I of this Exhibit C and have agreed to develop MSA Scope
Documents as discussed in Section II of this Exhibit C.
I. MSA Services. It is the intention of the parties that EDS will be the
principal supplier of current and future IT goods and services (including
functional replacements), in accordance with GM's stated IT strategies,
directions, architecture, and standards. The MSA Services set forth in this
Section I are described by functional service categories so that changes in
GM's business or in technology which replace existing processes or
technologies within the scope of the MSA Services, but serve the same or
comparable functions, will be within the scope of MSA Services. It is the
mutual goal of GM and EDS to make information a strategic advantage to GM
and provide, to the extent reasonably practicable, a consistent global IT
infrastructure and common global application software.
For the purposes of this Exhibit C, "participation" means that GM shall
consult with EDS with respect to the applicable services, but shall not
preclude GM from (i) performing such services internally, or (ii) obtaining
such services from other external sources without EDS involvement.
A. Inclusions. Consistent with Section 3.2 of the MSA and except as
provided in Section I.B below, functional IT service categories within
the scope of MSA Services are as follows:
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1. Infrastructure.
(a) Scope. Except with respect to Plant Floor Services which
are covered in Section I.A.5 below, the scope of the
computing and communications infrastructure
("Infrastructure") is as follows:
(1) Mainframe, super-computing, midrange and distributed
computing hardware and system software.
(2) Voice, data and video communications services and
networks. However, the parties mutually agree that the
videoconferencing products and services included in the
above shall be limited to (i) those for which terms and
pricing are specified in the Videoconferencing Terms
and Pricing document, dated March 29, 1996, mutually
developed by GM and EDS, and (ii) those being provided
to GM by EDS as of the Effective Date to the extent
that, prior to the Effective Date, they were mutually
treated by the parties as within the scope of Section
1.3 of the Master Agreement.
(3) End-user hardware (e.g., telephones, desktop PC's, Unix
workstations, 3270/5080 terminals) connected to or
using the computing or communications environment
described in sub-Sections I.A.1(a)(1) and I.A.1(a)(2)
hereof.
(4) Replacements of any of the foregoing which serve the
same or comparable functions as the foregoing.
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(b) Services. EDS shall be responsible for meeting GM's
requirements, in accordance with GM's stated IT strategies,
directions, architecture and standards, for the following
services applicable to the Infrastructure functions
described in sub-Section I.A.1(a) above:
(1) Participation in the investigation of and planning for
architecture and related Infrastructure technologies
supporting GM's IT strategies and directions.
(2) Development, implementation, and maintenance of
Infrastructure architecture and standards for all
computing and communications environments used by EDS
to provide services to both GM and EDS' other customers
("Shared Infrastructure").
(3) Participation in the development and maintenance of
Infrastructure architecture and standards relating to
all computing and communications environments desired
by GM which are not shared by EDS' other customers
("Dedicated Infrastructure").
(4) Infrastructure capability, capacity and configuration
management for Shared Infrastructure.
(5) Participation in Infrastructure capability and
configuration and performance of Infrastructure
capacity management for Dedicated Infrastructure.
(6) Infrastructure integration, installation, and
operations.
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(7) Infrastructure performance monitoring and improvements
(without limiting GM's right to monitor performance as
mutually agreed by the parties).
2. Application Software.
(a) Scope. Except with respect to Plant Floor Services which
are covered in Section I.A.5 below, EDS is responsible
pursuant to sub-Section I.A.2(b) below for meeting GM's
requirements for the development of application software and
implementation of commercial off-the-shelf application
software (with the "make or buy" decision being made by GM
with input from EDS) to support the following GM business
functions and processes (or their successors) and their
related sub-functions and processes:
(1) Business Planning.
(2) Financial.
(3) Human Resource Management.
(4) Sales, Service, Marketing and Aftersales.
(5) Engineering.
(6) Purchasing.
(7) Production Control and Logistics.
(8) Production/Manufacturing.
(9) Materials Management (e.g., ISP, GPS), excluding
material handling conveyances.
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(10) Corporate Affairs and Legal.
(b) Services. EDS shall be responsible for meeting GM's
requirements, in accordance with GM's stated IT strategies,
directions, architecture and standards, for the following
services in connection with application software used to
support the business functions and processes set forth in
sub-Section I.A.2(a) above:
(1) Participation in the investigation of new application
software and application software technologies
supporting GM's IT strategies and directions.
(2) Participation in the development and maintenance of
application architecture and standards.
(3) Maintenance, change control, and enhancement of current
and future application software.
(4) Development and implementation of software interfaces.
(5) Integration and operational support of current and
future application software.
(6) Troubleshooting and problem resolution.
(7) Output distribution (e.g., on-line, print, plot,
microfiche).
(8) Performance tuning and run-time improvements.
(9) Development (with the "make or buy" decision being made
by GM with input from EDS) and implementation of new
and replacement application software.
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(10) Help-desk support.
(11) Timesharing services.
3. Data Management.
(a) Scope. Except with respect to Plant Floor Services which
are covered in Section I.A.5 below, EDS will be responsible
for meeting GM's requirements for the management of data
used by or for applications software used to support the
various GM business functions described in sub-Section
I.A.2(a) above.
(b) Services. EDS shall be responsible for meeting GM's
requirements, in accordance with GM's stated IT strategies,
directions, architecture and standards, for the following
data management services to support the business functions
and processes set forth in sub-Section I.A.2(a) above:
(1) Participation in the development and maintenance of GM
data standards.
(2) Participation in the development and maintenance of
data architecture and technical standards.
(3) Implementation and maintenance of databases shared
within GM and data warehouses.
(4) Participation in the investigation of and planning for
new data/information technologies.
4. IT-Related Services. Except with respect to Plant Floor Services
which are covered in Section I.A.5 below, EDS shall be
responsible for meeting
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GM's requirements, in accordance with GM's stated IT strategies,
directions, architecture and standards, for the following cross-
functional services applicable to the business functions and
processes set forth in sub-Sections I.A.1(a), I.A.2(a), and
I.A.3(a) above:
(a) Reports on: performance status, invoice detail, scope of
work detail and other descriptions related to MSA Services.
(b) Investigation, acquisition, required development,
maintenance and use of IT-related methodologies and tools as
requested by GM.
(c) Implementation of IT security controls.
(d) Compliance management with respect to EDS' delivery of MSA
Services in accordance with GM's stated IT strategies,
direction, architecture and standards.
(e) Participation in planning for business continuity services.
(f) Planning for IT disaster recovery services jointly with GM.
(g) Delivery of IT disaster recovery and IT-related business
continuity services.
(h) Participation as requested by GM in IT planning, technology
assessment and other data management activities.
(i) NAO COe training for the term of the current NAO COe
agreement, dated November 30, 1993.
(j) Training in the use of EDS software and/or technologies
custom-developed by EDS for GM.
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(k) Backup and quality control (without limiting GM's right to
assess the quality of delivered MSA Services).
5. Plant Floor Services. EDS shall be responsible for plant floor
services to the extent set forth in sub-Section 1.3(e) of the MSA
("Plant Floor Services").
B. Exclusions. In addition to the provisions of Section 1.3 of the MSA,
MSA Services shall not include the following:
1. Any (i) plant floor services (except to the extent set forth in
sub-Section 1.3(e) of the MSA), including plant floor services
for Saturn Corporation, and (ii) Machine Control(s) as defined in
the Plant Floor Systems Services Agreement, entered into as of
June 7, 1996, between GM and EDS.
The services that are out of scope under the Memorandum of
Agreement on Information Technology Services at Saturn between
Saturn MFS and EDS dated April 22, 1994 (the "Saturn MOA") are
excluded from the MSA Services for the term of the Saturn MOA,
including extensions and renewals thereof, but excluding any
expansion of scope of services with respect thereto.
2. Hardware, software and "firmware" embedded into GM Products,
including embedded controls technology incorporated into vehicles
or vehicle components (e.g., Engine Control Modules).
3. IT requirements of GM suppliers and dealers.
4. Training, other than (i) NAO COe training for the term of the
current NAO COe agreement, dated November 30, 1993, and (ii)
training in the use of EDS software and/or technologies custom-
developed by EDS for GM.
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5. Consumable desktop and office supplies (e.g., paper, print
cartridges, diskettes).
6. Engineering test equipment and direct embedded test controls
technology, including computer-aided direct embedded test
controls technology.
7. Personnel services for data entry.
8. Standalone non-data processing equipment (e.g., copiers, fax
machines and audio visual equipment).
9. GM business publications.
10. Non-data processing personnel services.
11. Acquisition of commercially available business data.
12. Consulting services.
13. Determination of GM's business requirements for IT.
14. Customer Assistance Centers.
15. Roadside Assistance Centers.
16. Cellular Phones.
17. Pagers.
18. Videobroadcasting and videoconferencing (except to the extent
set forth in sub-Section I.A.1(a)(2) of this Exhibit C).
19. Payment Processing Centers.
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20. Expense Report Processing.
21. Strategic Planning.
22. Items which are not Infrastructure, or replacements of
Infrastructure that serve the same or comparable functions as
Infrastructure.
23. IT services for consortiums in which GM is a participant.
24. Determination of GM's IT Architecture, Strategy and Direction.
25. Additional exclusions applicable to GM Overseas User
Organizations only:
(a) Voice communications (including telephones).
(b) Satellite communications for dealers and suppliers.
(c) IT services that (i) were being performed as of August 1,
1995, by a third party under contract with GM, or internally
by GM, but only if and to the extent that the scope of such
services is not increased beyond that being performed by
such third party or internally by GM as of August 1, 1995,
or (ii) the Contracting Parties mutually agree in writing
and document in an applicable Service Agreement will not be
provided by EDS, in the case of each of (i) and (ii), for
the duration of that third party contract or internal
arrangement or that Service Agreement, including extensions
or renewals thereof, but excluding any expansion of the
scope of services with respect thereto and excluding any
contract with a new or different third party with respect to
such third party or internal GM services.
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Any services obtained by a GM User Organization from a third party, or
provided internally by GM, under the exclusions set forth in this
Section I.B shall not count against the annual or aggregate
limitations on competitive bidding and resourcing contained in Article
V of the MSA.
II. MSA Scope Documents. The parties have agreed upon, and will continue to
mutually agree upon, documents (each, an "MSA Scope Document") consisting
of a description of (i) specific IT services that are then being performed
by EDS for a particular GM Major Sector (or, if applicable, a group of GM
Major Sectors or GM Overseas User Organizations) that are MSA Services,
(ii) related services that are not MSA Services, and (iii) the roles and
responsibilities of the parties relating thereto.
The MSA Scope Documents are intended to assist in defining the specific
detail content of a particular MSA Service. However, the general
description of MSA Services contained in Section I of this Exhibit C will
control any interpretation of whether a particular service is or is not an
MSA Service, regardless of whether or not that service is then included in
any applicable MSA Scope Document. There are numerous MSA Scope Documents
which have been or will be prepared:
. The North American Scope Document, dated June 7, 1996, describes
the specific MSA Services being delivered by EDS within the NAO,
GMAC, and Delphi GM Major Sectors in North America as of the
effective date of the MSA. It will soon be updated to include the
other GM Major Sectors in North America as well.
. With respect to the GM Overseas User Organizations, the parties
will mutually agree upon MSA Scope Documents describing the
specific MSA Services then being delivered by EDS within each
applicable GM Major Sector, country, or unit, as mutually agreed.
These MSA Scope Documents (the "GM Overseas User Organization
Scope Documents") will be prepared in
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the same format as the North American Scope Document. However, in
each case, the MSA Services will be determined on the basis of
the description of MSA Services set forth in Section I of this
Exhibit C.
The MSA Scope Documents are intended to define, to the extent feasible, the
roles and responsibilities of the parties with respect to the MSA Services
described therein. The specific MSA Services to be provided by EDS pursuant
to a Service Agreement are subject to the agreement of the Contracting
Parties thereto and will be documented specifically for that Service
Agreement as described in Section 2.1 of the MSA.
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EXHIBIT D
PROCEDURES FOR NEGOTIATING SERVICE
AGREEMENTS AND RESOLVING IMPASSES
---------------------------------
<PAGE>
EXHIBIT D
PROCEDURES FOR NEGOTIATING SERVICE
AGREEMENTS AND RESOLVING IMPASSES
---------------------------------
ARTICLE D-I. DEFINITIONS
-------------------------
D1.1 Definitions. In addition to the terms otherwise defined in the MSA, the
following terms shall have the meanings set forth below whenever they are
used in the provisions of this Exhibit D:
(a) The term "Competitiveness Event" shall mean the negotiation or
renegotiation by a GM User Organization and an EDS Service
Organization of (i) a new or replacement Service Agreement, (ii) the
terms and conditions applicable to a new or replacement MSA Service
that is proposed to be provided under a then-current Service
Agreement, or (iii) the pricing of any MSA Services when and to the
extent that the negotiation or renegotiation of such pricing is
contractually provided for in a then-current Service Agreement.
(b) The term "Major Sector Negotiator" shall mean, for the negotiation of
any Major Sector Service Agreement, the person(s) designated by the
applicable GM Major Sector Contract Manager or the applicable EDS
Major Sector Contract Manager, respectively, pursuant to Section D2.2
of this Exhibit D, who will have primary responsibility for the
negotiation of the terms and conditions of that Major Sector Service
Agreement.
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(c) The term "Major Sector Service Agreement" shall mean the primary
Service Agreement between a GM Major Sector and the corresponding EDS
Major Sector.
(d) The term "Modified Cost-Plus Pricing Methodology" shall mean the cost-
plus pricing methodology set forth in Section D3.3 of this Exhibit D.
(e) The term "Modified EDS Cost" for any MSA Services shall mean the costs
incurred by EDS in providing those MSA Services determined in
accordance with sub-Sections D3.3(c) and D3.3(d) of this Exhibit D.
(f) The term "Modified Markup Percentage" shall mean, for any MSA Services
provided by EDS to any GM User Organization pursuant to the Modified
Cost-Plus Pricing Methodology, the percentage computed in accordance
with the calculation methodology set forth in a mutually agreed policy
letter for that purpose, signed as of the Effective Date by the GM
and EDS Corporate Contract Managers.
(g) The term "Negotiating Party" shall mean, for any Competitiveness
Event, the GM User Organization and the EDS Service Organization that
are participants in the negotiations with respect to that
Competitiveness Event.
(h) The term "Negotiator" shall mean, for any Competitiveness Event, the
person designated by the applicable Unit Project Manager or Major
Sector Contract Manager of the GM User Organization or the applicable
EDS Service Organization, respectively, pursuant to Section D2.2 of
this
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Exhibit D, who will have primary responsibility for the negotiation of
an agreement with respect to that Competitiveness Event.
(i) The term "Standing Neutral Mediator" shall mean the person jointly
selected from time to time pursuant to Section D3.1 of this Exhibit D.
(j) The term "Target Commencement Date" shall mean (i) for a new Service
Agreement which replaces an existing Service Agreement, the expiration
date of the existing Service Agreement, (ii) for a new Service
Agreement which does not replace an existing Service Agreement, the
anticipated effective date of the new Service Agreement, and (iii) for
any other Competitiveness Event, the date upon which agreement with
respect to that Competitiveness Event is reasonably required by GM.
Other terms used in this Exhibit D are defined in the context in which they
are used and, unless otherwise specified herein, shall have the meanings
there indicated whenever they are used in this Exhibit D.
ARTICLE D-II. NEGOTIATION PROCEDURES AND DEFAULT MECHANISMS
------------------------------------------------------------
D2.1 Good Faith and Fair Dealing. GM Parent and EDS Parent agree that all
negotiations between GM and EDS with respect to any Competitiveness Event
shall be governed by the fundamental principle of good faith and fair
dealing as set forth in Section 1.6 of the MSA. The responsibility for
concluding the negotiations relating to any Competitiveness Event shall be
first and foremost the duty of the GM and EDS Negotiators for that
Competitiveness Event. The Negotiators shall meet as often as they
reasonably deem necessary in order to resolve all issues necessary to agree
upon the price, terms and conditions relating to the Competitiveness Event.
Upon the approval of the GM and EDS Corporate Contract Managers or their
designated representatives, the Negotiators may use the services of the
Standing Neutral Mediator to assist them in their negotiations.
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D2.2 Designation of Negotiators. In connection with the occurrence or
anticipated occurrence of a Competitiveness Event, the Unit Project Manager
or Major Sector Contract Manager, as applicable, for each applicable
Negotiating Party shall designate a Negotiator for that Competitiveness
Event in a timely manner and, in any event, within a reasonable period of
time after receiving a written request for such designation. If the
Competitiveness Event is the negotiation of a Major Sector Service
Agreement, the Negotiators designated by the Negotiating Parties shall be
the Major Sector Negotiators for that Competitiveness Event.
D2.3 Major Sector Negotiation Procedures. The following procedures shall apply
with respect to the negotiation of a Major Sector Service Agreement:
(a) Negotiation Schedule. As soon as practical and reasonable, but no
later than one year prior to the Target Commencement Date for the
Major Sector Service Agreement, the EDS and GM Major Sector
Negotiators for the negotiation of that Major Sector Service Agreement
shall meet and agree upon a schedule that will be reduced to writing
and sent to the GM and EDS Corporate Contract Managers. Unless the
Major Sector Negotiators agree otherwise, the negotiation schedule
shall include the following items:
(1) The designation of GM and EDS staff who will participate in the
negotiations.
(2) The date when the GM Major Sector will provide a written
description of the MSA Services that it requires.
(3) The date when the EDS Major Sector will provide a written
proposal for providing those MSA Services.
(4) A schedule for subsequent meetings to conclude negotiations.
(5) The deadline for the conclusion of negotiations by the Major
Sector Negotiators, which shall not be later than sixty (60) days
prior to the Target Commencement Date for the Major Sector
Service Agreement. The negotiation schedule may also include
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interim deadlines for conclusion of negotiations on specific
items in the Major Sector Service Agreement.
(b) Reference to Corporate Contract Managers. In the event that the Major
Sector Negotiators reasonably conclude that further negotiations by
them will not result in resolution of all disputed issues, then the
Major Sector Negotiators shall promptly notify the Corporate Contract
Managers. At that time, but, in any event, no later than sixty (60)
days prior to the Target Commencement Date for the Major Sector
Service Agreement, the Corporate Contract Managers shall assume
responsibility for the negotiations of the Major Sector Service
Agreement. The Corporate Contract Managers may request the assistance
and advice of other senior executives, including members of the group
referred to in Section 3.1 of the MSA. In addition, the Corporate
Contract Managers may at any time seek the assistance of the Standing
Neutral Mediator to help them pursue negotiations and shall be
obligated to seek such assistance (i) if they have been unable to
resolve all disputed issues within thirty-seven (37) days prior to the
Target Commencement Date for the Major Sector Service Agreement, and
(ii) before any disputed issues may be referred to the Chief Executive
Officers as described in sub-Section D2.3(c) of this Exhibit D.
(c) Reference to Chief Executive Officers. At any time after the
Corporate Contract Managers have assumed responsibility for the
negotiations of the Major Sector Service Agreement, either Corporate
Contract Manager may request that the Standing Neutral Mediator
declare an impasse. If the Standing Neutral Mediator confirms that
the Corporate Contract Managers have exhausted all reasonable efforts
at negotiation and that further negotiation by the Corporate Contract
Managers is not likely to result in resolution of all disputed issues,
then the Standing Neutral Mediator shall declare an impasse by giving
written notice thereof to both of the Corporate Contract Managers.
At that time, but in any event no later than thirty (30) days prior to
the Target Commencement Date for the Major Sector Service Agreement,
the Chief Executive Officers of EDS Parent and GM Parent shall
personally assume responsibility for the negotiations
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of the Major Sector Service Agreement. The Chief Executive Officers
may at any time seek the assistance of the Standing Neutral Mediator.
(d) Default Mechanism. If the Negotiating Parties are unable to reach
agreement upon a Major Sector Service Agreement prior to the Target
Commencement Date therefor, then:
(1) With respect to any MSA Services that EDS is then providing for
the applicable GM Major Sector, EDS shall in good faith continue
to provide the same MSA Services, on the same terms and
conditions (other than pricing), as then being provided by EDS
unless and until the GM Major Sector, at its option and upon
reasonable notice to EDS, directs EDS in writing to reasonably
modify or discontinue such MSA Services in accordance with the
provisions of Section A9.4 of Exhibit A to the MSA.
(2) With respect to any MSA Services reasonably requested by the GM
Major Sector that EDS is not then providing for the GM Major
Sector, the GM Major Sector may, at its option and upon
reasonable notice to EDS, direct EDS in writing to commence
providing such MSA Services.
In either such event, unless and until the Negotiating Parties reach
agreement upon the Major Sector Service Agreement, (i) any such MSA
Services shall be considered provided pursuant to the MSA, (ii) for
purposes of Exhibit A to the MSA, the GM Major Sector and the EDS
Major Sector shall be considered Contracting Parties and the business
relationship between them shall be considered the Agreement, and (iii)
EDS shall be compensated (x) for all UPR Items, at the then-current
Uniform Published Rates for such UPR Items, (y) for all system
development services and application services customarily performed
on a cost-plus basis by EDS for GM, in accordance with the cost-plus
pricing methodology set forth in Section A7.3 of Exhibit A to the MSA,
and (z) for all other resources and services, in accordance with the
Modified Cost-Plus Pricing Methodology. Notwithstanding the
foregoing, with the approval of the Corporate Contract Managers, the
Negotiating Parties may
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mutually agree upon a different compensation arrangement, such as
escrowing disputed compensation or devising an interim compensation
arrangement, pending the successful negotiation of the Major Sector
Service Agreement. The Chief Executive Officers of GM Parent and EDS
Parent or their designees shall continue to negotiate in good faith to
reach agreement upon the Major Sector Service Agreement.
D2.4 UPR Negotiation Procedures. The following procedures shall apply with
respect to the negotiation of Uniform Published Rates for UPR Items that GM
Parent and EDS Parent have mutually agreed to list in the UPR Catalog:
(a) Negotiation. Whenever, in accordance with the provisions of Section
A7.1 of Exhibit A to the MSA, GM Parent and EDS Parent initiate
negotiation of the Uniform Published Rates for UPR Items, GM Parent
and EDS Parent shall each designate a Negotiator and those Negotiators
shall proceed expeditiously to successfully conclude the negotiations.
(b) Default Mechanism. If either Negotiator reasonably concludes that
further negotiations will not likely result in resolution of all
disputed issues, then he or she may request that the applicable
Corporate Contract Manager refer the disputed issues to arbitration as
provided in Section D3.2 of this Exhibit D.
D2.5 Procedures for System Development and Application Services. The
following procedures shall apply with respect to any Competitiveness Event
relating to system development services or to application services
customarily performed on a cost-plus basis by EDS for GM:
(a) Negotiation. The Negotiators for that Competitiveness Event may
mutually agree upon a formal or informal negotiation schedule and may,
with the prior approval of the Corporate Contract Managers, seek the
assistance of the Standing Neutral Mediator pursuant to Section D3.1
of this Exhibit D.
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(b) Default Mechanism. If the Negotiating Parties are unable to reach
agreement with respect to the Competitiveness Event prior to the
Target Commencement Date, then:
(1) With respect to any MSA Services that EDS is then providing for
the applicable GM User Organization, EDS shall in good faith
continue to provide the same MSA Services, on the same terms and
conditions (other than pricing), as then being provided by EDS
unless and until the GM User Organization, at its option and upon
reasonable notice to EDS, directs EDS in writing to reasonably
modify or discontinue such MSA Services in accordance with the
provisions of Section A9.4 of Exhibit A to the MSA.
(2) With respect to any MSA Services reasonably requested by the GM
User Organization that EDS is not then providing for the GM User
Organization, the GM User Organization may, at its option and
upon reasonable notice to EDS, direct EDS in writing to commence
providing such MSA Services.
In either such event, unless and until the Negotiating Parties reach
agreement with respect to the Competitiveness Event, (i) any such MSA
Services shall be considered provided pursuant to the MSA, (ii) for
purposes of Exhibit A to the MSA, the GM User Organization and the EDS
Service Organization shall be considered Contracting Parties and the
business relationship between them shall be considered the Agreement,
and (iii) EDS shall be compensated (x) for all UPR Items, at the then-
current Uniform Published Rates for such UPR Items, and (y) for all
other resources and services, in accordance with the cost-plus pricing
methodology set forth in Section A7.3 of Exhibit A to the MSA.
D2.6 Procedures for Other Negotiations. The following procedures shall apply
with respect to any Competitiveness Event not covered by the procedures set
forth in Section D2.3, D2.4 or D2.5 of this Exhibit D:
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(a) Negotiation. The Negotiators for that Competitiveness Event may
mutually agree upon a formal or informal negotiation schedule and may,
with the prior approval of the Corporate Contract Managers, seek the
assistance of the Standing Neutral Mediator pursuant to Section D3.1
of this Exhibit D. In the event that the Negotiators reasonably
conclude that further negotiations by them will not result in
resolution of all disputed issues, then the Negotiators shall promptly
notify the applicable Major Sector Contract Managers. At that time,
the Major Sector Contract Managers shall assume responsibility for the
negotiations relating to the Competitiveness Event. The Major Sector
Contract Managers may, with the prior approval of the Corporate
Contract Managers, seek the assistance of the Standing Neutral
Mediator pursuant to Section 3.1 of this Exhibit D. At any time after
the Major Sector Contract Managers have assumed responsibility for the
negotiations relating to the Competitiveness Event, either Major
Sector Contract Manager may, but shall not be obligated to, refer the
matter to the Corporate Contract Managers, in which event the
Corporate Contract Managers shall assume responsibility for the
negotiations relating to the Competitiveness Event. The Corporate
Contract Managers may at any time seek the assistance of the Standing
Neutral Mediator pursuant to Section D3.1 of this Exhibit D.
(b) Default Mechanism. If the Negotiating Parties are unable to reach
agreement with respect to the Competitiveness Event prior to the
Target Commencement Date therefor, then:
(1) With respect to any MSA Services that EDS is then providing for
the applicable GM User Organization, EDS shall in good faith
continue to provide the same MSA Services, on the same terms and
conditions (other than pricing), as then being provided by EDS
unless and until the GM User Organization, at its option and upon
reasonable notice to EDS, directs EDS in writing to reasonably
modify or discontinue such MSA Services in accordance with the
provisions of Section A9.4 of Exhibit A to the MSA.
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(2) With respect to any MSA Services reasonably requested by the GM
User Organization that EDS is not then providing for the GM User
Organization, the GM User Organization may, at its option and
upon reasonable notice to EDS, direct EDS in writing to commence
providing such MSA Services.
In either such event, unless and until the Negotiating Parties reach
agreement with respect to such Competitiveness Event, (i) any such MSA
Services shall be considered provided pursuant to the MSA, (ii) for
purposes of Exhibit A to the MSA, the GM User Organization and the EDS
Service Organization shall be considered Contracting Parties and the
business relationship between them shall be considered the Agreement, and
(iii) EDS shall be compensated (x) for all UPR Items, at the then-current
Uniform Published Rates for such UPR Items, (y) for all system development
services and application services customarily performed on a cost-plus
basis by EDS for GM, in accordance with the cost-plus pricing methodology
set forth in Section A7.3 of Exhibit A to the MSA, and (z) for all other
resources and services, in accordance with the Modified Cost-Plus Pricing
Methodology. Notwithstanding the foregoing, with the approval of the
Corporate Contract Managers, the Negotiating Parties may mutually agree
upon a different compensation arrangement, such as escrowing disputed
compensation or devising an interim compensation arrangement, pending the
successful negotiation of an agreement with respect to such Competitiveness
Event. The Major Sector Contract Managers or, if applicable, the Corporate
Contract Managers shall continue to negotiate in good faith to reach
agreement with respect to such Competitiveness Event.
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ARTICLE D-III. DISPUTE RESOLUTION PROCEDURES
---------------------------------------------
D3.1 Standing Neutral Mediator. The Standing Neutral Mediator will be a neutral
third party jointly selected by GM Parent and EDS Parent whose duties will
be to assist the Negotiating Parties in the resolution of disputes with
regard to the negotiations relating to Competitiveness Events. The purpose
of the mediation will be to arrive at a mutually acceptable resolution of
the negotiations voluntarily, cooperatively and informally. The Standing
Neutral Mediator will not have adjudicatory power over any dispute. The
Negotiating Parties shall cooperate fully with the Standing Neutral
Mediator to the full extent reasonably necessary to resolve the
negotiations.
(a) Selection of the Standing Neutral Mediator. Within thirty (30) days
after the Effective Date, or within thirty (30) days after a prior
Standing Neutral Mediator's services have been terminated pursuant to
sub-Section D3.1(e) of this Exhibit D, GM Parent and EDS Parent shall
jointly select a person to serve as the Standing Neutral Mediator
until his or her services are terminated pursuant to sub-Section
D3.1(e) of this Exhibit D.
(b) Mediation Process. Following a request from either the Corporate
Contract Managers or the Chief Executive Officers of GM Parent and EDS
Parent, the services of the Standing Neutral Mediator may be utilized
in any particular negotiation of a Competitiveness Event or any
particular dispute arising in any such negotiation. After
consultation with the Negotiating Parties, the Standing Neutral
Mediator may request that each Negotiating Party submit written
materials and/or a confidential statement setting forth key facts and
arguments in support of its position and suggesting proposed
resolutions. The information contained in the confidential statements
shall not be shared with the other Negotiating Party by the Standing
Neutral Mediator without the permission of the submitting Negotiating
Party. The Standing Neutral Mediator may conduct preliminary,
private, confidential meetings with the Negotiators for the
Negotiating Parties. Thereafter, the Standing Neutral Mediator may
conduct a joint mediation session at which the Negotiator for each of
the Negotiating Parties may be expected to briefly present that
Negotiating Party's positions on the disputed issues and respond to
the other
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Negotiating Party's positions. After the summary presentations, the
Standing Neutral Mediator may meet separately and together with the
Negotiators for the Negotiating Parties to assist them in resolving
disputed issues. If the disputed issues have not been settled after
the joint mediation session, the Standing Neutral Mediator may
continue individual discussions by telephone or in person. The
Negotiators for the Negotiating Parties will make themselves
reasonably available for further discussions and/or meetings after the
joint mediation session. At all times during the mediation, the
Negotiating Parties are free to engage in ex parte communications with
the Standing Neutral Mediator. Upon the mutual consent of the
Negotiating Parties and in consultation with the Standing Neutral
Mediator, the process described in this sub-Section D3.1(b) may be
modified to meet the requirements of a particular negotiation.
(c) Confidentiality. All communications, statements made by the
Negotiating Parties, documents or other information disclosed by the
Negotiating Parties, statements made by or notes of the Standing
Neutral Mediator, and impressions, opinions or recommendations of the
Standing Neutral Mediator in connection with the mediation are
confidential, privileged, non-discoverable, inadmissible and without
prejudice in any litigation, arbitration, or subsequent proceeding;
provided, however, that (i) evidence otherwise admissible shall not be
rendered inadmissible because of its use in the mediation, and (ii)
the Negotiating Parties may agree to disclose communications and
documents (other than those of the Standing Neutral Mediator) to each
other or to non-participants in the mediation. Upon request, the
Standing Neutral Mediator shall sign a confidentiality agreement that
is satisfactory to the Negotiating Parties.
(d) Disqualification of Standing Neutral Mediator. The Standing Neutral
Mediator and any person who assists him or her shall not be a
necessary party in any arbitral or judicial proceeding relating to the
mediation or to the subject matter of the negotiation. The Standing
Neutral Mediator and any person who assists him or her may not be
called as a witness or as an expert in any pending or subsequent
litigation or arbitration involving the Negotiating Parties and
relating to the negotiation. Moreover, the Standing Neutral Mediator
and any person who assists him or her shall be
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disqualified as a witness or as an expert in any pending or subsequent
litigation or arbitration relating to the negotiation.
(e) Term. The Standing Neutral Mediator shall serve at the pleasure of GM
Parent and EDS Parent. At any time, the services of the Standing
Neutral Mediator may be terminated by (i) either Corporate Contract
Manager providing written notice thereof to the other Corporate
Contract Manager and the Standing Neutral Mediator, or (ii) the
resignation of the Standing Neutral Mediator.
(f) Compensation. EDS Parent and GM Parent shall jointly agree upon and
share equally the compensation and expenses for the Standing Neutral
Mediator.
D3.2 Arbitration. Any dispute in connection with Uniform Published Rates for
UPR Items which has not been resolved by negotiation as provided in sub-
Section D2.4 of this Exhibit D shall be settled by arbitration pursuant to
this Section D3.2. Except as otherwise provided herein, the arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. (S)(S) 1-
16. EDS Parent and GM Parent agree to abide by the decision of the
arbitrators. In the event the arbitrators' decision is not voluntarily
honored, GM Parent and EDS Parent agree that the arbitrators' decision may
be enforced in any court having jurisdiction. The arbitrators are not
empowered to award damages, and EDS and GM hereby irrevocably waive any
right to recover such damages with respect to any dispute resolved by
arbitration.
(a) Commencement of Arbitration. Either Corporate Contract Manager may,
by giving the other Corporate Contract Manager written notice thereof,
refer a dispute with regard to the Uniform Published Rate for a UPR
Item to arbitration pursuant to this Section D3.2, but only after (i)
at least forty-five (45) days have elapsed since negotiations
regarding the Uniform Published Rate for that UPR Item commenced, and
(ii) the Standing Neutral Mediator has assisted the applicable
Negotiators in negotiating such Uniform Published Rate and has
confirmed that the Negotiators are not likely to resolve the dispute
through further negotiations. Within seven (7) days after a dispute
has been referred to arbitration pursuant to
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this Section D3.2, each Negotiating Party shall provide the other a
Notice of Arbitration that shall include:
(1) The names of the individuals representing the Negotiating Party
in the arbitration proceeding.
(2) A statement of the general nature of the dispute.
(3) The remedy sought.
(4) The name and address of the arbitrator appointed by the
Negotiating Party.
(b) Selection of Arbitrators. Unless the Negotiating Parties agree
otherwise, the Arbitration Tribunal shall consist of an arbitrator
appointed by each Negotiating Party and a "non-party" arbitrator, who
shall chair the Arbitration Tribunal. As soon as possible after the
exchange of the Notices of Arbitration and, in any event, within seven
(7) days thereafter, the arbitrators appointed by the Negotiating
Parties shall select the "non-party" arbitrator.
(c) Place of Arbitration. The place of arbitration shall be Detroit,
Michigan, unless the Negotiating Parties agree otherwise.
(d) Conduct of Arbitral Proceedings. The arbitration proceedings shall be
conducted in an expeditious manner. Each Negotiating Party shall
submit a written statement setting forth the facts and arguments in
support of its position to the Arbitration Tribunal within seven (7)
days after the exchange of the Notices of Arbitration. Within seven
(7) days thereafter, the Arbitration Tribunal shall hold a hearing at
which time each Negotiating Party shall make an oral presentation in
support of its position. The Arbitration Tribunal shall render a
decision within fourteen (14) days after the conclusion of all oral
testimony.
(e) No Ex Parte Contact. No Negotiating Party or anyone acting on its
behalf shall have any ex parte communication with the non-party
arbitrator with
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respect to any matter of substance relating to the proceeding. A
Negotiating Party and the arbitrator it appointed, however, may confer
with regard to any matter.
(f) Decision. Unless the Negotiating Parties agree otherwise, the
Arbitration Tribunal shall issue a final written decision. No
statement of reasons shall be required. The decision shall be made
and signed by at least a majority of the arbitrators. Executed copies
of the decision shall be delivered by the Arbitration Tribunal to the
Negotiating Parties. Within seven (7) days after receipt of the
decision, either Negotiating Party, with notice to the other
Negotiating Party, may request that the Arbitration Tribunal correct
any errors in computation, clerical or typographical errors, or errors
of a similar nature. If no requests for corrections have been made
or, in any event, within ten (10) days after issuing its decision, the
Arbitration Tribunal shall certify its decision as final.
(g) Confidentiality. The Negotiating Parties and the arbitrators shall
treat the proceedings, any oral or written information provided to the
Arbitration Tribunal, and the decision of the Arbitration Tribunal, as
confidential, except in connection with a judicial challenge to, or
enforcement of, the arbitrators' decision, and unless otherwise
required by law.
(h) Costs. Each Negotiating Party shall bear its own costs in connection
with any arbitration proceedings pursuant to this Section D3.2. The
Negotiating Parties shall share equally the compensation and expenses
of the Arbitration Tribunal.
D3.3 Modified Cost-Plus Pricing Methodology. With respect to any MSA Services
provided by EDS to any GM User Organization for which Section D2.3 or D2.6
of this Exhibit D provides that EDS is to be compensated in accordance with
the Modified Cost-Plus Pricing Methodology set forth in this Section D3.3,
EDS will charge the applicable GM User Organization, and the applicable GM
User Organization will pay EDS for those MSA Services, according to the
following:
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(a) Payment Terms. The GM User Organization shall pay EDS monthly,
according to the terms of Section A8.2 of Exhibit A of the MSA, the
Modified EDS Cost for such MSA Services, plus a markup on the Modified
EDS Cost equal to (i) the then-current Modified Markup Percentage for
such MSA Services, multiplied by (ii) such Modified EDS Cost.
(b) Inspection and Audit. Upon the reasonable request of the GM Corporate
Contract Manager, GM will have the right to examine and audit relevant
EDS records supporting payments and other provisions related to the
Modified EDS Cost for the MSA Services provided pursuant to this
Section D3.3, all in accordance with the following:
(1) The term "records" means accounting records, written policies and
procedures, general ledger records, records supporting payments
to and credits from suppliers, vouchers, statements of cost and
records necessary to evaluate and verify direct and indirect
costs (including overhead and other allocations), EDS purchasing
records, and any other records reasonably requested by GM's
public accountant, as they may apply to costs and settlements
associated with this Section D3.3, whether the records are in
written form, in the form of computer data and files, or any
other form required for audit.
(2) GM will use its public accounting firm for the audit unless EDS
reasonably and in good faith believes that disclosure of any
information requested by GM, or by GM's public accounting firm,
will result in the disclosure of confidential or proprietary
information of EDS. In such event, GM and EDS will agree to an
alternative independent "big six" public accounting firm which
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will be engaged by GM to perform such services, but will report
its findings to both GM and EDS. In this regard, such
independent public accounting firm shall disclose only such
information as may be necessary to verify and validate those
findings and, to the extent reasonably possible, will do so in a
way that will not disclose any confidential or proprietary
information of EDS. The cost of such independent public
accounting firm will be borne equally by both GM and EDS. The
public accounting firm and each of the auditors performing the
audit will execute a reasonable confidentiality agreement
acceptable to GM and EDS in form and content.
(3) EDS shall make these records available at its offices at all
reasonable times for examination, audit, or reproduction. The
independent auditor shall have access to EDS facilities, shall be
allowed to interview all current employees, and EDS will not
prohibit GM's public accountant from interviewing former EDS
employees, to discuss matters pertinent to this Section D3.3.
The independent auditor shall have access to all necessary
records, and shall be provided adequate and appropriate work
space, in order to conduct audits in compliance with this
provision.
(4) Any payment to EDS may be (i) reduced by amounts, including
interest at rates determined by the Secretary of the Treasury
pursuant to Public Law 92-41 (85 stat. 97), found to be
unallowable or not properly allocated to GM, or (ii) adjusted for
prior overpayments and underpayments by GM. GM will have the
right, in accordance with sub-Section D3.3(b)(2) of this Exhibit
D, to audit relevant EDS records at the end of each calendar
year and for a period of three years after payment of any amount
pursuant to this Section D3.3.
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(c) Accounting Practices. The Modified EDS Cost for any MSA Services
provided to the applicable GM User Organization pursuant to this
Section D3.3 will be computed according to the following:
(1) EDS shall follow consistently the accounting practices described
below in accumulating and reporting costs.
(2) All costs incurred for the same purposes, in like circumstances,
are either direct costs only or indirect costs only with respect
to final cost objectives. No final cost objective shall have
allocated to it as an indirect cost any cost, if other costs
incurred for the same purpose, in like circumstances, have been
included as a direct cost of that or any other final cost
objective. Further, no final cost objective shall have allocated
to it as a direct cost any cost, if other costs incurred for the
same purpose, in like circumstances, have been included in any
indirect cost pool to be allocated to that or any other final
cost objective. For purposes of this Section D3.3:
(A) Direct cost means any cost which is identified specifically
with a particular final cost objective. Direct costs are
not limited to items which are incorporated in the end
product.
(B) Indirect cost means any cost not directly identified with a
single final cost objective, but identified with two or more
final cost objectives or with at least one intermediate cost
objective.
(C) Cost objective means a function, organizational subdivision,
contract or other work unit for which cost data
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are desired and for which provision is made to accumulate
and measure the cost of processes, products, jobs,
capitalized projects, etc.
(3) With respect to overhead expenses, Modified EDS Cost will include
that portion of EDS overhead expenses as is properly allocable to
the applicable GM User Organization pursuant to the methodology
used consistently throughout EDS, i.e., all expenses that cannot
be reasonably charged to specific profit centers are allocated to
all EDS profit centers on the basis of the ratio of the direct
expenses charged to a particular profit center to the total
direct expenses charged to all EDS profit centers. Changes in
specific allocation methodologies may be periodically made by EDS
provided that such methodologies are applied consistently and
uniformly as they relate to all EDS customers.
(4) Home office expense shall be allocated on the basis of the
beneficial and causal relationship between supporting and
receiving activities. Home office expense means the expense of
an office responsible for directing or managing two or more, but
not necessarily all, segments of an organization. EDS may have
several intermediate home offices which report to a common home
office.
Home office expenses shall be allocated directly to the maximum
extent practical. Expenses not directly allocated, if
significant in amount and relation to total home office expense,
shall be grouped in logical and homogeneous expense pools and
allocated on a causal and beneficial relationship.
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Residual home office expense, that cost which is not allocated
directly or not allocated on a causal and beneficial
relationship, shall be allocated to EDS' profit centers on the
basis of the ratio of the direct expenses charged to a particular
profit center to the total direct expenses charged to all EDS
profit centers. Changes in specific allocation methodologies may
be periodically made by EDS provided that such methodologies are
applied consistently and uniformly as they relate to all EDS
customers.
(5) EDS business unit general and administrative (G&A) expenses shall
be allocated to business unit final cost objectives based on
their beneficial or causal relationship. These expenses
represent the cost of the management and administration of the
business unit as a whole. Business unit G&A costs shall be
grouped in a separate indirect cost pool which shall be allocated
to final cost objectives by means of a cost input base
representing the total activity of the business unit.
(6) EDS shall have, and consistently apply, written statements of
accounting policies and practices for accumulating the costs of
material and for allocating costs of material to cost objectives.
The cost of material used solely in performing indirect functions
may be allocated to an indirect cost pool. Costs of a category
of materials shall be accounted for in material inventory
records.
(7) EDS shall have a written statement of accounting policies and
practices for classifying costs as direct or indirect which shall
be consistently applied. Indirect costs shall be accumulated in
indirect cost pools which are homogeneous. Pooled costs shall be
allocated to cost objectives in reasonable proportion to the
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beneficial or causal relationship of the pooled costs to cost
objectives.
(8) Research and development (R&D) and bid and proposal (B&P) costs
shall be allocated to cost objectives based on the beneficial or
causal relationship between such costs and cost objectives. The
R&D and B&P costs of a home office shall be allocated to segments
on the basis of the beneficial or causal relationship between the
R&D and B&P costs and the segments reporting to that home office.
The R&D and B&P costs of a business unit shall be allocated to
the final cost objectives of that business unit on the basis of
the beneficial or causal relationship between the R&D and B&P
costs and the final cost objectives. These practices shall be
consistently applied.
D-21
<PAGE>
(d) [Confidential information has been omitted.]
(1) Advertising costs: whose primary purpose is to promote the sale of
products or services by stimulating interest in products or product
line or disseminating messages calling favorable attention to EDS for
the purposes of enhancing EDS' image to sell its products or services.
Included are costs of trade shows and special events, ceremonies,
promotional materials, brochures, etc. that are designed to call
favorable attention to EDS and its activities. Any such costs
[Confidential information has been omitted.] shall be subject to the
allocation methodologies described in sub-Sections D3.3(c)(3) and
D3.3(c)(4) of this Exhibit D.
(2) [Confidential information has been omitted.] bad debts: means actual
or estimated [Confidential information has been omitted.] losses
arising from uncollectible accounts receivable and any directly
associated costs such as collection costs and legal costs.
(3) Fines and penalties: means all costs for fines and penalties.
(4) Gains & losses on disposition of depreciable property or capital
assets: when resulting from the sale, retirement or other
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Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
disposition of depreciable property related to business lost by EDS as a
result of competitive bidding. Gains and losses [Confidential information
has been omitted.] when incurred pursuant to Section A9.4 of Exhibit A to
the MSA; provided that under this Section D3.3, [Confidential information
has been omitted.] Section A9.4 of Exhibit A to the MSA.
(5) [Confidential information has been omitted.] means costs of salaries and
wages, and related burden, maintenance, repair, housing, rent, and other
related costs (property taxes, insurance and depreciation). Facilities
means plants or any portion thereof, equipment or other tangible capital
assets. [Confidential information has been omitted.]
(6) Interest and other financial costs: means interest on borrowings, bond
discounts, costs of financing and refinancing capital, legal and
professional fees paid in connection with preparing prospectuses, costs of
preparing and issuing stock rights, and directly associated costs.
[Confidential information has been omitted] an imputed cost of money that
is based on the net book values of the assets using the [Confidential
information has been omitted.] The cost of money for any calendar year
shall be the arithmetic mean of the interest rate (using the January 1 rate
and the December 31 rate) multiplied by the arithmetic mean of the net book
value of assets (the January 1 net book values and the December 31 net book
values). The resulting dollar amounts will be used to calculate the cost of
money factor. The cost of money will be billed monthly using estimated
factors (interest rate as of
D-23
Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
January 1 of the current year and asset value which is the arithmetic mean
of the actual value on January 1 of the current year and the forecast value
for December 31 of the current year) and will be adjusted to actual at the
end of each calendar year. Any variances between forecasted and actual
factors will be charged or credited. The net book value of assets means
those assets employed for the direct benefit of GM or those assets that are
subject to the allocation methodologies described in sub-Sections
D3.3(c)(3) and D3.3(c)(4) of this Exhibit D.
(7) [Confidential information has been omitted.] other contracts: [Confidential
information has been omitted.] income under any other contract, including
costs contributed under cost-sharing contracts, [Confidential information
has been omitted.]
(8) Organization costs: incremental costs in connection with (i) planning or
executing mergers and acquisitions, (ii) resisting or planning to resist
the take over or change in control of the corporate structure, and (iii)
raising capital related to mergers and acquisitions.
(9) Termination or cancellation costs: means incurrence of costs that would not
have arisen had a contract not been terminated or canceled. Termination or
cancellation costs [Confidential information has been omitted.] incurred
pursuant to Section A9.4 of Exhibit A to the MSA; provided that under this
Section D3.3, [Confidential information has been omitted.] pursuant to
Section A9.4 of Exhibit A to the MSA.
(10) Costs related to certain legal and other proceedings: means EDS' internal
costs, costs of private counsel, settlement costs or
D-24
Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
damages. Such costs, including costs for patent infringement litigation,
decisions by an appropriate official of an executive agency to debar or
suspend EDS, to rescind or void a contract, or to terminate a contract for
default, or a decision regarding a dispute with GM, [Confidential
information has been omitted.]
(11) Goodwill: intangible assets that originate under the purchase method of
accounting for a business combination when the price paid by the acquiring
company exceeds the sum of the identifiable individual assets acquired less
liabilities assumed, based upon their fair values. The excess is referred
to as goodwill. Goodwill [Confidential information has been omitted.] shall
be subject to the allocation methodologies described in sub-Sections
D3.3(c)(3) and D3.3(c)(4) of this Exhibit D.
(12) Asset valuations resulting from business combinations: when the purchase
method of accounting for a business combination is used, [Confidential
information has been omitted.] Any such costs [Confidential information
has been omitted.] shall be subject to the allocation methodologies
described in sub-Sections D3.3(c)(3) and D3.3(c)(4) of this Exhibit D.
(13) [Confidential information has been omitted.] by any EDS internal business
unit or support unit [Confidential information has been omitted.]
D-25
Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
(14) Insurances and indemnification: [Confidential information has been
omitted.] when charged to EDS' home office and/or profit centers and are
subject to the allocation methodologies described in sub-Sections
D3.3(c)(3) and D3.3(c)(4) of this Exhibit D.
(15) Patent costs: [Confidential information has been omitted.]
(16) Taxes: Interest, fines and penalties incurred for the non-payment of any
tax [Confidential information has been omitted.]: federal income and excess
profits taxes; taxes in connection with financing, refinancing, and
reorganization; taxes on real or personal property [Confidential
information has been omitted.] tax effects of differences between taxable
income and pre-tax income as reflected by the books of account and
financial statements.
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Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
EXHIBIT E
GUIDELINES & METHODOLOGY FOR DETERMINING
ACHIEVEMENT OF IT STRUCTURAL COST REDUCTION TARGETS
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<PAGE>
EXHIBIT E
GUIDELINES & METHODOLOGY FOR DETERMINING
ACHIEVEMENT OF IT STRUCTURAL COST REDUCTION TARGETS
---------------------------------------------------
Annual target adjustments and cost reductions pursuant to this Exhibit E will be
calculated in accordance with the following:
1. The annual target will be adjusted according to the following:
(a) At the beginning of each calendar year, to adjust for IT structural
cost reductions resulting from GM-funded systems development (which
will result in net cost reductions in that calendar year), the annual
target will be reduced by a percentage equal to the percentage yielded
by dividing (i) the previous calendar year's fixed billings for
systems being eliminated during the current calendar year, as a result
of GM-funded systems development, by (ii) the total aggregate fixed
charges for ongoing base level MSA Services ("Baselevel Fixed
Charges") for the prior calendar year.
(b) To provide equity in the event of major changes in the Baselevel Fixed
Charges which may be the result of major changes in GM business (e.g.,
plant closings or new plants and divestitures or acquisitions), the
annual target may be adjusted by mutual agreement of the Corporate
Contract Managers.
2. For calendar year 1996, carry over amounts of savings initially realized in
1996 from 1995 cost reduction efforts pursuant to the Performance Reduction
Requirement provision of the NAO Service Agreement, and similar provisions
of other Service Agreements, will be credited towards the achievement of
the 1996 annual target in an amount equal to $17 million.
E-1
<PAGE>
3. Any reductions in billings under Service Agreements (excluding those cost
reductions listed as exclusions in sub-Section 4.2(e) of the MSA and those
cost reductions listed as exclusions in Section 5 of this Exhibit E) will
be counted toward achievement of the annual target at the "net" amount of
the reduction. The determination of the net amount will be subject to the
following:
(a) The net amount for products, systems or services which are
specifically replaced will be determined by subtracting the annual
billing amount for the equivalent replacement products, systems or
services from the annual billing amount for the replaced products,
systems and services.
(b) Cost reductions occasioned by a specific project shall not be netted
by additional authorized but unrelated MSA spending whether on a
separate RISS, SDA or other like document or on the same document. In
like manner, additional MSA spending occasioned by a specific cost
savings effort shall not be excluded from netting against total
savings by the use of a separate RISS, SDA or like document.
(c) For purposes of the net calculation under this Section 3, any one-time
expenses paid by GM in connection with the applicable products,
systems or services (e.g., installation, purchase or license fees)
will be amortized over a period of four years.
In all cases GM and EDS will make a good faith effort to ensure that the
counting of achievement against the annual target is equitable to both
parties. Additional instructions, examples and clarifications necessary
for the implementation of counting of achievement against the annual target
will be issued by a policy letter to be mutually agreed upon by the
Corporate Contract Managers.
E-2
<PAGE>
4. While increased functionality of products, systems and services will not
count toward achievement of the annual target, GM and EDS recognize there
is substantial value to GM when such functionality increases. Accordingly a
report of major functionality increases will be issued in connection with
any review of progress against the annual target. GM and EDS shall review
such report in conjunction with the assessment of achievement against the
annual target.
5. In addition to the exclusions to the calculation of cost reductions set
forth in sub-Section 4.2(e) of the MSA, the calculation of cost reductions
to be credited toward achievement of the annual targets pursuant to Section
4.2 of the MSA (as such targets may be adjusted pursuant to Section 1 of
this Exhibit E) shall specifically exclude (i) reductions in plant floor
services (as defined in sub-Section 1.3(e) of the MSA), except for
reductions in such services which prior to the Effective Date were
described in a scope of work for services under Section 1.3 of the Master
Agreement, (ii) cost reductions attributable to GM-funded systems
development, and (iii) amounts sourced or resourced to EDS or third parties
pursuant to Article V of the MSA or the cost reductions therefrom. The
above provision notwithstanding, with respect to any IT structural cost
reductions which result from strategies, concepts and/or fully developed
ideas that can verifiably and in good faith be shown to have been
originated by EDS and communicated to GM prior to the commencement of
competitive bidding of the underlying MSA Services, and then subsequently
implemented as part of the sourcing or resourcing of such MSA Services, the
net IT cost reductions therefrom shall be included in the calculation of
cost reductions to be credited toward the achievement of applicable annual
targets.
E-3
<PAGE>
EXHIBIT F
TERMINATION UPON CHANGE OF CONTROL
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<PAGE>
EXHIBIT F
TERMINATION UPON CHANGE OF CONTROL
----------------------------------
1. Termination Upon Change of Control.
(a) In the event that a Change of Control occurs at any time or from time
to time after the Effective Date and, within 90 days thereafter
(subject to extension as provided in sub-Section 1(e) hereof), the
Board of Directors of GM Parent reasonably and in good faith
determines (a "GM Board Determination"):
(1) that control of EDS has been acquired by a competitor of GMC in
the manufacture, distribution or sale of passenger cars or trucks
and that, after taking into account all relevant factors
(including, without limitation, the nature and extent of any
acquiring Person's competition with GMC), there is a reasonable
likelihood of a significant competitive threat to GMC arising
from such Change of Control;
(2) that control of EDS has been acquired by a competitor of GMC and
that, after taking into account all relevant factors (including,
without limitation, the nature and extent of any acquiring
Person's competition with GMC), there is a reasonable likelihood
of a significant competitive threat to one or more significant GM
User Organizations within GMC (the "Affected Organizations")
arising from such Change of Control (provided, however, that a GM
Board Determination shall only be made pursuant to this sub-
Section 1(a)(2) with respect to a competitor of GMC as to which
the Board of Directors of GM Parent determines reasonably and in
good faith that it is not appropriate under the terms of sub-
Section 1(a)(1) hereof to make a GM Board Determination based on
control of EDS having been acquired by such competitor); or
F-1
<PAGE>
(3) that, as a result of such Change of Control, after taking into
account all relevant factors (including, without limitation, the
financial condition of EDS and the business reputation of any
Person acquiring control of EDS), there is (i) substantial
uncertainty as to EDS' continued ability to perform, in all
material respects, its obligations under the MSA, including,
without limitation, EDS' obligations under Section 2.3 of the MSA
to the extent and at such times as such provisions are applicable
in accordance with their terms, and the Service Agreements
entered into in connection therewith, or (ii) any other
significant threat to the business relationship between EDS and
GMC.
GM Parent may, by delivering written notice to EDS Parent ("Contract
Notice") at any time within 30 days after the GM Board Determination
(or at such other time as is provided in sub-Section 1(e) hereof),
elect (A) in the case of a GM Board Determination specified in sub-
Section 1(a)(1) or 1(a)(3) hereof, to terminate the MSA as of a date
specified in such notice, which date shall not be earlier than the
six-month anniversary of the date of delivery thereof, or (B) in the
case of a GM Board Determination specified in sub-Section 1(a)(2)
hereof, to terminate the Service Agreements to which the Affected
Organizations are parties as of a date specified in such notice and to
exclude the Affected Organizations from the scope of the MSA as of
such date.
If (A) a Contract Notice has been delivered by GM Parent based on a GM
Board Determination pursuant to sub-Section 1(a)(2) hereof, and (B)
the Board of Directors of EDS Parent determines reasonably and in good
faith that the revenues derived by EDS during the most recently
completed calendar year from the Service Agreements to be terminated
as a result of such GM Board Determination equal or exceed 60% of the
annual aggregate revenue paid by GM for MSA Services performed during
such calendar year, then EDS Parent shall have the
F-2
<PAGE>
right to elect to terminate the MSA within 30 days after receipt of
notification of such GM Board Determination by delivering to GM Parent
a written notice stating that it is terminating the MSA as of a date
specified in such notice, which date shall not be earlier than the
six-month anniversary of the date of delivery thereof.
(b) Any Contract Notice sent to EDS Parent pursuant to this Exhibit F
shall (i) identify the applicable Change of Control transaction, (ii)
if applicable, identify the competitor of GMC or of an Affected
Organization with which EDS consummated a Change of Control
transaction specified in sub-Section 1(a)(1) or 1(a)(2) hereof, (iii)
set forth, in reasonable detail, the basis upon which the GM Board
Determination was made, and (iv) include as an attachment a certified
copy of any resolution of the Board of Directors of GM Parent that
evidences the GM Board Determination.
(c) GM Parent agrees that any GM Board Determination shall be made in good
faith, solely on the basis of one or more of the criteria referred to
in sub-Section 1(a) hereof and shall not be made for the purpose of
negotiating any modification or amendment of the MSA or any Service
Agreement that does not relate directly to the basis on which the GM
Board Determination is made.
(d) From time to time after the date hereof (but not more frequently than
once in any twelve-month period), EDS Parent may request in writing
that the Board of Directors of GM Parent consider and determine
whether a GM Board Determination would be made in connection with a
proposed Change of Control transaction and, if a GM Board
Determination would be made, whether such determination would be made
pursuant to sub-Section 1(a)(1), 1(a)(2) or 1(a)(3) hereof (an
"Advance Determination Request"). Any Advance Determination Request
submitted to GM Parent shall be accompanied by:
F-3
<PAGE>
(1) A statement that EDS has a bona fide intention of entering into a
Change of Control transaction and a summary, in reasonable
detail, of the material terms of the proposed Change of Control
transaction, including, without limitation, its proposed form and
timing;
(2) an identification of the Person or Persons with which EDS
proposes to consummate such Change of Control transaction (the
"Bidder") and an undertaking by the Bidder to cooperate in
providing information, including access to its senior management
personnel, to GM Parent in connection with its determination of
whether to make a GM Board Determination;
(3) any plans or proposals the Bidder may have, in connection with
such Change of Control transaction, which relate to or would
result in (i) any extraordinary corporate transaction such as a
merger, reorganization or liquidation, involving EDS, (ii) a sale
or transfer of assets of EDS that are material to the performance
of its obligations under the MSA or any Major Sector Service
Agreement, (iii) any change in the board of directors of EDS
Parent, (iv) any material change in the capitalization of EDS,
and (v) any other change in EDS' business or corporate structure
that would be reasonably likely to have a material effect on the
performance of its obligations under the MSA or any Major Sector
Service Agreement; and
(4) a good faith estimate by EDS Parent and the Bidder of the effect,
if any, that the consummation of such Change of Control
transaction would have on EDS' continued ability to perform, in
all material respects, its obligations under the MSA or any Major
Sector Service Agreement, including, without limitation, EDS'
obligations under Section 2.3 of the MSA to the extent and at
such times as such provisions are applicable in
F-4
<PAGE>
accordance with their terms, and the Service Agreements entered
into in connection therewith.
In addition, EDS Parent and the Bidder shall provide such other
documentation and information as GM Parent may reasonably request in
connection with such proposed Change of Control transaction or its
determination of whether to make a GM Board Determination. If
requested by GM, EDS Parent shall afford GM Parent an opportunity,
prior to the making of any GM Board Determination, to meet and discuss
with senior management of EDS Parent any factors relevant to whether a
GM Board Determination should be made in response thereto.
(e) In the event that a Change of Control occurs at any time after the
Effective Date, EDS Parent shall promptly deliver to GM Parent a
written notice (a "Change of Control Notice") stating that a Change of
Control has occurred. If a GM Board Determination has been made with
respect to a Change of Control in response to an Advance Determination
Request, GM Parent may elect to terminate the MSA or one or more
Service Agreements (as the case may be) in accordance with sub-Section
1(a) hereof by delivering a Contract Notice to EDS Parent at any time
during the period between the occurrence of the Change of Control and
the expiration of 30 days after the date of delivery to GM Parent of a
Change of Control Notice with respect thereto, and no additional GM
Board Determination shall be required after the occurrence of such
Change of Control. In determining whether to make a GM Board
Determination after the delivery of a Change of Control Notice, to the
extent that GM Parent has not previously received information in
connection with an Advance Determination Request, GM Parent shall be
entitled to receive from EDS Parent and any Person acquiring control
of EDS, and to rely on, the same information that would be required to
be provided to GM Parent by EDS Parent or a Bidder pursuant to sub-
Section 1(d) hereof, which information shall be provided to GM Parent
as promptly as practicable and in any event within 30 days following
the Change of Control. In the event that
F-5
<PAGE>
any such information is provided to GM Parent after occurrence of the
Change of Control, the 90-day period referred to in sub-Section 1(a)
hereof shall automatically be extended to a date 90 days after EDS
Parent and the Person acquiring control of EDS certify to GM Parent
that all such required information has been provided.
(f) If requested by EDS Parent within 30 days after delivery of an Advance
Determination Request or Change of Control Notice (as the case may
be), GM Parent shall afford EDS Parent, prior to the making of any GM
Board Determination, an opportunity to meet and discuss with senior
management of GM Parent and the Board of Directors of GM Parent
regarding such proposed Change of Control transaction, including any
factors relating to the MSA or the determination by GM Parent of
whether to make a GM Board Determination. Within 90 days after receipt
of the Advance Determination Request or Change of Control Notice (as
the case may be) and the information required by sub-Sections 1(d) or
1(e) hereof, GM Parent shall notify EDS Parent in writing whether a GM
Board Determination has been made with respect to the proposed Change
of Control transaction, together with the basis upon which any such
determination was made. If (i) GM Parent notifies EDS Parent that a GM
Board Determination will not be made with respect to such Change of
Control transaction, or (ii) GM Parent fails to notify EDS Parent in
writing within such 90-day period that the Board of Directors of GM
Parent has made a GM Board Determination, then GM Parent may not
subsequently make a GM Board Determination and terminate the MSA or
any Service Agreement on the basis thereof unless EDS Parent or the
Bidder and Person acquiring control of EDS (each, an "Information
Provider") failed to provide GM Parent with all material information
required pursuant to sub-Section 1(d) or 1(e) hereof. The failure on
the part of any Information Provider to provide, or cause to be
provided, to GM Parent any information required pursuant to sub-
Section 1(d) or 1(e) hereof shall not itself constitute a sufficient
basis for the making of a GM Board Determination unless specific
F-6
<PAGE>
information that is material to a GM Board Determination is identified
and requested by GM Parent in writing and such information is not
provided to GM Parent within 30 days after receipt by the applicable
Information Provider of a request therefor. GM Parent shall keep
confidential the fact that EDS has submitted to it any Advance
Determination Request, as well as all information provided to it by
any Information Provider pursuant to sub-Sections 1(d) or 1(e) hereof.
(g) If the MSA or any Service Agreement is terminated in accordance with
sub-Section 1(a) hereof, GM will pay to EDS all amounts owed to EDS
for transition services [Confidential information has been omitted.]
In addition, if the MSA or any Service Agreement is terminated as the
result of a GM Board Determination made pursuant to sub-Section
1(a)(2) or 1(a)(3) hereof, GM will also pay to EDS (without
duplication) an amount equal to the product of (i) all wind-down
expenses and cancellation charges [Confidential information has been
omitted.] multiplied by (ii) a percentage equal to:
(1) [Confidential information has been omitted.] if the applicable
GM Board Determination is made pursuant to sub-Section 1(a)(2)
hereof.
(2) [Confidential information has been omitted.] if the applicable
GM Board Determination is made pursuant to sub-Section 1(a)(3)
hereof prior to the fifth anniversary of the Effective Date.
(3) [Confidential information has been omitted.] if the applicable
GM Board Determination is made pursuant to sub-Section 1(a)(3)
hereof on or after the fifth, but prior to the sixth, anniversary
of the Effective Date.
F-7
Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
(4) [Confidential information has been omitted.] if the applicable
GM Board Determination is made pursuant to sub-Section 1(a)(3)
hereof on or after the sixth, but prior to the seventh,
anniversary of the Effective Date.
(5) [Confidential information has been omitted.] if the applicable
GM Board Determination is made pursuant to sub-Section 1(a)(3)
hereof on or after the seventh, but prior to the eighth,
anniversary of the Effective Date.
(6) [Confidential information has been omitted.] if the applicable
GM Board Determination is made pursuant to sub-Section 1(a)(3)
hereof on or after the eighth, but prior to the ninth,
anniversary of the Effective Date.
(7) [Confidential information has been omitted.] if the applicable
GM Board Determination is made pursuant to sub-Section 1(a)(3)
hereof on or after the ninth anniversary of the Effective Date.
[Confidential information has been omitted.]
2. Definitions. In addition to the terms otherwise defined in the MSA, the
following terms shall have the meanings set forth below whenever they are
used in the provisions of this Exhibit F:
(a) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "'beneficially own," any securities: (i) that such Person,
directly or indirectly is the "beneficial owner" of (as determined
pursuant to Rule 13d-3 and Rule 13d-5 of the General Rules and
Regulations under the Exchange Act as in effect on the Effective
Date); provided, however, that a Person shall not be deemed the
beneficial owner of any securities because of such Person's right to
vote such
F-8
Confidential treatment has been requested by EDS for the indicated portions of
this page.
<PAGE>
stock if the agreement or arrangement to vote such securities arises
solely from a revocable proxy or consent given in response to a proxy
or consent solicitation made to ten or more Persons pursuant to, and
in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act; or (ii) that such Person, directly
or indirectly, has the right or obligation to acquire (whether such
right or obligation is exercisable or effective immediately or only
after the passage of time or the occurrence of an event), pursuant to
any agreement or arrangement or upon the exercise of conversion
rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
beneficial owner of any securities tendered pursuant to a tender or
exchange offer made by such Person until such tendered securities are
accepted for purchase or exchange.
(b) "Change of Control" means the occurrence (at any time after the
Effective Date) of any of the following events:
(1) Any Person (other than an Exempt Person) shall file (or be
required to file) a Schedule 13D or 14D-1 under the Exchange Act
disclosing that such Person has become the Beneficial Owner of a
number of shares of Common Stock of EDS Parent which represent
50% or more of the aggregate voting power of the outstanding
shares of Common Stock of EDS Parent; or
(2) Any Person (other than an Exempt Person) (i) shall file (or be
required to file) a Schedule 13D or 14D-1 under the Exchange Act
disclosing that such Person has become the Beneficial Owner of a
number of shares of Common Stock of EDS Parent which represent
30% or more of the aggregate voting power of the outstanding
shares of Common Stock of EDS Parent, or (ii) commences a proxy
solicitation with respect to the election or removal of members
of the Board of Directors of EDS Parent
F-9
<PAGE>
at any annual or special meeting of EDS Parent security holders,
which solicitation is subject to Rule 14a-11 of the General Rules
and Regulations of the Exchange Act, and within 24 months after
the date of such acquisition of beneficial ownership of Common
Stock of EDS Parent or the date of such solicitation, as the case
may be, individuals who, as of the date of such acquisition or
solicitation, constituted the Board of Directors of EDS Parent
(the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board of Directors of EDS Parent;
provided, however, that any individual becoming a director
subsequent to such date whose election, or recommendation or
nomination for election by the stockholders of EDS Parent, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Directors (acting separately or as part
of any action taken by the Board of Directors of EDS Parent or
any committee thereof) shall be considered as though such
individual were an Incumbent Director, provided that such
individual was not the nominee of the Person that acquires such
beneficial ownership or commences such solicitation, as the case
may be, or otherwise nominated or elected by or at the direction
of such Person as part of any plan or arrangement regarding a
change of control of EDS Parent; or
(3) There shall be consummated any transaction (or series of related
transactions) and, as a result thereof, a number of shares of
Common Stock of EDS Parent (or any Surviving Company resulting
from such transaction) which represent 50% or more of the
aggregate voting power of the outstanding shares of Common Stock
of EDS Parent (or such Surviving Company) shall be Beneficially
Owned, directly or indirectly, by Persons who did not either (i)
own such securities as Common Stock of EDS Parent immediately
prior to the transaction, or (ii) receive such securities in
respect of the conversion or exchange of Common Stock of EDS
Parent in the transaction.
F-10
<PAGE>
(c) "Common Stock" means, as to any company, the shares of common stock or
other securities of such company of any class or series the holders of
which are entitled to vote generally in the election of directors of
such company (excluding any class or series the holders of which would
be entitled so to vote upon the occurrence of any contingency, so long
as such contingency has not occurred).
(d) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(e) "Exempt Person" means EDS Parent, any subsidiary of EDS Parent, any
employee benefit plan of EDS Parent or any subsidiary of EDS Parent,
and any Person organized, appointed or established by EDS Parent or
any such subsidiary for or pursuant to the terms of any such plan.
(f) "GMC" means General Motors Corporation and any functional entity,
subsidiary, department, group or affiliate which is then-currently
being provided MSA Services by EDS pursuant to the MSA or an
applicable Service Agreement thereunder.
(g) "Major Sector Service Agreement" means the primary Service Agreement
between a GM Major Sector and the corresponding EDS Major Sector.
(h) "Person" means any individual, firm, corporation, partnership,
association, trust, unincorporated organization or other entity, and
shall include any "group" within the meanings of Section 13(d)(3) of
the Exchange Act or Rule 13d-3 of the General Rules and Regulations
under the Exchange Act as in effect on the Effective Date.
(i) "Surviving Company" means the following:
F-11
<PAGE>
(1) in the case of a merger, consolidation or business combination,
the Person that survives or results from such transaction; or
(2) in the case of a sale, transfer or conveyance of all or
substantially all of the properties and assets of EDS, the Person
to which such properties and assets are sold, transferred or
conveyed.
Other terms used in this Exhibit F are defined in the context in which they
are used and, unless otherwise specified herein, shall have the meanings
indicated wherever they are used in this Exhibit F.
F-12
<PAGE>
EXHIBIT G
CANCELLATION LOSSES ON THE DISPOSITION OF
CAPITAL ASSETS AND LONG-TERM LEASES
-----------------------------------
<PAGE>
EXHIBIT G
CANCELLATION LOSSES ON THE DISPOSITION OF
CAPITAL ASSETS AND LONG-TERM LEASES
-----------------------------------
The GM Contracting Party's obligation to pay EDS' losses (net unrecoverable
costs) for disposal of capital assets and cancellation of long-term leases
(i.e., leases with terms over one (1) year) entered into by EDS in connection
with the MSA Services, in the event of the GM Contracting Party's cancellation
of MSA Services under Section A9.4 of Exhibit A to the MSA (the GM Contracting
Party's "Contingent Payment Obligation" or "CPO"), will be subject to the
following:
1. Contingent Payment Obligation.
(a) Capital Asset and Lease Termination Costs--General. Where the
applicable Service Agreement utilizes a fixed-price or cost-plus
pricing methodology and the applicable asset is not leased to the GM
Contracting Party as described in sub-Section 1(b) of this Exhibit G,
the CPO for these items will be determined, prior to any additional
reduction pursuant to sub-Sections 3(a) and 3(b) of this Exhibit G, as
follows:
(1) Losses on any capital asset shall be EDS' purchase price for the
capital asset, reduced by (i) the amount that the asset has
depreciated, and (ii) its salvage value at the time of
cancellation.
(2) Losses on any long-term lease shall be the lease cancellation
charges for that lease; provided, however, that the parties shall
use all reasonable efforts to mitigate the amount of such
charges.
The amount a capital asset has depreciated according to sub-Section
1(a)(1) of this Exhibit G will be based upon a depreciation schedule
which reasonably relates to the expected term of the Service Agreement
under which the asset is provided to GM,
G-1
<PAGE>
unless such a depreciation schedule is inconsistent with U.S.
Generally Accepted Accounting Principles in effect as of the effective
date of the applicable Service Agreement ("GAAP"), in which case GAAP
will be used. In the event that the asset has been depreciated in a
manner which does not reasonably relate to the expected term of the
Service Agreement, then, at the time of cancellation, if necessary,
the Contracting Parties may mutually agree upon an equitable
adjustment to the CPO to account for the difference between the
depreciation schedule used and the depreciation schedule suggested by
the foregoing.
In those instances where the GM Contracting Party has made a
substantial advance payment for the use of an asset provided under a
fixed-price or cost-plus pricing methodology, the amount of the
advance payment shall be considered in connection with the
determination of the amount of the CPO in an equitable and fair
manner.
Except as otherwise provided above, the salvage value of capital
assets and the mitigation of lease termination charges referred to
above will include the amounts, if any, recovered by EDS in the sale,
lease, sublease or alternate revenue producing use of the assets. Any
calculation of a CPO under this sub-Section 1(a) will be done in a
manner which is reasonably designed to provide EDS with its expected
"benefit of the bargain" up to the effective date of cancellation with
respect to the asset according to the applicable Service Agreement.
(b) Assets Provided under Lease to GM. In any case where the applicable
assets under a Service Agreement are provided under a lease (operating
or capital) to the GM Contracting Party, the CPO shall be a lump sum
equal to the net present value of the expected amount of the remaining
lease payment stream for the then-current term of the lease,
discounted at the ninety-day LIBOR rate published in The Wall Street
Journal on or immediately prior to the date of cancellation.
G-2
<PAGE>
(c) Alternate Pricing Methodology. Where the Service Agreement provides
for pricing on other than a fixed-price or cost-plus pricing
methodology and pricing is based on use of the assets (in terms of a
fixed charge per unit) which takes into consideration projected usage,
then the parties may agree on additional or alternative determinations
of the CPO that are related to actual usage up to the time of
cancellation.
(d) CPO for Partial Termination. Where a substantial part of the MSA
Services being provided under the Service Agreement is cancelled, the
CPO will be determined on an appropriate pro-rata basis that is agreed
upon by the parties.
2. CPO Verification and Audit. EDS will provide GM with whatever information
is in EDS' possession or that it can obtain from third parties if that
information is reasonably requested by GM to enable it to verify the CPO.
Where the CPO includes costs for capital assets that are partially complete
at termination, and are being billed to EDS on a cost-plus or time and
materials basis, EDS will for itself and GM incorporate into any agreement
for the purchase of such capital assets, a provision substantially in the
form of the following:
"Supplier shall maintain records, including all pertinent ledgers,
payroll data, books, records, correspondence, written instructions,
drawings, receipts, vouchers and other documents, for a period of one
(1) year beyond final payment under this Agreement, which adequately
substantiate the applicability and accuracy of charges for services
and related expenses to EDS ("Records") and shall, upon receipt of
reasonable advance notice from EDS, produce such Records for audit by
EDS or its designee, which shall include General Motors Corporation."
The failure on the part of EDS to negotiate such an audit right on behalf
of itself and GM shall negate any liability on the part of GM for the CPO
on such assets. Also, EDS will
G-3
<PAGE>
permit the GM Central Office at its expense to audit the books and records
of EDS to the extent necessary to allow GM to verify the CPO.
3. Shared Cost Assets.
(a) GM. In those instances where the CPO includes costs for assets that
are used in connection with other Service Agreements, then, unless
otherwise provided in any applicable Service Agreement, after
cancellation EDS will provide the GM Contracting Party with the CPO
and recommend an appropriate apportionment of the CPO among the
applicable GM Contracting Parties. If the GM Contracting Parties
cannot agree upon an apportionment within a reasonable period of time,
then EDS will be paid the CPO in full by the GM Contracting Party that
EDS determines is responsible for all or the largest share of the CPO,
and the proper apportionment will be done internally by GM.
(b) Third Party Customers. In those instances where the CPO includes costs
for assets that are used for third party customers of EDS, such use
shall not in any manner disturb the obligations of either party under
the Service Agreement, except that the CPO shall be reduced to the
extent of such third party use.
4. Transfer of Title or Lease Assumption. On the effective date of
cancellation under Section A9.4 of Exhibit A to the MSA, except (i) in the
case of an operating lease under sub-Section 1(b) of this Exhibit G, (ii)
if EDS does not own the assets, or (iii) if the assets are shared by third
party customers of EDS, GM may elect to purchase the assets by paying EDS
the CPO and any salvage value for the assets. Unless GM does so elect to
purchase any assets for which a CPO is payable according to the terms of
this Exhibit G, then EDS will use all reasonable efforts to sell, lease,
sublease or otherwise utilize the assets. In the event EDS is unable, after
such reasonable efforts, to sell, lease, sublease or otherwise utilize the
assets, then, except in the case of an operating lease under sub-Section
1(b) of this Exhibit G or with respect to assets shared by third party
customers of EDS, (x) in the event EDS owns the assets, GM will pay EDS the
CPO, and, as consideration for GM's payment of the CPO, EDS shall promptly
transfer to GM title to and possession of the assets, or (y) in the event
EDS
G-4
<PAGE>
leases the assets, upon assumption of the lease by GM, EDS shall, to the
extent permitted under the applicable lease, promptly grant to GM all the
rights of EDS as lessee of the assets. In either case, GM shall pay or
reimburse EDS for all sales, use or other taxes based upon such transfer of
title or grant of rights.
G-5
<PAGE>
EXHIBIT 10(b)
AMENDED EDS INCENTIVE PLAN
<PAGE>
1996 INCENTIVE PLAN
OF
ELECTRONIC DATA SYSTEMS CORPORATION
1. Plan. This 1996 Incentive Plan of Electronic Data Systems Corporation
(the "Plan") is a continuation of the 1984 Electronic Data Systems Corporation
Stock Incentive Plan (the "Existing Plan"), which was adopted by General
Motors Corporation, a Delaware corporation ("General Motors"), to reward
certain corporate officers and key employees of the predecessor of Electronic
Data Systems Holding Corporation (to be renamed "Electronic Data Systems
Corporation" upon the consummation of the Reincorporation (as hereinafter
defined)), a Delaware corporation (the "Company"), and its subsidiaries by
enabling them to acquire shares of Class E Common Stock, par value $.10 per
share ("GM Class E Common Stock"), of General Motors. Upon the Amendment
Effective Date (as hereinafter defined), the Existing Plan shall be amended
and restated in its entirety as set forth herein and shall be assumed by the
Company and neither General Motors nor the committee appointed by General
Motors to administer the Existing Plan (the "Predecessor Committee") shall
have any further rights or responsibilities hereunder.
2. Objectives. This Plan is designed to attract and retain key employees of
the Company and its Subsidiaries (as hereinafter defined), to attract and
retain qualified directors of the Company, to encourage the sense of
proprietorship of such employees and Directors, and to stimulate the active
interest of such persons in the development and financial success of the
Company and its Subsidiaries. These objectives are to be accomplished by
making Awards (as hereinafter defined) under this Plan and thereby providing
Participants (as hereinafter defined) with a proprietary interest in the
growth and performance of the Company and its Subsidiaries.
3. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
"Amendment Effective Date" has the meaning set forth in paragraph 19 hereof.
"Annual Director Award Date" means, for each year beginning on or after the
Amendment Effective Date, the first business day of the month next succeeding
the date upon which the annual meeting of stockholders of the Company is held
in such year.
"Authorized Officer" means the Chairman of the Board or the Chief Executive
Officer of the Company (or any other senior officer of the Company to whom
either of them shall delegate the authority to execute any Award Agreement).
"Award" means an Employee Award or a Director Award.
"Award Agreement" means any Employee Award Agreement or Director Award
Agreement.
"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"Code" means the 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.
"Director" means an individual serving as a member of the Board.
"Director Award" means the grant of a Director Option or Director Restricted
Stock.
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<PAGE>
"Director Award Agreement" means a written agreement between the Company and
a Participant who is a Nonemployee Director setting forth the terms,
conditions and limitations applicable to a Director Award.
"Director Options" means Nonqualified Options granted to Nonemployee
Directors pursuant to the applicable terms, conditions and limitations
specified in paragraph 9(a) hereof.
"Director Restricted Stock" means Common Stock granted to Nonemployee
Directors pursuant to the applicable terms, conditions and limitations
specified in paragraph 9(b) hereof.
"Disability" means, with respect to a Nonemployee Director, the inability to
perform the duties of a Director for a continuous period of more than three
months by reason of any medically determinable physical or mental impairment.
"Dividend Equivalents" means, with respect to shares of Restricted Stock
that are to be issued at the end of the Restriction Period, an amount equal to
all dividends and other distributions (or the economic equivalent thereof)
which are payable to stockholders of record during the Restriction Period on a
like number of shares of Common Stock.
"Employee" means an employee of the Company or any of its Subsidiaries.
"Employee Award" means the grant of any Option, SAR, Stock Award, Cash Award
or Performance Award, whether granted singly, in combination or in tandem, to
a Participant who is an Employee pursuant to such applicable terms, conditions
and limitations as the Committee may establish in order to fulfill the
objectives of the Plan.
"Employee Award Agreement" means a written agreement between the Company and
a Participant who is an Employee setting forth the terms, conditions and
limitations applicable to an Employee Award.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" of a share of Common Stock means, as of a particular
date, (i) if shares of Common Stock are listed on a national securities
exchange, the mean between the highest and lowest sales price per share of
Common Stock on the consolidated transaction reporting system for the
principal national securities exchange on which shares of Common Stock are
listed on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported,
(ii) if shares of Common Stock are not so listed but are quoted on the Nasdaq
National Market, the mean between the highest and lowest sales price per share
of Common Stock reported by the Nasdaq National Market on that date, or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported or (iii) if the Common
Stock is not so listed or quoted, the mean between the closing bid and asked
price on that date, or, if there are no quotations available for such date, on
the last preceding date on which such quotations shall be available, as
reported by the Nasdaq Stock Market, or, if not reported by the Nasdaq Stock
Market, by the National Quotation Bureau Incorporated; provided, however,
that, in the case of Awards made on the Amendment Effective Date, if as of
such date trading in shares of Common Stock shall not have commenced on the
New York Stock Exchange, the "Fair Market Value" of a share of Common Stock
for purposes of such Awards shall be deemed to be equal to the average of the
closing prices of a share of GM Class E Common Stock on the Amendment
Effective Date and the four consecutive trading days immediately preceding
such date, in each case as reported on the consolidated transaction reporting
system for the New York Stock Exchange on such date.
"Incentive Option" means an Option that is intended to comply with the
requirements set forth in Section 422 of the Code.
"Noncompetition Provisions" has the meaning set forth in paragraph 8(c)
hereof.
"Nonemployee Director" has the meaning set forth in paragraph 4(b) hereof.
2
<PAGE>
"Nonqualified Stock Option" means an Option that is not an Incentive Option.
"Option" means a right to purchase a specified number of shares of Common
Stock at a specified price.
"Participant" means an Employee or Director to whom an Award has been made
under this Plan.
"Performance Award" means an award made pursuant to this Plan to a
Participant who is an Employee that is subject to the attainment of one or
more Performance Goals.
"Performance Goal" means a standard established by the Committee, to
determine in whole or in part whether a Performance Award shall be earned.
"Reincorporation" means (i) the merger of Electronic Data Systems
Intermediate Corporation, a Delaware corporation and direct wholly owned
subsidiary of the Company, with and into the Company and (ii) the merger of
Electronic Data Systems Corporation, a Texas corporation and indirect wholly
owned subsidiary of the Company, with and into the Company.
"Restricted Stock" means any Common Stock that is restricted or subject to
forfeiture provisions.
"Restriction Period" means a period of time beginning as of the date upon
which an Award of Restricted Stock is made pursuant to this Plan and ending as
of the date upon which the Common Stock subject to such Award is no longer
restricted or subject to forfeiture provisions.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or any
successor rule.
"SAR" means a right to receive a payment, in cash or Common Stock, equal to
the excess of the Fair Market Value or other specified valuation of a
specified number of shares of Common Stock on the date the right is exercised
over a specified strike price (in each case, as determined by the Committee).
"Split-Off" means the issuance or delivery of shares of Common Stock upon
conversion of all of the outstanding shares of GM Class E Common Stock as a
result of the merger of GM Mergeco Corporation, a Delaware corporation and
indirect wholly owned subsidiary of the Company, with and into General Motors
in accordance with the terms of the Merger Agreement to be entered into
between General Motors and GM Mergeco Corporation.
"Stock Award" means an award in the form of shares of Common Stock or units
denominated in shares of Common Stock.
"Subsidiary" means (i) in the case of a corporation, any corporation of
which the Company directly or indirectly owns shares representing more than
50% of the combined voting power of the shares of all classes or series of
capital stock of such corporation which have the right to vote generally on
matters submitted to a vote of the stockholders of such corporation and (ii)
in the case of a partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly or
indirectly owns more than 50% of the voting, capital or profits interests
(whether in the form of partnership interests, membership interests or
otherwise).
"Transactions" has the meaning set forth in paragraph 19 hereof.
4. Eligibility.
(a) Employees. Key Employees eligible for Employee Awards under this Plan
are those who hold positions of responsibility and whose performance, in
the judgment of the Committee, can have a significant effect on the success
of the Company and its Subsidiaries.
(b) Directors. Directors eligible for Director Awards under this Plan are
those who are not employees of the Company or any of its Subsidiaries
("Nonemployee Directors").
3
<PAGE>
5. Common Stock Available for Awards. Subject to the provisions of paragraph
15 hereof, there shall be available for Awards under this Plan granted wholly
or partly in Common Stock (including rights or options which may be exercised
for or settled in Common Stock) an aggregate of 60,000,000 shares of Common
Stock (in addition to any shares that are the subject of Awards outstanding as
of the Amendment Effective Date), of which an aggregate of not more than
400,000 shares shall be available for Director Awards and the remainder shall
be available for Employee Awards. The number of shares of Common Stock that
are the subject of Awards under this Plan, that are forfeited or terminated,
expire unexercised, are settled in cash in lieu of Common Stock or in a manner
such that all or some of the shares covered by an Award are not issued to a
Participant or are exchanged for Awards that do not involve Common Stock,
shall again immediately become available for Awards hereunder; provided,
however, that in the case of shares of Common Stock that are the subject of
Awards made under the Existing Plan prior to the Amendment Effective Date,
such shares shall in no event become available for Awards hereunder at any
time after such date. The Committee may from time to time adopt and observe
such procedures concerning the counting of shares against the Plan maximum as
it may deem appropriate. The Board and the appropriate officers of the Company
shall from time to time take whatever actions are necessary to file any
required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that shares of Common Stock are
available for issuance pursuant to Awards.
6. Administration.
(a) This Plan, as it applies to Participants who are Employees but not
with respect to Participants who are Nonemployee Directors, shall be
administered by the Committee. To the extent required in order for Employee
Awards to be exempt from Section 16 of the Exchange Act by virtue of the
provisions of Rule 16b-3, the Committee shall consist of at least two
members of the Board who meet the requirements of the definition of
"disinterested person" set forth in Rule 16b-3(c)(2)(i) promulgated under
the Exchange Act.
(b) Subject to the provisions hereof, insofar as this Plan relates to the
Employee Awards, 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. Insofar as this Plan relates to
Employee Awards, 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, in its
discretion, provide for the extension of the exercisability of an Employee
Award, accelerate the vesting or exercisability of an Employee Award,
eliminate or make less restrictive any restrictions contained in an
Employee Award, waive any restriction or other provision of this Plan or an
Employee Award or otherwise amend or modify an Employee Award in any manner
that is either (i) not adverse to the Participant to whom such Employee
Award was granted or (ii) consented to by such Participant. The Committee
may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Employee Award in the manner and to
the extent the Committee deems necessary or desirable to carry it into
effect. Any decision of the Committee in the interpretation and
administration of this Plan shall lie within its sole and absolute
discretion and shall be final, conclusive and binding on all parties
concerned.
(c) No member of the Committee or officer of the Company to whom the
Committee has delegated authority in accordance with the provisions of
paragraph 7 of 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 any 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.
7. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish, except that the Committee may not delegate to any person the
authority to grant Awards to, or take other action with respect to,
Participants who are subject to Section 16 of the Exchange Act.
4
<PAGE>
8. Employee Awards.
(a) The Committee shall determine the type or types of Employee Awards to
be made under this Plan and shall designate from time to time the Employees
who are to be the recipients of such Awards. Each Employee Award may be
embodied in an Employee Award Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its
sole discretion and shall be signed by the Participant to whom the Employee
Award is made and by an Authorized Officer for and on behalf of the
Company. Employee Awards may consist of those listed in this paragraph 8(a)
hereof and may be granted singly, in combination or in tandem. Employee
Awards may also be made in combination or in tandem with, in replacement
of, or as alternatives to, grants or rights under this Plan or any other
employee plan of the Company or any of its Subsidiaries, including the plan
of any acquired entity; provided that no Option may be issued in exchange
for the cancellation of an Option with a lower exercise price. An Employee
Award may provide for the grant or issuance of additional, replacement or
alternative Employee Awards upon the occurrence of specified events,
including the exercise of the original Employee Award granted to a
Participant. All or part of an Employee Award may be subject to conditions
established by the Committee, which may include, but are not limited to,
continuous service with the Company and its Subsidiaries, achievement of
specific business objectives, increases in specified indices, attainment of
specified growth rates and other comparable measurements of performance.
Upon the termination of employment by a Participant who is an Employee, any
unexercised, deferred, unvested or unpaid Employee Awards shall be treated
as set forth in the applicable Employee Award Agreement.
(i) Stock Option. An Employee Award may be in the form of an Option.
An Option awarded pursuant to this Plan may consist of an Incentive
Option or a Nonqualified Option. The price at which shares of Common
Stock may be purchased upon the exercise of an Incentive Option shall
be not less than the Fair Market Value of the Common Stock on the date
of grant. The price at which shares of Common Stock may be purchased
upon the exercise of a Nonqualified Option shall be not less than, but
may exceed, the Fair Market Value of the Common Stock on the date of
grant. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Options awarded pursuant to this Plan,
including the term of any Options and the date or dates upon which they
become exercisable, shall be determined by the Committee.
(ii) Stock Appreciation Right. An Employee Award may be in the form
of an SAR. The terms, conditions and limitations applicable to any SARs
awarded pursuant to this Plan, including the term of any SARs and the
date or dates upon which they becomes exercisable, shall be determined
by the Committee.
(iii) Stock Award. An Employee Award may be in the form of a Stock
Award. The terms, conditions and limitations applicable to any Stock
Awards granted pursuant to this Plan shall be determined by the
Committee.
(iv) Cash Award. An Employee Award may be in the form of a Cash
Award. The terms, conditions and limitations applicable to any Cash
Awards granted pursuant to this Plan shall be determined by the
Committee.
(v) Performance Award. Without limiting the type or number of
Employee Awards that may be made under the other provisions of this
Plan, an Employee Award may be in the form of a Performance Award. A
Performance Award shall be paid, vested or otherwise deliverable solely
on account of the attainment of one or more pre-established, objective
Performance Goals established by the Committee prior to the earlier to
occur of (x) 90 days after the commencement of the period of service to
which the Performance Goal relates and (y) the elapse of 25% of the
period of service (as scheduled in good faith at the time the goal is
established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having
knowledge of the relevant facts could determine whether the goal is
met. Such a Performance Goal may be based on one or more of business
criteria that apply to the individual, one or more business units of
the Company, or the Company as a whole, and may include one or more of
the following: increased revenue, net income, stock price,
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<PAGE>
market share, earnings per share, return on equity, return on assets or
decrease in costs. Unless otherwise stated, such a Performance Goal
need not be based upon an increase or positive result under a
particular business criterion and could include, for example,
maintaining the status quo or limiting economic losses (measured, in
each case, by reference to specific business criteria). In interpreting
Plan provisions applicable to Performance Goals and Performance Awards,
it is the intent of the Plan to conform with the standards of Section
162(m) of the Code and Treasury Regulations (S) 1.162-27(e)(2)(i), and
the Committee in establishing such goals and interpreting the Plan
shall be guided by such provisions. Prior to the payment of any
compensation based on the achievement of Performance Goals, the
Committee must certify in writing that applicable Performance Goals and
any of the material terms thereof were, in fact, satisfied. Subject to
the foregoing provisions, the terms, conditions and limitations
applicable to any Performance Awards made pursuant to this Plan shall
be determined by the Committee.
(b) Notwithstanding anything to the contrary contained in this Plan, the
following limitations shall apply to any Employee Awards made hereunder:
(i) no Participant may be granted, during any one-year period,
Employee Awards consisting of Options or SARs that are exercisable for
more than 1,500,000 shares of Common Stock;
(ii) no Participant may be granted, during any one-year period,
Employee Awards consisting of shares of Common Stock or units
denominated in such shares (other than any Employee Awards consisting
of Options or SARs) covering or relating to more than 300,000 shares of
Common Stock (the limitation set forth in this clause (ii), together
with the limitation set forth in clause (i) above, being hereinafter
collectively referred to as the "Stock Based Awards Limitations"); and
(iii) no Participant may be granted Employee Awards consisting of
cash or in any other form permitted under this Plan (other than
Employee Awards consisting of Options or SARs or otherwise consisting
of shares of Common Stock or units denominated in such shares) in
respect of any one-year period having a value determined on the date of
grant in excess of $5,000,000.
(c) Prior to the Amendment Effective Date, certain awards consisting of
shares of GM Class E Common Stock or units denominated in such shares (the
"Existing Stock Awards") have been made to Employees under the Existing
Plan as in effect from time to time. As of the Amendment Effective Date,
each Existing Stock Award shall be adjusted so that such award shall
consist of or relate to a number of shares of Common Stock equal to the
number of shares of GM Class E Common Stock that are the subject of such
Existing Stock Award immediately prior to such date, without any alteration
or enlargement of the rights of the holders thereof. Notwithstanding
anything to the contrary contained in this Plan, all Existing Stock Awards
that are subject to the restrictions and other provisions relating to
competition by participants and related matters that are set forth in
Section 10 of the Existing Plan (the "Noncompetition Provisions") shall
continue to be subject to the Noncompetition Provisions after the Amendment
Effective Date, as fully and to the same extent as if Section 10 of the
Existing Plan were set forth herein in its entirety. The Noncompetition
Provisions shall apply to all Existing Awards, but shall not apply to any
Awards made after the Amendment Effective Date unless otherwise determined
by the Committee.
9. Director Awards. Each Nonemployee Director of the Company shall be
granted Director Awards in accordance with this paragraph 9 and subject to the
applicable terms, conditions and limitations set forth in this Plan and the
applicable Director Award Agreement. Notwithstanding anything to the contrary
contained herein, Director Awards shall not be made in any year in which a
sufficient number of shares of Common Stock are not available to make such
Awards under this Plan.
(a) Director Options. On the Amendment Effective Date, each Nonemployee
Director shall be automatically awarded a Director Option that provides for
the purchase of 1,500 shares of Common Stock. In addition, on each Annual
Director Award Date, each Nonemployee Director shall automatically be
granted a Director Option that provides for the purchase of 1,500 shares of
Common Stock. In the event that a Nonemployee Director is elected after the
Amendment Effective Date otherwise than by election at
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<PAGE>
an annual meeting of stockholders of the Company, on the date of his or her
election, such Nonemployee Director shall automatically be granted a
Director Option that provides for the purchase of a number of shares of
Common Stock (rounded up to the nearest whole number) equal to the product
of (i) 1,500 and (ii) a fraction the numerator of which is the number of
days between the election of such Nonemployee Director and the next
scheduled Annual Director Award Date (or, if no such date has been
scheduled, the first anniversary of the immediately preceding Annual
Director Award Date) and the denominator of which is 365. Each Director
Option shall have a term of ten years from the date of grant,
notwithstanding any earlier termination of the status of the holder as a
Nonemployee Director. The purchase price of each share of Common Stock
subject to a Director Option shall be equal to the Fair Market Value of the
Common Stock on the date of grant. All Director Options shall vest and
become exercisable in increments of one-third of the total number of shares
of Common Stock that are subject thereto (rounded up to the nearest whole
number) on the first and second anniversaries of the date of grant and of
all remaining shares of Common Stock that are subject thereto on the third
anniversary of the date of grant. All unvested Director Options shall be
forfeited if the Nonemployee Director resigns as a Director without the
consent of a majority of the other Directors.
In addition to the Director Options automatically awarded pursuant to the
immediately preceding paragraph, a Nonemployee Director may make an annual
election to receive, in lieu of all or any portion of the Director's fees
he would otherwise be entitled to receive in cash during the next year
(including both annual retainer and meeting fees), Director Options that
provide for the purchase of a number of shares of Common Stock (rounded up
to the nearest whole number) equal to the product of (x) three times (y) a
fraction the numerator of which is equal to the dollar amount of fees the
Nonemployee Director elects to forego in the next year in exchange for
Director Options and the denominator of which is equal to the Fair Market
Value of the Common Stock on the date of the election. Each annual election
made by a Nonemployee Director pursuant to this paragraph 9(a)(i) shall
take the form of a written document signed by such Nonemployee Director and
filed with the Secretary of the Company, (ii) shall designate the dollar
amount of the fees the Nonemployee Director elects to forego in the next
year in exchange for Director Options and (iii) to extent provided by the
Committee in order to ensure that the Award of the Director Options is
exempt from Section 16 by virtue of Rule 16b-3, shall be irrevocable and
shall be made at least six months prior to the date as of which such Award
of Director Options is to be effective. An Award of Director Options at the
election of a Nonemployee Director shall be effective on the next Annual
Director Award Date.
Any Award of Director Options shall be embodied in a Director Award
Agreement, which shall contain the terms, conditions and limitations set
forth above and shall be signed by the Participant to whom the Director
Options are granted and by an Authorized Officer for and on behalf of the
Company.
(b) Director Restricted Stock. On the Amendment Effective Date, each
Nonemployee Director shall automatically be awarded 500 shares of Director
Restricted Stock. In addition, on each Annual Director Award Date, each
Nonemployee Director shall automatically be granted 500 shares of Director
Restricted Stock. In the event that a Nonemployee Director is elected after
the Amendment Effective Date otherwise than by election at an annual
meeting of stockholders of the Company, on the date of his or her election,
such Nonemployee Director shall automatically be granted a number of shares
of Director Restricted Stock (rounded up to the nearest whole number) equal
to the product of (i) 500 and (ii) a fraction the numerator of which is the
number of days between the election of such Nonemployee Director and the
next scheduled Annual Director Award Date (or, if no such date has been
scheduled, the first anniversary of the immediately preceding Annual
Director Award Date) and the denominator of which is 365. Shares of
Director Restricted Stock awarded to a Nonemployee Director (i) shall vest
in increments of one-third of the total number of shares of Director
Restricted Stock (rounded up to the nearest whole number) that are the
subject of such Award on the first and second anniversaries of the date of
grant and all remaining shares of Director Restricted Stock that are the
subject of such Award on the third anniversary of the date of grant and
(ii) shall fully vest (to the extent not previously vested pursuant to
clause (i) above) upon a failure to reelect the Nonemployee Director as
Director, the death of the Director or the resignation of the Director by
7
<PAGE>
reason of Disability or at the request of a majority of the other
Directors. All unvested shares of Director Restricted Stock granted to a
Nonemployee Director shall be forfeited if the Nonemployee Director resigns
as a Director without the consent of a majority of the other Directors.
In addition to the Director Restricted Stock automatically awarded
pursuant to the immediately preceding paragraph, a Nonemployee Director may
make an annual election to receive, in lieu of all or any portion of the
Director's fees he would otherwise be entitled to receive in cash during
the next year (including both annual retainer and meeting fees), a number
of shares of Director Restricted Stock (rounded up to the nearest whole
number) having a Fair Market Value equal to 110% of a fraction the
numerator of which is equal to the dollar amount of fees the Nonemployee
Director elects to forego in the next year in exchange for Director
Restricted Stock and the denominator of which is equal to the Fair Market
Value of the Common Stock on the date of the election. Each annual election
made by a Nonemployee Director pursuant to this paragraph 9(b)(i) shall
take the form of a written document signed by such Nonemployee Director and
filed with the Secretary of the Company, (ii) shall designate the dollar
amount of the fees the Nonemployee Director elects to forego in the next
year in exchange for Director Restricted Stock and (iii) to the extent
provided by the Committee in order to ensure that the Award of the Director
Restricted Stock is exempt from Section 16 by virtue of Rule 16b-3, shall
be irrevocable and shall be made at least six months prior to the date as
of which such Award of Director Restricted Stock is to be effective. An
Award of Director Restricted Stock at the election of a Nonemployee
Director shall be effective on the next Annual Director Award Date.
Any Award of Director Restricted Stock shall be embodied in a Director
Award Agreement, which shall contain the terms, conditions and limitations
set forth above and shall be signed by the Participant to whom the Director
Restricted Stock is granted and by an Authorized Officer for and on behalf
of the Company.
10. Payment of Awards.
(a) General. Payment of Employee Awards may be made in the form of cash
or Common Stock, or a combination thereof, and may include such
restrictions as the Committee shall determine, including, in the case of
Common Stock, restrictions on transfer and forfeiture provisions. If
payment of an Employee Award is made in the form of Restricted Stock, the
Employee Award Agreement relating to such shares shall specify whether they
are to be issued at the beginning or end of the Restriction Period. In the
event that shares of Restricted Stock are to be issued at the beginning of
the Restriction Period, the certificates evidencing such shares (to the
extent that such shares are so evidenced) shall contain appropriate legends
and restrictions that describe the terms and conditions of the restrictions
applicable thereto. In the event that shares of Restricted Stock are to be
issued at the end of the Restricted Period, the right to receive such
shares shall be evidenced by book entry registration or in such other
manner as the Committee may determine.
(b) Deferral. With the approval of the Committee, payments in respect of
Employee Awards may be deferred, either in the form of installments or a
future lump sum payment. The Committee may permit selected Participants to
elect to defer payments of some or all types of Employee Awards in
accordance with procedures established by the Committee. Any deferred
payment of an Employee Award, whether elected by the Participant or
specified by the Employee Award Agreement or by the Committee, may be
forfeited if and to the extent that the Employee Award Agreement so
provides.
(c) Dividends and Interest. Rights to dividends or Dividend Equivalents
may be extended to and made part of any Employee Award consisting of shares
of Common Stock or units denominated in shares of Common Stock, subject to
such terms, conditions and restrictions as the Committee may establish. The
Committee may also establish rules and procedures for the crediting of
interest on deferred cash payments and Dividend Equivalents for Employee
Awards consisting of shares of Common Stock or units denominated in shares
of Common Stock.
8
<PAGE>
(d) Substitution of Awards. At the discretion of the Committee, a
Participant who is an Employee may be offered an election to substitute an
Employee Award for another Employee Award or Employee Awards of the same or
different type.
11. Stock Option Exercise. The price at which shares of Common Stock may be
purchased under an Option shall be paid in full at the time of exercise in
cash or, if elected by the optionee, the optionee may purchase such shares by
means of tendering Common Stock or surrendering another Award, including
Restricted Stock or Director Restricted Stock, valued at Fair Market Value on
the date of exercise, or any combination thereof. The Committee shall
determine acceptable methods for Participants who are Employees to tender
Common Stock or other Employee Awards; provided that any Common Stock that is
or was the subject of an Employee Award may be so tendered only if it has been
held by the Participant for six months. The Committee may provide for
procedures to permit the exercise or purchase of such Awards by use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Employee Award. Unless otherwise provided in the applicable Award Agreement,
in the event shares of Restricted Stock are tendered as consideration for the
exercise of an Option, a number of the shares issued upon the exercise of the
Option, equal to the number of shares of Restricted Stock or Director
Restricted Stock used as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock or Director Restricted Stock so submitted
as well as any additional restrictions that may be imposed by the Committee.
12. Tax Withholding. The Company shall have the right to deduct applicable
taxes from any Employee Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate
amount of cash or number of shares of Common Stock or a combination thereof
for payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Employee Award with respect to which withholding is
required. If shares of Common Stock are used to satisfy tax withholding, such
shares shall be valued based on the Fair Market Value when the tax withholding
is required to be made. The Committee may provide for loans, on either a short
term or demand basis, from the Company to a Participant who is an Employee to
permit the payment of taxes required by law.
13. Amendment, Modification, Suspension or Termination. The Board may amend,
modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose
permitted by law, except that (i) no amendment or alteration that would
adversely affect the rights of any Participant under any Award previously
granted to such Participant shall be made without the consent of such
Participant, (ii) no amendment or alteration shall be effective prior to
approval by the stockholders of the Company to the extent such approval is
then required pursuant to Rule 16b-3 in order to preserve the applicability of
any exemption provided by such rule to any Award then outstanding (unless the
holder of such Award consents) or to the extent stockholder approval is
otherwise required by applicable legal requirements and (iii) the Plan shall
not be amended more than once every six months to the extent such limitation
is required by Rule 16b-3(c)(2)(ii) (or any successor provision) under the
Exchange Act as then in effect.
14. Assignability. Unless otherwise determined by the Committee and provided
in the Award Agreement, no Award or any other benefit under this Plan
constituting a derivative security within the meaning of Rule 16a-1(c) under
the Exchange Act shall be assignable or otherwise transferable except by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder. The Committee may prescribe and
include in applicable Award Agreements other restrictions on transfer. Any
attempted assignment of an Award or any other benefit under this Plan in
violation of this paragraph 14 shall be null and void.
15. Adjustments.
(a) The existence of outstanding Awards shall not affect in any manner
the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations
9
<PAGE>
or other changes in the capital stock of the Company or its business or any
merger or consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stock (whether or not such issue is prior to,
on a parity with or junior to the Common Stock) or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding of any
kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock, declaration of a dividend payable in shares of
Common Stock or other stock split, then (i) the number of shares of Common
Stock reserved under this Plan, (ii) the number of shares of Common Stock
covered by outstanding Awards in the form of Common Stock or units
denominated in Common Stock, (iii) the exercise or other price in respect
of such Awards, (iv) the appropriate Fair Market Value and other price
determinations for such Awards, (v) the number of shares of Common Stock
covered by Director Options automatically granted pursuant to paragraph
9(a) hereof, (vi) the number of shares of Director Restricted Stock
automatically granted pursuant to paragraph 9(b) hereof and (vii) the Stock
Based Awards Limitations shall each be proportionately adjusted by the
Board to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any
consolidation or merger of the Company with another corporation or entity,
the adoption by the Company of any plan of exchange affecting the Common
Stock or any distribution to holders of Common Stock of securities or
property (other than normal cash dividends or dividends payable in Common
Stock), the Board shall make appropriate adjustments to (i) the number of
shares of Common Stock covered by Awards in the form of Common Stock or
units denominated in Common Stock, (ii) the exercise or other price in
respect of such Awards, (iii) the appropriate Fair Market Value and other
price determinations for such Awards, (iv) the number of shares of Common
Stock covered by Director Options automatically granted pursuant to
paragraph 9(a) hereof, (v) the number of shares of Director Restricted
Stock automatically granted pursuant to paragraph 9(b) hereof and (vi) the
Stock Based Awards Limitations to give effect to such transaction shall
each be proportionately adjusted by the Board to reflect such transaction;
provided that such adjustments shall only be such as are necessary to
maintain the proportionate interest of the holders of the Awards and
preserve, without exceeding, the value of such Awards. In the event of a
corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board shall be authorized to
issue or assume Awards by means of substitution of new Awards, as
appropriate, for previously issued Awards or an assumption of previously
issued Awards as part of such adjustment.
16. Restrictions. No Common Stock or other form of payment shall be issued
with respect to any Award unless the Company shall be satisfied based on the
advice of its counsel that such issuance will be in compliance with applicable
federal and state securities laws. It is the intent of the Company that this
Plan comply with Rule 16b-3 with respect to persons subject to Section 16 of
the Exchange Act unless otherwise provided herein or in an Award Agreement,
that any ambiguities or inconsistencies in the construction of this Plan be
interpreted to give effect to such intention, and that if any provision of
this Plan is found not to be in compliance with Rule 16b-3, such provision
shall be null and void to the extent required to permit this Plan to comply
with Rule 16b-3. Certificates evidencing shares of Common Stock certificates
delivered under this Plan (to the extent that such shares are so evidenced)
may be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities
exchange or transaction reporting system upon which the Common Stock is then
listed or to which it is admitted for quotation and any applicable federal or
state securities law. The Committee may cause a legend or legends to be placed
upon such certificates (if any) to make appropriate reference to such
restrictions.
17. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash,
Common Stock or rights thereto under this Plan, any such accounts shall be
used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be
a trustee of any cash, Common Stock or rights thereto to be granted under this
Plan. Any liability or obligation of the Company to any
10
<PAGE>
Participant with respect to an Award of cash, Common Stock or rights thereto
under this Plan shall be based solely upon any contractual obligations that
may be created by this Plan and any Award Agreement, and no such liability or
obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company nor the Board
nor the Committee shall be required to give any security or bond for the
performance of any obligation that may be created by this Plan.
18. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions
of the Code or the securities laws of the United States, shall be governed by
and construed in accordance with the laws of the State of Delaware.
19. Effectiveness. The Existing Plan shall be amended and restated in its
entirety as set forth herein as of the earliest date (the "Amendment Effective
Date") upon which both the Reincorporation and the Split-Off (collectively,
the "Transactions") have been consummated; provided, however, that (i) the
amendment and restatement of the Existing Plan and the assumption of the
Existing Plan by the Company as contemplated hereby are expressly conditioned
upon the approval of this Plan by the Board of Directors and the Executive
Compensation Committee of General Motors and the ratification and approval of
this Plan by the Board (the "Corporate Approvals Condition") and (ii) insofar
as this Plan relates to Employees and Employee Awards, the amendment and
restatement of the Existing Plan and the assumption of the Existing Plan by
the Company as contemplated hereby are expressly conditioned upon the
ratification and approval of this Plan by (a) a majority of the voting power
of the holders of common stock of General Motors of all classes, voting
together as a single class in accordance with their respective voting rights
and (b) a majority of the holders of Class E Common Stock, voting together as
a separate class (the "Stockholder Approval Condition"). If the Transactions
are not consummated prior to December 31, 1996 or if at the date upon which
the Transactions are consummated the Corporate Approvals Condition shall not
have been satisfied, the Existing Plan shall not be amended and restated as
set forth herein and the awards granted under the Existing Plan as then in
effect shall not be affected and shall continue in full force and effect in
accordance with the Existing Plan as then in effect and any award agreements
hereunder. If the Transactions are consummated prior to December 31, 1996 but
at the date upon which the Transactions are consummated the Stockholder
Approval Condition shall not have been satisfied, (a) the Existing Plan shall
not be amended and restated as set forth herein and all awards granted under
the Existing Plan as then in effect shall not be affected and shall continue
in full force and effect in accordance with the Existing Plan as then in
effect (or as the same may be amended from time to time) and any award
agreements hereunder and (b) a new plan (the "Separate Director Stock
Incentive Plan") shall be deemed to have been adopted by the Company and
approved by General Motors as the sole stockholder of the Company, which plan
shall be referred to as the "1996 Nonemployee Director Stock Incentive Plan"
and shall include all of the terms and conditions set forth herein that relate
to Directors and Director Awards but not the terms and conditions that relate
to Employees and Employee Awards (it being understood that the Board shall be
authorized to cause the Separate Director Stock Incentive Plan to be embodied
in a separate document by eliminating all references to Employees and Employee
Awards contained herein and making other appropriate changes to the text
hereof, none of which shall result in any alteration or enlargement of the
rights granted to Directors hereunder).
11
<PAGE>
EXHIBIT 10(m)
SEPARATION AGREEMENT,
DATED AS OF JUNE 7, 1996,
BETWEEN
ELECTRONIC DATA SYSTEMS CORPORATION
AND
GENERAL MOTORS CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Definitions........................................................................ 1
-----------
2. Certain Intercompany Matters....................................................... 11
----------------------------
2.1 Capital Stock Matters........................................................ 11
2.2 Insurance Matters............................................................ 12
2.3 Indemnification of EDS Indemnified Parties................................... 17
2.4 Leases of Real Property...................................................... 19
2.5 Employee Benefit Matters..................................................... 19
2.6 Registration Rights Agreement................................................ 22
2.7 Transfer Agreement........................................................... 23
2.8 Publicity.................................................................... 23
2.9 Further Assurances........................................................... 23
3. GM-PBGC Agreement Matters.......................................................... 23
-------------------------
3.1 GM Representations and Warranties............................................ 23
3.2 GM Covenants................................................................. 24
4. Confidentiality.................................................................... 26
---------------
4.1 Treatment of Confidential Information........................................ 26
4.2 Legally Required Disclosure of Confidential Information...................... 27
5. Continuing Information Support..................................................... 28
------------------------------
5.1 Access to Information........................................................ 28
5.2 Production of Witnesses...................................................... 28
5.3 Reimbursement................................................................ 28
5.4 Retention of Records......................................................... 29
6. Expenses........................................................................... 29
--------
6.1 General...................................................................... 29
6.2 Fees of Professional Advisors................................................ 29
6.3 Costs of Preparation and Distribution of Consent Solicitation and Form S-4... 29
6.4 Certain Costs Relating to EDS Common Stock................................... 30
6.5 Annual Fee for Listing of Stock.............................................. 30
6.6 Allowance.................................................................... 30
7. Covenant To Preserve Tax-Free Status Of Split-Off.................................. 30
-------------------------------------------------
7.1 Representations and Warranties............................................... 30
7.2 Restrictions on EDS.......................................................... 31
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
7.3 Cooperation and Other Covenants.............................................. 34
7.4 Indemnification for Tax Liabilities.......................................... 35
7.5 Procedure for Indemnification for Tax Liabilities............................ 35
7.6 Arbitration.................................................................. 36
7.7 Exclusive Remedies........................................................... 37
8. Indemnification.................................................................... 37
---------------
8.1 Indemnification by EDS....................................................... 37
8.2 Indemnification by GM........................................................ 39
8.3 Other Liabilities............................................................ 40
8.4 Tax Effects of Indemnification............................................... 41
8.5 Effect of Insurance Upon Indemnification..................................... 41
8.6 Procedure for Indemnification Involving Third-Party Claims................... 42
8.7 Procedure for Indemnification Not Involving Third-Party Claims............... 43
8.8 Exclusive Remedies........................................................... 43
9. Miscellaneous...................................................................... 44
-------------
9.1 Dispute Resolution........................................................... 44
9.2 Survival..................................................................... 44
9.3 Complete Agreement........................................................... 44
9.4 Authority.................................................................... 44
9.5 Governing Law................................................................ 44
9.6 Consent to Jurisdiction...................................................... 44
9.7 Notices...................................................................... 45
9.8 Amendment and Modification................................................... 46
9.9 Binding Effect; Assignment................................................... 46
9.10 Third Party Beneficiaries.................................................... 46
9.11 Counterparts................................................................. 46
9.12 Waiver....................................................................... 46
9.13 Severability................................................................. 47
9.14 Remedies..................................................................... 47
9.15 Performance.................................................................. 47
9.16 References; Construction..................................................... 47
</TABLE>
ii
<PAGE>
Exhibits
- --------
Exhibit A Form of Canadian Transfer Agreement
Exhibit B CPR Rules
Exhibit C GM Indemnification Bylaw
Exhibit D Form of Release and Covenant Not to Sue (R2)
Exhibit E Form of Release and Covenant Not to Sue (R3)
Exhibit F Professional Advisor Fees to be Paid by EDS
Exhibit G Professional Advisor Fees to be Paid by GM
iii
<PAGE>
SEPARATION AGREEMENT
--------------------
THIS SEPARATION AGREEMENT, dated as of June 7 , 1996, is between
------ ---
Electronic Data Systems Corporation, a Delaware corporation, and General Motors
Corporation, a Delaware corporation. Capitalized terms used and not otherwise
defined herein are defined in Section 1 below.
RECITALS
--------
WHEREAS, as part of the Split-Off of EDS from GM, each outstanding share
of Class E Stock will be converted into one share of EDS Common Stock;
WHEREAS, the conversion of all outstanding shares of Class E Stock into
EDS Common Stock on a one-for-one basis will be accomplished through a merger of
GM with its indirect wholly owned subsidiary, GM Mergeco Corporation, and it is
expected that such merger will be consummated immediately after the execution
and delivery of this Separation Agreement;
WHEREAS, immediately prior to the execution and delivery of this
Separation Agreement, (i) Electronic Data Systems Intermediate Corporation, a
Delaware corporation, was merged with and into Electronic Data Systems Holding
Corporation, (ii) Electronic Data Systems Corporation, a Texas corporation, was
merged with and into Electronic Data Systems Holding Corporation, and (iii)
Electronic Data Systems Holding Corporation was renamed "Electronic Data Systems
Corporation";
WHEREAS, GM has received from the IRS a ruling, dated December 27, 1995,
to the effect that the Split-Off would be tax-free to GM and its stockholders
for United States federal income tax purposes and the parties hereto wish to
preserve the tax-free status of the Split-Off; and
WHEREAS, the parties hereto have determined that in order to accomplish
the objectives of the Split-Off and to facilitate the consummation thereof, it
is necessary and desirable to restructure certain intercompany relationships,
allocate certain liabilities and provide mutual indemnification, all as set
forth herein;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions, hereinafter set forth, the parties do hereby agree as follows:
1. DEFINITIONS.
-----------
ADR: Center for Public Resources, Alternative Dispute Resolution
section.
AFFILIATE: an EDS Affiliate or a GM Affiliate, as the case may be.
1
<PAGE>
BUSINESS: the EDS Business or the GM Business, as the case may be.
BUSINESS DAY: any day other than a Saturday, a Sunday, or a day on which
banking institutions located in the State of New York are authorized or
obligated by law or executive order to close.
CANADIAN TRANSFER AGREEMENT: the Transfer Agreement, dated as of the
date hereof, by and between GM-Canada and EDS-Canada.
CLASS E STOCK: the Class E Common Stock, par value $0.10 per share, of
GM.
CODE: the Internal Revenue Code of 1986, as amended.
CONFIDENTIAL INFORMATION: as to EDS, (a) any information concerning GM,
the GM Business or any GM Affiliate that was obtained by EDS or an EDS Affiliate
prior to the Effective Time, (b) any information concerning GM, the GM Business
or any GM Affiliate that is obtained by EDS under Section 5.1, or (c) any other
information obtained by, or furnished to, EDS or any EDS Affiliate that (i) is
marked "Confidential" or "Secret" by GM or any GM Affiliate or (ii) GM or any GM
Affiliate has notified EDS or any EDS Affiliate in writing is confidential or
secret; provided, however, that "Confidential Information" as to EDS shall not
include any information furnished to EDS or any EDS Affiliate by GM or any GM
Affiliate, pursuant to or in connection with any Service Agreement; as to GM,
(a) any information concerning EDS, the EDS Business or any EDS Affiliate that
was obtained by GM or a GM Affiliate prior to the Effective Time, (b) any
information concerning EDS, the EDS Business or any EDS Affiliate that is
obtained by GM under Section 5.1, or (c) any other information obtained by, or
furnished to, GM or any GM Affiliate that (i) is marked "Confidential" or
"Secret" by EDS or any EDS Affiliate or (ii) EDS or any EDS Affiliate has
notified GM or any GM Affiliate in writing is confidential or secret; provided,
however, that "Confidential Information" as to GM shall not include any
information furnished to GM or any GM Affiliate by EDS or any EDS Affiliate,
pursuant to or in connection with any Service Agreement.
CONTROL: the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
COOPERATION AGREEMENT: that certain Agreement made March 12, 1995 by and
among United States Trust Company of New York, as trustee and investment manager
of a trust established under the GM Hourly Pension Plan, Bankers Trust Company,
as trustee and investment manager of a trust established under the General
Motors Retirement Program for Salaried Employees, and GM.
CPR RULES: the Rules for Non-Administered Arbitration of Business
Disputes promulgated by the Center for Public Resources attached hereto as
Exhibit B.
2
<PAGE>
D & O INSURANCE: directors' and officers' liability insurance.
DGCL: the General Corporation Law of the State of Delaware, as in effect
on the date hereof and as the same may hereafter be amended from time to time.
DELAWARE SUPERIOR COURT: the Superior Court of the State of Delaware.
DISPUTE NOTICE: written notice of any dispute between GM and EDS arising
out of or relating to this Separation Agreement, which shall set forth, in
reasonable detail, the nature of the dispute.
E TEAM: the team consisting of three officers of EDS (i.e., Lester M.
Alberthal, Jr., Gary J. Fernandes and Joseph M. Grant) that was appointed by the
Board of Directors of GM for the purpose of negotiating the terms of the Split-
Off from the perspective of the holders of Class E Common Stock pursuant to the
Negotiation Process.
E TEAM PARTY: the members of the E Team and all officers and employees of
EDS (or any predecessor thereof) or any EDS Affiliate (or any predecessor
thereof) who provided substantial assistance to the E Team in discharging its
responsibilities in connection with the Negotiation Process.
EDS: Electronic Data Systems Corporation, a Delaware corporation.
EDS AFFILIATE: a Person that, after giving effect to the Split-Off,
directly or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with EDS; provided, however, that for
purposes of this Separation Agreement none of the GM Hourly Pension Plan, any
trust thereunder, or any trustee or other fiduciary thereof shall be deemed an
EDS Affiliate.
EDS BOARD NOMINEE: the individuals who are not employees of EDS and who
have been elected as directors of EDS, effective as of immediately following the
Effective Time, as identified in the Form S-4.
EDS BUSINESS: any business or operations of EDS or any EDS Affiliate.
EDS-CANADA: E.D.S. of Canada, Ltd., an Ontario corporation and a wholly
owned subsidiary of EDS.
EDS CAPITAL STOCK: all classes or series of capital stock of EDS.
EDS COMMON STOCK: the Common Stock, par value $0.01 per share, of EDS.
EDS CONTROLLED GROUP: a group of corporations or other entities including
EDS treated as if they were a single employer pursuant to section 414(b) or (c)
of the Code.
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EDS COVERED PERSON: EDS, any EDS Affiliate, any corporation to which EDS
is a successor and each individual who served at any time within the six-year
period prior to the Effective Time as a director, director nominee, officer or
other covered employee of EDS, any EDS Affiliate or any corporation to which EDS
is a successor, in each case to the extent covered by a particular Insurance
Policy.
EDS DIRECTOR: all directors of EDS from and after the reconstitution of
the EDS board of directors on March 11, 1996 and through the Effective Time.
EDS DISCLOSURE PORTIONS: the material set forth in the Form S-4 under the
following captions: "Risk Factors Regarding EDS after the Split-Off," "Special
Factors -- Background of the Split-Off" (only with respect to discussion of
actions taken by the E Team, the management of EDS or EDS), "Special Factors --
Fairness Opinions" (only with respect to discussion of actions taken, consent to
actions taken, and information provided to the financial advisors, by the E
Team, the management of EDS or EDS), "The Split-Off-- Stock Exchange Listings
for EDS Common Stock," "Plans and Proposals of EDS," "Recent Developments --
EDS," "EDS Unaudited Pro Forma Consolidated Capitalization," "EDS Unaudited Pro
Forma Condensed Consolidated Financial Statements," "EDS Selected Consolidated
Financial Information," "EDS Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business of EDS," "EDS Management and
Executive Compensation," "EDS Capital Stock," any summaries in the Form S-4 of
the information set forth in such sections, and Part II - Information Not
Required in Prospectus (provided, that with respect to Item 21, "EDS Disclosure
Portions" includes the list of exhibits and financial statement schedules
contained in the Form S-4, but not the exhibits, financial statement schedules
or appendices furnished to the SEC pursuant to Item 21).
EDS INDEMNIFIED PARTIES: the following persons, to the extent that they
took, or omitted to take, any action in the respective capacities indicated
herein: (i) an E Team Party, (ii) an EDS Director, or (iii) an EDS Board
Nominee.
EDS QUALIFIED PLAN: the EDS Retirement Plan.
EDS RELEASEE: as defined in the GM-PBGC Agreement.
EDS TRANSFER AGENT: The Bank of New York, as the transfer agent for the
EDS Common Stock.
EDS TRANSFEREE: as defined in the GM-PBGC Agreement.
EFFECTIVE TIME: the date and time at which the Split-Off becomes
effective.
ENVIRONMENTAL LAWS: all federal, state, local and foreign laws and
regulations relating to pollution or protection of human health, safety or the
environment, including, without limitation, laws and regulations relating to
emissions, discharges, releases, or threatened releases of Materials
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of Environmental Concern, or otherwise to the generation, storage, disposal,
transport, or handling of Materials of Environmental Concern.
ERISA: the Employee Retirement Income Security Act of 1974, as amended,
29 U.S.C. (S) 1001, et seq., and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect from time to
time.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended, together
with the rules and regulations promulgated thereunder.
EXCHANGE AGENT: The Bank of New York, as exchange agent for the exchange
of certificates representing shares of EDS Common Stock for certificates
representing shares of Class E Stock following consummation of the Split-Off.
FORM S-4: the Registration Statement on Form S-4 filed with the SEC by
EDS on April 16 , 1996 (Registration No. 333-02543), as amended.
GM: General Motors Corporation, a Delaware corporation.
GM AFFILIATE: a Person that, after giving effect to the Split-Off,
directly or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with GM; provided, however, that for
purposes of this Separation Agreement none of the GM Hourly Pension Plan, any
trust thereunder, or any trustee or other fiduciary thereof shall be deemed a GM
Affiliate.
GMAC MORTGAGE: GMAC Mortgage Corporation, a Michigan corporation.
GMAC MORTGAGE QUALIFIED PLANS: the GMAC Mortgage Corporation Savings
Incentive Plan and the Employees Retirement Plan for GMAC Mortgage Corporation.
GM BUSINESS: any business or operations of GM or any GM Affiliates.
GM-CANADA: General Motors of Canada Limited, a Canada corporation.
GM CONTROLLED GROUP: a group of corporations or other entities including
GM treated as if they were a single employer pursuant to section 414(b) or (c)
of the Code.
GM DISCLOSURE PORTIONS: the material set forth in the Form S-4 under the
following captions: "Incorporation of Certain Documents by Reference," "Risk
Factors Regarding General Motors After the Split-Off," "Risk Factors Regarding
Non-Consummation of the Split-Off," "Special Factors -- Alternatives to the
Split-Off," "Special Factors -- Background of the Split-Off" (except for
discussion of actions taken by the E Team, the Board of Directors of EDS or
EDS), "Special Factors -- Fairness Opinions" (only with respect to discussion of
actions taken, consent to actions taken, or information provided to the
financial advisors, by the GM Team, the Board of Directors
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of GM (or any committee thereof), the management of GM or GM), "Special Factors
- -- Recommendations of the Capital Stock Committee and the GM Board; Fairness of
the Transactions," "Special Factors -- Requisite Vote for the Transactions,"
"Special Factors -- Certain U.S. Federal Income Tax Considerations," "Special
Factors -- GM-PBGC Agreement," "Special Factors -- Certain Litigation," "The
Split-Off -- General," "The Split-Off -- Merger Agreement," "The Split-Off -- No
Appraisal Rights," "The Split-Off -- Certain U.S. Federal Income Tax
Considerations," "Recent Developments -- GM," "General Motors Unaudited Pro
Forma Condensed Consolidated Financial Statements," "Class E Common Stock,"
"Solicitation of Written Consent of General Motors Common Stockholders,"
"Security Ownership of Certain Beneficial Owners and Management of General
Motors and EDS," and any summaries in the Form S-4 of the information set forth
in such sections.
GM-EDS CONTRACT: any written contract, agreement or understanding between
GM or any GM Affiliate and EDS or any EDS Affiliate, including without
limitation the Service Agreements, but excluding this Separation Agreement.
GM HOURLY PENSION PLAN: the General Motors Corporation Hourly-Rate
Employees Pension Plan.
GM INDEMNIFICATION BYLAW: Article V of the By-Laws of GM, as in effect
on the date hereof, a true and correct copy of which is attached hereto as
Exhibit C.
GM-PBGC AGREEMENT: the Agreement made as of March 3, 1995 by and between
GM and the PBGC, as amended by the GM-PBGC Agreement Amendment.
GM-PBGC AGREEMENT AMENDMENT: the First Amendments to Agreement Made as
of March 3, 1995, By and Between General Motors Corporation and the Pension
Benefit Guaranty Corporation.
GM-PBGC ESCROW AGENT: Bankers Trust Company, a New York banking
corporation, as the escrow agent under the GM-PBGC Escrow Agreement, selected by
GM and the PBGC pursuant to section 9(d)(v) of the GM-PBGC Agreement.
GM-PBGC ESCROW AGREEMENT: the Escrow Agreement made as of March 5, 1996
by and among GM, the PBGC and the GM-PBGC Escrow Agent.
GM PENSION LIABILITY: as defined in the GM-PBGC Agreement.
GM PENSION PLANS: as defined in the GM-PBGC Agreement.
GM QUALIFIED PLANS: the GM Retirement Program for Salaried Employees and
the Saturn Personal Choices Retirement Plan.
GM TRANSFER AGENT: Boston EquiServe, L.P., as the transfer agent for the
Class E Stock.
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HUGHES: Hughes Electronics Corporation, a Delaware corporation.
HOURLY PLAN TRUSTEE: either United States Trust Company of New York or
U.S. Trust Company of California, N.A., in either of their capacities as trustee
of a trust established under the GM Hourly Pension Plan.
HUGHES QUALIFIED PLANS: the Hughes Non-Bargaining Retirement Plan, the
Hughes Subsidiary Retirement Plan, the Hughes Salaried Employees Thrift and
Savings Plan and the Hughes Thrift and Savings Plan.
INDEMNIFYING PARTY: a Person that is obligated to provide
indemnification under this Separation Agreement (other than pursuant to Section
2.3).
INDEMNITEE: a Person that is entitled to seek indemnification under this
Separation Agreement (other than pursuant to Section 2.3).
INDEMNITY PAYMENT: an amount that an Indemnifying Party is required to
pay to an Indemnitee under this Separation Agreement.
INSURANCE POLICIES: collectively, each insurance policy or other form of
insurance coverage maintained or provided by GM or any of its Affiliates for the
benefit of EDS, any corporation to which EDS is a successor, or any of EDS' or
such predecessor corporation's Affiliates, directors, director nominees,
officers or employees prior to or at the Effective Time, together with all
amendments, endorsements and waivers thereto or additional insurance policies or
other forms of insurance required by Section 2.2 to be maintained or provided by
GM.
INSURANCE PROCEEDS: the payment received by an insured from an insurance
carrier or paid by an insurance carrier on behalf of the insured, net of any
applicable premium adjustment and tax effect.
IRS: Internal Revenue Service of the U.S. Department of Treasury or any
successor agency.
JOINT DISCLOSURE PORTION: any material set forth in the Form S-4 that
does not constitute a part of an EDS Disclosure Portion or a GM Disclosure
Portion.
LOSSES: all losses, liabilities, claims, obligations, demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements, or fees, reasonable
attorneys' fees and court costs, of any nature or kind, and whether or not the
same would properly be reflected on a balance sheet, including, without
limitation, such losses relating to or arising in respect of Materials of
Environmental Concern and violations or purported violations of Environmental
Laws.
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MASTER SERVICE AGREEMENT: the Master Service Agreement dated as of the
date hereof by and between GM and EDS relating to the information technology
services to be provided to GM by EDS after the Effective Time.
MATERIALS OF ENVIRONMENTAL CONCERN: any pollutants, contaminants or
wastes, any toxic or hazardous substances or materials, or any petroleum or
petroleum products.
NEGOTIATION PERIOD: the period of 20 Business Days following the initial
meeting of the representatives of GM and EDS following the receipt of a Dispute
Notice.
NEGOTIATION PROCESS: the process by which the financial and other
essential terms of the Split-Off were negotiated, as approved by the Board of
Directors of GM on August 7, 1995.
NOTICE: any notice, request, claim, demand, or other communication under
this Separation Agreement.
PBGC: Pension Benefit Guaranty Corporation, a U.S. government
corporation established under section 4002 of ERISA.
PERSON: an individual, partnership, joint venture, corporation, trust,
unincorporated association, any other entity, or a government or any department
or agency or other unit thereof.
PROCEEDING: any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, in which
an EDS Indemnified Party was or is made or is threatened to be made a party or
is otherwise involved.
PROPOSED ACQUISITION TRANSACTION: a transaction or series of
transactions after the Effective Time as a result of which any Person or any
group of related Persons would acquire, or have the right to acquire, from one
or more holders of outstanding shares of EDS Capital Stock a number of shares of
EDS Capital Stock that would comprise more than 15% of (i) the value of all
outstanding shares of EDS Capital Stock as of the date of such transaction, or
in the case of a series of transactions, the date of the last transaction of
such series, or (ii) the number of the issued and outstanding shares of EDS
Common Stock as of the date of such transaction, or in the case of a series of
transactions, the date of the last transaction of such series.
REGISTRATION RIGHTS AGREEMENT: the Registration Rights Agreement,
entered into on March 12, 1995, by and between GM and the Hourly Plan Trustee.
RELEASES AND COVENANTS NOT TO SUE: the Releases and Covenants Not to Sue
executed by the PBGC and deposited with the GM-PBGC Escrow Agent pursuant to the
GM-PBGC Agreement and in the forms attached hereto as Exhibits D and E.
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REPRESENTATION DATE: any date on which EDS makes any representation (i)
to the IRS for the purpose of obtaining a Subsequent Split-Off Ruling or to
counsel selected by GM for the purpose of obtaining an opinion of counsel
described in the definition of Subsequent Split-Off Ruling, or (ii) to GM for
the purpose of any determination required to be made by GM pursuant to Section
7.2.
REPRESENTATIVE: with respect to any Person, any of such Person's
directors, officers, employees, agents, consultants, advisors, accountants or
attorneys.
RULING: the ruling dated December 27, 1995, issued by the IRS to GM in
connection with the Split-Off.
RULING REQUEST: the written request (including exhibits) submitted by GM
to the IRS dated August 30, 1995 seeking a ruling that the Split-Off would be
tax-free to GM and its stockholders, and all additional documents subsequently
submitted to the IRS in connection therewith.
SECURITIES ACT: the Securities Act of 1933, as amended, together with
the rules and regulations promulgated thereunder.
SEPARATE COUNSEL: as defined in Section 8.6(b).
SERVICE AGENT: for GM, The Corporation Trust Company, with offices on
the date hereof at 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801; and for EDS, The Prentice-Hall Corporation System, Inc., with
offices on the date hereof at 1013 Centre Road, Wilmington, County of New
Castle, Delaware 19805.
SERVICE AGREEMENTS: the Master Agreement, effective as of September 1,
1985 (the "Master Agreement"), by and between GM and EDS, the Master Service
Agreement, all service agreements and other vendor-customer agreements entered
pursuant to or in connection with either the Master Agreement or the Master
Service Agreement, and all other GM-EDS Contracts pursuant to which EDS has
provided or provides information technology or other services to GM.
SPECIAL INTER-COMPANY PAYMENT: as described in the Form S-4.
SPLIT-OFF: the proposed split-off of EDS from GM described in the Form
S-4.
SPLIT-OFF LOSSES: as defined in Section 2.3(g).
SUBSEQUENT EDS RULING REQUEST: a request by EDS after the Effective Time
for a private letter ruling from the IRS.
SUBSEQUENT SPLIT-OFF RULING: either (i) a ruling from the IRS or (ii) an
opinion of counsel selected by GM in its sole and absolute discretion, in either
case confirming, in form and substance satisfactory to GM, that no income, gain
or loss for United States federal income tax purposes will
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be recognized by GM, the stockholders or former stockholders of GM, or any GM
Affiliate with respect to the Split-Off as a consequence of the consummation of
a subsequent transaction.
SUBSIDIARY: with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries Controls or
owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body; provided, however, that for the purposes of this
Separation Agreement, neither EDS nor any of the Subsidiaries of EDS shall be
deemed to be Subsidiaries of GM or of any of the Subsidiaries of GM.
SUBTRUST LETTER AGREEMENT: that certain letter agreement, dated June 7,
1995, among the Hourly Plan Trustees and GM.
TAX: (i) any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Section 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on, minimum, estimated, or other
tax, assessment, or governmental charge of any kind whatsoever imposed by any
governmental authority, including any interest, penalty, or addition thereto,
whether disputed or not; (ii) liability for the payment of any amounts of the
type described in clause (i) above arising as a result of being (or having been)
a member of any group or being (or having been) included or required to be
included in any Tax Return related thereto; and (iii) liability for the payment
of any amounts of the type described in clause (i) above as a result of any
express or implied obligation to indemnify or otherwise assume or succeed to the
liability of any other Person.
TAX ALLOCATION AGREEMENTS: collectively, the Agreement for the
Allocation of United States Federal Income Taxes entered into effective as of
December 31, 1984, and the Agreement for the Allocation of United States
Federal, State and Local Income Taxes, both as amended and restated in the
Amended and Restated Agreement for the Allocation of United States Federal,
State and Local Income Taxes, dated as of April 2, 1996, by and between GM and
EDS.
TAX-FREE REORGANIZATION: a Proposed Acquisition Transaction that would
constitute a tax-free reorganization under the Code with respect to EDS, its
Subsidiaries and its stockholders, with respect to which at least 50% of the
consideration to be received in exchange for the acquired corporation
constitutes property described in Section 354(a)(1) of the Code.
TAX-FREE STATUS OF THE SPLIT-OFF: the nonrecognition of taxable gain or
loss for United States federal income tax purposes to GM or GM's stockholders,
including holders of Class E Stock, in connection with the Split-Off.
TAX-RELATED LOSSES: (i) all federal, state and local taxes (including
interest and penalties thereon) imposed pursuant to any settlement, final
determination, judgment or otherwise; (ii) all
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accounting, legal and other professional fees, and court costs incurred in
connection with such taxes; and (iii) all costs and expenses that may result
from adverse tax consequences to GM (including all costs, expenses and damages
associated with stockholder litigation or controversies) payable by GM or GM
Affiliates.
THIRD-PARTY CLAIM: any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration tribunal asserted by a
Person other than GM or any GM Affiliate or EDS or any EDS Affiliate which gives
rise to a right of indemnification hereunder.
TRANSFER AGREEMENT: the Transfer Agreement, dated March 12, 1995, by and
between GM and the Hourly Plan Trustee.
VOTING STOCK: with respect to any Person, all classes and series of the
capital stock of such Person entitled to vote generally in the election of
directors.
2. CERTAIN INTERCOMPANY MATTERS.
----------------------------
2.1 CAPITAL STOCK MATTERS.
(a) Recognition of Stockholders. Immediately after the Effective Time,
EDS shall regard the Persons who were record holders of Class E Stock
immediately prior to the Effective Time as the record holders of EDS Common
Stock without requiring any action on the part of such Persons. EDS agrees
that (i) subject to any transfers of such stock, each such holder shall be
entitled to receive all dividends payable on, and exercise voting rights
and all other rights and privileges with respect to, EDS Common Stock and
(ii) each such holder shall be entitled, upon proper surrender (in
accordance with the requirements of the letter of transmittal and other
instructions provided by the Exchange Agent) of the certificate or
certificates representing the shares of Class E Stock formerly held by it,
to receive one or more certificates representing the shares of EDS Common
Stock then held by it.
(b) GM Representations and Warranties. GM hereby represents and
warrants that, as of immediately prior to the Effective Time (i)
487,555,556 shares of Class E Stock will be issued and outstanding, (ii)
all of such shares will be validly issued, fully paid and nonassessable,
(iii) none of such shares will be subject to any preemptive rights, and
(iv) there will be (x) no outstanding securities of GM or any of its
Subsidiaries convertible into or exchangeable for shares of Class E Stock
and (y) no outstanding subscriptions, options, warrants, rights or other
arrangements or commitments to which GM is a party obligating GM to issue
any shares of Class E Stock.
(c) EDS Representations and Warranties. EDS hereby represents and
warrants that, as of immediately prior to the Effective Time (i)
487,555,556 shares of EDS Common
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Stock will be issued and outstanding, (ii) all of such shares will be
validly issued, fully paid and nonassessable, and (iii) all of such shares
will be held of record by GM.
(d) Cooperation of Transfer Agents; Stockholder Records. GM shall
cause the GM Transfer Agent to cooperate with the EDS Transfer Agent, and
EDS shall cause the EDS Transfer Agent to cooperate with the GM Transfer
Agent, in connection with the Split-Off and all other matters relating to
the exchange of certificates evidencing the conversion of all outstanding
shares of Class E Stock into EDS Common Stock. As soon as practicable after
the Effective Time, GM shall cause the GM Transfer Agent to deliver to the
EDS Transfer Agent the transfer records reflecting the record holders of
Class E Stock as of the Effective Time. As soon as practicable after
receipt by the EDS Transfer Agent of such transfer records, EDS shall cause
the EDS Transfer Agent, in its capacity as the Exchange Agent, to
distribute letters of transmittal, in form reasonably satisfactory to GM,
for such exchange of certificates by such record holders. EDS shall cause
the EDS Transfer Agent to issue the certificates representing the shares of
EDS Common Stock promptly after proper surrender (in accordance with the
requirements of the letter of transmittal and other instructions provided
by the Exchange Agent) of the certificates representing the corresponding
shares of Class E Stock. Upon the reasonable request of EDS from time to
time after the Effective Time, GM shall, or shall cause the GM Transfer
Agent to, cooperate in providing EDS with reasonable access to all
historical share, transfer and dividend payment records with respect to
former holders of Class E Stock.
2.2 INSURANCE MATTERS.
(a) Cooperation in Insurance Matters. GM has historically provided
insurance coverage to EDS and certain EDS Affiliates through various
insurance policies (and other forms of insurance coverage) maintained by GM
for the benefit of itself and its subsidiaries for general liability,
products liability, directors and officers liability, automobile liability
and other types of losses. EDS has made payments to GM to reimburse GM for
its allocable share of certain premiums and costs for the provision of such
insurance. From and after the Effective Time, except as set forth herein,
EDS and the EDS Affiliates shall be responsible for obtaining and
maintaining insurance coverage separately from the GM insurance programs.
Notwithstanding the foregoing, from and after the Effective Time, (i) upon
request by EDS, GM shall use commercially reasonable efforts to assist EDS
in the transition to separate, initial insurance coverage for EDS and the
EDS Affiliates, effective from and after the Effective Time, and shall
provide EDS with information that is reasonably necessary to prevent gaps
in EDS' insurance coverages, (ii) each of GM and EDS shall cooperate with
and use commercially reasonable efforts to assist the other in the
collection of proceeds from insurance claims made under any Insurance
Policy and the EDS Covered Persons shall be entitled to the benefit of any
proceeds from insurance claims made by or for the benefit of any EDS
Covered Person with respect to the Insurance Policies, and (iii) GM shall
not take any action that would jeopardize or otherwise interfere with any
EDS Covered
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Person's ability to collect any proceeds payable by any Person pursuant to
such Insurance Policies.
(b) Claims-Made Coverage. Until the six-year anniversary of the
Effective Time, or until such earlier time as EDS requests, GM shall
provide EDS with general liability and products liability insurance
coverage and D&O Insurance for all applicable incidents, acts or omissions
occurring prior to or at the Effective Time, regardless of when, prior to
the six-year anniversary of the Effective Time (or EDS' earlier termination
of coverage), any claims relating to such incidents, acts or omissions are
presented. GM shall provide such coverage at no cost to EDS. Such insurance
coverage shall be no less favorable to any EDS Covered Person in coverage
or amount than the lesser of (i) the coverage in effect at the Effective
Time or (ii) any applicable insurance coverage in effect for GM at the time
of the claim; provided, however, that if GM determines that (x) the amount
or scope of such coverage will be reduced to a level materially inferior to
the level of coverage in existence immediately prior to the Effective Time
or (y) the retention or deductible levels applicable to such coverage, if
any, will be increased to a level materially greater than the levels in
existence immediately prior to the Effective Time, GM shall give EDS notice
of such determination as promptly as practicable, but in no event less than
30 days prior to the effectiveness of such reduction in coverage or
increase in retention or deductible levels. Upon notice of such
determination, EDS shall be entitled to no less than 90 days to evaluate
its options regarding continuance of coverage hereunder and may cancel all
or any portion of such coverage as of any day within such 90 day period,
regardless of whether such date coincides with any anniversary of the
Effective Time. At any time during the period that GM is obligated to
provide coverage pursuant to this Section 2.2(b), upon at least 30 days
prior written notice, EDS may request GM to cancel all or any portion of
such coverage as of the next anniversary of the Effective Time. In the
event of any cancellation of coverage by EDS pursuant to this Section
2.2(b), GM shall have no obligation to provide such canceled coverage with
respect to any periods from and after the effective date of such
termination. The term "coverage" as used in this Section 2.2 shall be
deemed to include all applicable excess coverage.
(c) Occurrence Coverage for Prior Acts. GM shall take no action to
remove any EDS Covered Person from insurance coverage under any Insurance
Policy effective at, or at any time prior to, the Effective Time that is
written on an occurrence basis.
(d) Claims. GM agrees that after the Effective Time, EDS shall be
entitled to furnish notice of insurance claims directly to the insurers
under the Insurance Policies and otherwise to communicate directly with
such insurers, in a manner consistent with past practice. EDS shall provide
GM with copies of all such written notices of insurance claims
contemporaneously with the provision of such written notices to such
insurers. EDS shall provide GM with such other written communications
between EDS and the insurers related to such claims as reasonably requested
by GM.
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(e) Treatment of Certain Retentions and Deductibles. Responsibility
for deductible or self-insured amounts with respect to any Insurance Policy
provided or maintained after the Effective Time pursuant to Section 2.2(b)
or 2.2(c) as it relates to coverage for any EDS Covered Person shall be
borne 100% by (i) GM, in the case of automobile liability claims and (ii)
EDS, in all other cases. Notwithstanding the foregoing, if GM and EDS are
involved in the same claim, GM and EDS shall negotiate in good faith the
fair allocation of any self-insurance retention or other deductible payable
under the Insurance Policies. Such allocation shall be based upon all
relevant factors, including, without limitation and as appropriate, the
relative number of Persons affiliated with EDS or GM that are involved in
such claim and the nature of the allegations with respect to each such
Person.
(f) Adjustment of Premiums Applicable to Periods Prior to the
Effective Time. Any premiums that have been paid or are payable by EDS to
GM with respect to coverage under any of the Insurance Policies maintained
or provided prior to the Effective Time shall be pro-rated, and as soon as
practicable after the Effective Time shall be either refunded by GM to EDS
or paid by EDS to GM, as appropriate, so that EDS is responsible for only
those premiums relating to (i) any full policy year ending prior to the
Effective Time and (ii) the partial policy year ending at the Effective
Time.
(g) Pending and Prior Acts Claims. GM shall not charge EDS, and EDS
shall not be obligated to pay, any amounts (other than any applicable
deductible or self-insurance retention amounts or any premium amounts with
respect to periods prior to the Effective Time that are payable by EDS
pursuant to Section 2.2(f)) with respect to (i) pending claims under the
Insurance Policies or (ii) any other claims under the Insurance Policies
relating to occurrences before the Effective Time that are reported after
the Effective Time ; provided, however, that if (i) a third party insurance
provider has paid insurance proceeds for a pending claim under an Insurance
Policy, (ii) such insurance provider has reserved its right to
reimbursement in the event of a later determination that such proceeds were
not payable under the Insurance Policy, (iii) GM, EDS and the insurance
provider later agree that such proceeds are reimbursable to the insurance
provider, and (iv) GM actually repays any such amounts to such insurance
provider, then EDS shall promptly reimburse GM for such amounts actually
repaid to the third party insurance provider by GM. Notwithstanding the
first sentence of Section 2.2(e), the amounts of any deductibles or self-
insurance retentions payable by EDS that are applicable to claims pending
at the Effective Time shall be determined in accordance with past practice.
Without limiting the generality of the foregoing, EDS shall not be required
to pay any amounts in respect of adjusting services after the Effective
Time.
(h) Management of Covered Litigation. Except as otherwise provided in
Section 2.3 or 8, the management, defense and settlement of any claim
covered by any Insurance Policy that is brought by a third party shall be
handled as follows:
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(i) Unless Section 2.2(h)(ii) or 2.2(h)(iii) is applicable, GM
shall have the right to manage the defense of such claim, to settle
such claim in its sole discretion and to charge EDS, pursuant to
Section 2.2(e) or 2.2(g), for that portion of the settlement that is
within any applicable deductible or retention. EDS shall use
commercially reasonable efforts to cooperate with GM in its defense of
such claim. GM shall provide EDS with all information reasonably
requested by EDS regarding the defense of such claim. GM shall consult
with EDS prior to the settlement of such claim for an amount in excess
of $100,000 and shall consider in good faith any recommendations or
objections of EDS as to the amount or form of such settlement. GM
shall not, without the prior written consent of EDS, (x) settle or
compromise such claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the delivery by the
claimant or plaintiff to each applicable EDS Covered Person of a
written release from all liability in respect of such claim or (y)
settle or compromise such claim in any manner that would be reasonably
likely to have a material adverse effect on any EDS Covered Person.
(ii) Notwithstanding Section 2.2(h)(i), if (x) such claim
involves both GM or any GM Affiliate and EDS or any EDS Affiliate and
is covered by any Insurance Policy providing D&O Insurance coverage or
(y) EDS reasonably and in good faith determines that such claim is
significant to a material business interest of EDS, GM and EDS shall
jointly control the defense of, and cooperate with each other with
respect to defending, such claim. If either GM or EDS fails to jointly
defend any such claim, the party that does not so fail shall solely
defend such claim and the party failing to jointly defend shall use
commercially reasonable efforts to cooperate with the other party in
its defense of such claim. GM and EDS shall consult with each other
prior to the settlement of such claim, and shall consider in good
faith any recommendations or objections of the other as to the amount
or form of such settlement. GM shall have the right to settle such
claim, but GM shall not settle such claim without the prior written
consent of EDS, which consent shall not be unreasonably withheld. EDS
shall be responsible, and GM shall have the right to charge EDS,
pursuant to Section 2.2(e) or 2.2(g), for that portion of the
settlement that is within any applicable deductible or retention.
Notwithstanding the foregoing, if EDS reasonably and in good faith
determines that either a conflict of interest between any EDS Covered
Person and GM exists in respect of such claim (other than a conflict
with respect to whether such claim is in an amount within or in excess
of any applicable deductible or self-insurance retention), or there
may be defenses available to any EDS Covered Person that are different
from or in addition to those available to GM, EDS shall have the right
to manage the defense of such EDS Covered Person in respect of such
claim; however, EDS shall not settle such claim with respect to such
EDS Covered Person without the prior written consent of GM, which
consent shall not be unreasonably withheld.
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(iii) Notwithstanding Section 2.2(h)(i) or 2.2(h)(ii), if such
claim does not involve GM or any GM Affiliate and is covered by any
Insurance Policy providing D&O Insurance coverage, EDS shall have the
right to manage the defense of, including, without limitation, the
selection of counsel with respect to, such claim. EDS shall provide GM
with all information reasonably requested by GM regarding the defense
of such claim. EDS shall be entitled to settle such claim in an amount
below any applicable deductible or self-insurance retention. EDS shall
consult with GM prior to the settlement of such claim and shall
consider in good faith any recommendations or objections of GM as to
the amount or form of such settlement. Any settlement of such a claim
in excess of any applicable deductible or self-insurance retention
amount shall require the prior written consent of GM, which consent
shall not be unreasonably withheld.
(iv) Nothing in this Separation Agreement shall be construed to
allocate between a party and its directors, director nominees,
officers or employees responsibility for the defense of any action or
suit brought by or in the right of such party.
(i) Access to Insurance Information. Upon the reasonable request of
EDS from time to time during the period in which claims are open or can be
made under any Insurance Policy, (i) GM shall provide EDS with a true and
complete copy of each Insurance Policy and (ii) subject to Section 4, GM
shall provide EDS with reasonable access to all applicable risk management
data for the purpose of obtaining information with respect to any insurance
claim relating to any EDS Covered Person. GM shall provide EDS with
reasonable access to all litigation pleadings and other documents and
correspondence relating to any EDS Covered Person, and copies thereof as
reasonably requested by EDS. GM shall cause to be delivered to EDS all
updates of the EDS claims histories as reasonably requested by EDS until
all claims are closed, or until earlier notified by EDS. Notwithstanding
Section 6.1, all reasonable out-of-pocket costs and expenses (excluding
allocated compensation, salary and overhead expense) reasonably incurred by
GM in complying with this Section 2.2(i) shall be reimbursed by EDS upon
presentation of invoices therefor.
(j) Certain Workers' Compensation Insurance Premiums. GM acknowledges
that neither EDS nor any EDS Affiliate owes any amount in respect of
workers' compensation insurance coverage provided or maintained by or
through GM for the benefit of EDS or the EDS Affiliates during the 1992/93
policy year. GM hereby fully and unconditionally releases EDS and the EDS
Affiliates from any and all liability or obligation for the payment of any
premium allocation or other amount with respect to the provision of such
coverage. GM and EDS acknowledge that as of the Effective Time, no amounts
are payable by EDS to GM for workers' compensation insurance premiums.
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2.3 INDEMNIFICATION OF EDS INDEMNIFIED PARTIES.
(a) Indemnification of EDS Indemnified Parties. GM shall indemnify and
hold harmless each EDS Indemnified Party, in its capacity as such, in
accordance with section 5.1 of the GM Bylaws, as fully and to the same
extent as if such EDS Indemnified Party were a director or officer of GM,
from and against all amounts (including judgments, fines, payments in
settlement, costs and expenses of enforcing this Section 2.3, attorneys'
fees and other expenses) reasonably incurred by or on behalf of such EDS
Indemnified Party in connection with any Proceeding that is based upon, or
arises out of, any actual or alleged acts or omissions relating to:
(i) in the case of an E Team Party, the Split-Off or the
formulation, negotiation, approval, ratification, implementation or
consummation thereof;
(ii) in the case of an EDS Director, the approval, ratification,
implementation or consummation of the Split-Off or any of the elements
thereof, including the Special Inter-Company Payment, the Master
Service Agreement (and the other Service Agreements to be entered into
in connection therewith), this Separation Agreement and the Tax
Allocation Agreement; provided, however, that such indemnification
shall not apply to acts or omissions relating to (i) EDS' charter,
bylaws or stockholder rights plan, (ii) EDS' employee and director
benefits plans or compensation arrangements, (iii) EDS' management or
director indemnification agreements, or (iv) EDS' plans, proposals,
intentions or policies applicable after the Effective Time, including
EDS' proposed dividend policy, proposed business plan or proposed
restructuring activities; and
(iii) in the case of an EDS Board Nominee, the expression of any
views prior to the Effective Time at the request of GM or the Board of
Directors of GM with respect to EDS' proposed charter, bylaws,
stockholder rights plans or employee benefits plans.
GM agrees that, if and to the extent that a determination on the part of
the Board of Directors of GM is required under the DGCL or any other
mandatory provision of applicable law in order to authorize the payment of
any amounts pursuant to this Section 2.3(a), the Board of Directors of GM
shall make such determination at least as promptly as is its customary
practice with respect to similar determinations as to the indemnification
of directors and officers of GM.
(b) Other Bylaw Provisions. With respect to each matter for which any
EDS Indemnified Party is entitled to indemnification pursuant to Section
2.3(a), each EDS Indemnified Party shall be entitled to the benefit of all
other provisions and procedures set forth in the GM Indemnification Bylaw
(including, without limitation, the advancement of expenses pursuant to
Section 5.2 thereof) as fully and to the same extent as if such EDS
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Indemnified Party were a director or officer of GM. GM agrees that it shall
advance such expenses to each EDS Indemnified Party at least as promptly as
is its customary practice with respect to the advancement of expenses to
directors and officers of GM.
(c) Inapplicability to Certain Losses. Section 2.3(a) and (b) shall
not apply to any Losses incurred by any EDS Indemnified Party or EDS Board
Nominee arising out of (i) any untrue statement or alleged untrue statement
of a material fact contained in any section of the Form S-4 or (ii) the
omission or alleged omission to state in any section of the Form S-4 a
material fact required to be stated therein or necessary to make the
statements therein not misleading, as indemnification for such Losses is
provided for in Section 8.
(d) No Amendment. The obligations of GM under this Section 2.3 shall
not be terminated, modified or amended in such a manner as to adversely
affect in any material respect the rights granted to any EDS Indemnified
Party without the prior written consent of such EDS Indemnified Party.
(e) GM Board Resolution. GM shall not rescind or modify the resolution
of the GM Board of Directors adopted on August 7, 1995 authorizing certain
indemnification for certain EDS Indemnified Parties.
(f) EDS Reimbursement. As soon as practicable, but in any event within
10 days after presentation of an invoice therefor, EDS shall reimburse GM
for all amounts (including judgments, fines, payments in settlement, costs
and expenses) actually paid to, or on behalf of, an EDS Indemnified Party
pursuant to this Section 2.3. Any amounts under this Section 2.3(f) that
are not paid by EDS within 10 days after receipt of a written notice
specifying the delinquency of any such payment shall bear interest, from
the date of the original invoice therefor until paid, at the prime rate
established from time to time by Citibank N.A., New York. If any
reimbursement sought by GM pursuant to the first sentence of this Section
2.2(f) is judicially determined to be unenforceable, EDS shall contribute
to GM the amounts for which such reimbursement is held to be unenforceable.
The fact that at any time (i) EDS shall have a reimbursement or
contribution obligation pursuant to this Section 2.3(f), or (ii) EDS is in
breach of any reimbursement or contribution obligation pursuant to this
Section 2.3(f), shall not impair or diminish, or constitute an excuse for
nonperformance or delay in performance of, GM's obligations pursuant to the
other provisions of this Section 2.3.
(g) Split-Off Losses. GM and EDS agree that all Losses relating to,
arising out of, or due to, directly or indirectly, the Split-Off or the
formulation, negotiation, approval, ratification, implementation or
consummation thereof or any of the elements thereof (including the Special
Inter-Company Payment, the Master Service Agreement (and the other Service
Agreements to be entered into in connection therewith), this Separation
Agreement and the Tax Allocation Agreement), including all Losses relating
to, arising out of, or due to, directly or indirectly, the lawsuits
disclosed in the Form S-4 under the caption "Special Factors -
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Certain Litigation," including Solomon v. General Motors Corporation, et
al., TRV Holding Company v. General Motors Corporation, et al. and Ward, et
al., as Trustees for the Eisenberg Children's Irrevocable Trust II v.
General Motors Corporation, et al. (collectively, "Split-Off Losses"),
shall be governed by this Section 2.3 (except as set forth in Section 7,
8.1(a), 8.1(b), 8.1(c), 8.1(e), 8.2(a), 8.2(b), 8.2(c), 8.2(e) or 8.3(d)).
Thus, GM shall have no liability to EDS, any EDS Affiliate or any of their
respective directors, officers or employees for any Split-Off Losses and
EDS shall have no liability to GM, any GM Affiliate or any of their
respective directors, officers or employees for any Split-Off Losses except
as provided in this Section 2.3 or Section 7, 8.1(a), 8.1(b), 8.1(c),
8.1(e), 8.2(a), 8.2(b), 8.2(c), 8.2(e) or 8.3(d). Nothing in this Section
2.3(g) shall affect any of the rights or obligations of the parties under
the Tax Allocation Agreement.
2.4 LEASES OF REAL PROPERTY. GM and EDS shall jointly review all
instances in which EDS maintains facilities in, or otherwise occupies, real
property owned or leased by GM and shall use commercially reasonable efforts in
each case to either negotiate and enter into a written lease incorporating terms
and conditions which are fair to both parties or terminate the arrangement on
mutually agreeable terms; provided, however, that the foregoing shall not apply
in any instance (i) involving facilities maintained, or real property occupied,
by EDS in connection with any Service Agreement or (ii) covered by a written
lease agreement between the parties.
2.5 EMPLOYEE BENEFIT MATTERS.
(a) General Rules.
(i) A participant in either of the GM Qualified Plans who
transferred from GM or a member of the GM Controlled Group to EDS,
with the consent of, or at the direction of, GM management, at any
time from September 1, 1985 to the Effective Time, will receive the
following treatment from the GM Qualified Plans. The GM Qualified
Plans will, for employees who remain continuously employed by EDS or a
member of the EDS Controlled Group until retirement with eligibility
for immediate commencement of retirement benefits from EDS or a member
of the EDS Controlled Group: (1) treat the transferred employee's
accrued GM service as unbroken; (2) treat base salary paid by EDS or a
member of the EDS Controlled Group as compensation for purposes of
calculating final average pay under the GM Qualified Plans; (3)
provide benefits under the terms of the GM Qualified Plans in effect
at the time of retirement from EDS; and (4) use credited service with
EDS or a member of the EDS Controlled Group in determining vesting,
but not accrual, under the GM Qualified Plans.
(ii) A participant in the EDS Qualified Plan who transferred from
EDS or a member of the EDS Controlled Group to GM or a GM Affiliate
whose employees are eligible to participate in the GM Qualified Plans,
with the consent of, or at the direction of, EDS management at any
time during which EDS was in the
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GM Controlled Group will receive the following treatment from the EDS
Qualified Plan. The EDS Qualified Plan will, for employees who remain
continuously employed by GM or a member of the GM Controlled Group
until retirement with eligibility for immediate commencement of
retirement benefits from GM or a member of the GM Controlled Group:
(1) treat the transferred employee's accrued EDS service as unbroken;
(2) consider income to the employees, as reported on Form W-2 and
adjusted in accordance with the terms of the EDS Qualified Plan, from
GM or a member of the GM Controlled Group for purposes of calculating
final average earnings under the EDS Qualified Plan; (3) provide EDS
Qualified Plan benefits under the plan terms in effect at the time of
retirement from GM; and (4) use credited service with GM or a member
of the GM Controlled Group in determining vesting, but not accrual,
under the EDS Qualified Plan.
(iii) To the extent the EDS salary history of an employee who
transferred from GM to EDS is used to calculate a GM Qualified Plan
benefit, EDS agrees to take no salary action for the purpose of
manipulating the GM Qualified Plan's obligation. To the extent the GM
salary history of an employee transferred from EDS to GM is used to
calculate an EDS Qualified Plan benefit, GM agrees to take no salary
action for the purpose of manipulating the EDS Qualified Plan's
obligation.
(iv) GM and EDS have provided and will continue to provide on a
cooperative basis data necessary to determine employee benefits for
employees who transferred from one company to the other, and data
necessary to administer their employee benefit plans in compliance
with applicable law. The parties hereby represent and warrant that the
above referenced data is, has been, and will be accurate and complete
in all material respects. For purposes of this paragraph, "GM" shall
mean GM's United States-based operations and its domestic affiliates
and "EDS" shall mean EDS' United States-based operations and its
domestic affiliates.
(v) Except as otherwise provided in the second sentence of this
Section 2.5(a)(v), employees who leave GM or a member of the GM
Controlled Group or EDS or a member of the EDS Controlled Group to
work for the other company after the Effective Time will be treated as
having terminated employment with the company they are leaving. EDS
employees who are working in the GM Marketing Division Customer
Assistance Center and who are hired by a GM marketing division
directly from such an EDS position will use GM credited service for
determining vesting of EDS Qualified Plan benefits.
(b) Issues Related to GM-Canada. Simultaneously with the execution
and delivery of this Separation Agreement, GM shall cause GM-Canada, and
EDS shall cause EDS-Canada, to execute and deliver the Canadian Transfer
Agreement, substantially in the form attached hereto as Exhibit A.
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(c) Issues Related to Hughes. For employees who transferred from
Hughes to EDS or a member of the EDS Controlled Group at any time from
September 1, 1985 to the Effective Time, no service or compensation at EDS
or a member of the EDS Controlled Group after the Effective Time will be
considered for any purpose under the Hughes Qualified Plans. For employees
who transferred from EDS or a member of the EDS Controlled Group to Hughes
at any time from September 1, 1985 to the Effective Time, no service or
compensation at Hughes after the Effective Time for which the employee is
given credit under any of the Hughes Qualified Plans will be considered for
any purpose under the EDS Qualified Plan.
(d) Issues Related to GMAC Mortgage.
(i) For employees who transferred from GMAC Mortgage to EDS or a
member of the EDS Controlled Group at any time from September 1, 1985
to the Effective Time, no service or compensation at EDS or a member
of the EDS Controlled Group after the Effective Time will be
considered for any purpose under the GMAC Mortgage Qualified Plans.
GMAC Mortgage will vest such transferred employees in their accrued
benefits under the GMAC Mortgage Qualified Plans as of the Effective
Time.
(ii) For employees who transferred from EDS or a member of the
EDS Controlled Group to GMAC Mortgage at any time from September 1,
1985 to the Effective Time, no service or compensation at GMAC
Mortgage after the Effective Time will be considered for any purpose
under the EDS Qualified Plan. EDS will vest such transferred employees
in their accrued benefits under the EDS Qualified Plan as of the
Effective Time.
(e) Communication with Employees. GM and EDS will cooperate in
devising communications to employees regarding the effects of the Split-
Off. Such cooperation will include providing each other the opportunity to
review and comment on such communications prior to distribution to
employees. The parties will also cooperate in devising the description or
summary of these communications which is internally distributed by the
parties.
(f) Necessary Amendments. GM, EDS and their respective Affiliates
agree to make such amendments to any plan, program, or policy which any may
sponsor as necessary to effectuate the provisions of this Separation
Agreement as soon as practicable following the Effective Time.
(g) Compliance with Applicable Requirements of ERISA and the Code.
Notwithstanding anything herein to the contrary, if compliance with any of
the provisions of this Section 2.5 would result in any plan sponsored by
GM, EDS or any of their Affiliates
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violating any requirement of ERISA or the Code, then compliance with such
provision shall not be required to the extent that compliance would so
violate these requirements.
(h) Third Party Rights. Nothing in this Section 2.5 shall give any
third party, including, but not limited to, any employee of GM, EDS or any
of their respective Affiliates, and any participant or beneficiary in any
plan sponsored by GM, EDS or any of their respective Affiliates, any right
or claim to any payment. GM, EDS and their respective Affiliates expressly
reserve the right to terminate any of their employees.
2.6 REGISTRATION RIGHTS AGREEMENT.
(a) GM hereby represents and warrants as follows:
(i) Other than as expressly provided in the Cooperation Agreement
or the Subtrust Letter Agreement, since March 12, 1995, (x) the
Registration Rights Agreement has not been modified or amended and (y)
GM has not waived the benefit of any term of the Registration Rights
Agreement, which waiver would have any adverse effect after the
Effective Time. As of the Effective Time, the Cooperation Agreement
shall terminate and be of no further force or effect.
(ii) Neither GM nor any GM Affiliate has entered into or agreed
to enter into any contract, agreement or understanding (other than the
Registration Rights Agreement) that would require registration of any
EDS Common Stock under the Securities Act from or after the Effective
Time.
(iii) GM has heretofore delivered to EDS a true and correct copy
of each of the Registration Rights Agreement, the Cooperation
Agreement and the Subtrust Letter Agreement.
(b) Simultaneously with the execution and delivery of this Separation
Agreement, EDS shall execute and deliver a Succession Agreement (the
"Succession Agreement"), substantially in the form of Exhibit D to the
Registration Rights Agreement. GM hereby assigns to EDS all of GM's right,
title and interest in and to the Subtrust Letter Agreement as it relates to
the Registration Rights Agreement (but not the Transfer Agreement). EDS
specifically does not assume any obligation of GM or any GM Affiliate with
respect to (i) any contract, agreement or understanding referred to in
Section 2.6(a)(ii) above (other than the Registration Rights Agreement) or
(ii) the Cooperation Agreement.
(c) EDS shall not modify or amend the Registration Rights Agreement in
any respect that would adversely affect GM's rights or obligations referred
to in section 1(c) of the Succession Agreement or any rights of GM under
section 10 of the Registration Rights Agreement with respect to any
registration prior to the Effective Time of shares of Class E Stock by GM
pursuant to such Registration Rights Agreement.
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2.7 TRANSFER AGREEMENT.
(a) GM hereby represents and warrants as follows:
(i) Since March 12, 1995, (x) the Transfer Agreement has not been
modified or amended and (y) GM has not waived the benefit of any
material term of the Transfer Agreement.
(ii) GM has heretofore delivered to EDS a true and correct copy
of the Transfer Agreement.
(b) Without the prior written consent of EDS, GM shall not (i) modify
or amend the Transfer Agreement in any material respect, (ii) permit or
consent to any modification or amendment of the Transfer Agreement in any
material respect, (iii) waive the benefit of any material term of the
Transfer Agreement, or (iv) take any other action, or omit to take any
action that would impair the validity of, or the material rights of GM
under, the Transfer Agreement.
2.8 PUBLICITY. EDS, with respect to EDS and all of the EDS Affiliates,
and GM, with respect to GM and all of the GM Affiliates, agree to take all
commercially reasonable action to discontinue their respective uses as promptly
after the Effective Time as is commercially reasonable of any printed material
that indicates a continued parent-subsidiary relationship between GM and EDS or
any of their respective Affiliates. This Section 2.8 shall not be deemed to
prohibit the use of printed material containing appropriate and accurate
references to the historical relationships between the parties or their
Affiliates.
2.9 FURTHER ASSURANCES. In addition to the actions specifically
provided for elsewhere in this Separation Agreement, each of the parties hereto
shall use its best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things commercially reasonably necessary, proper or
expeditious under applicable laws, regulations and agreements in order to
consummate and make effective the Split-Off as promptly as reasonably
practicable. Without limiting the generality of the foregoing, each party
hereto shall cooperate with the other party, and execute and deliver, or use its
best efforts to cause to have executed and delivered, all instruments, including
instruments of conveyance, assignment and transfer, and to make all filings
with, and to obtain all consents, approvals or authorizations of, any
governmental or regulatory authority in order to make effective the Split-Off.
3. GM-PBGC AGREEMENT MATTERS.
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3.1 GM REPRESENTATIONS AND WARRANTIES. GM hereby represents and
warrants as follows:
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(a) No Amendment.
(i) Since March 3, 1995 and other than in connection with the GM-
PBGC Agreement Amendment, (x) the GM-PBGC Agreement has not been
modified or amended, (y) GM has not waived the benefit of any material
term of the GM-PBGC Agreement and (z) GM has not taken any other
action, or omitted to take any action, that would (1) impair the
validity of any of the Releases and Covenants Not to Sue or (2) impair
the rights of GM (to the extent related to delivering to EDS executed
Releases and Covenants Not to Sue), EDS, any EDS Releasee or any EDS
Transferee under the GM-PBGC Agreement or any of the Releases and
Covenants Not to Sue. Without limiting the generality of the
foregoing, GM has not waived the PBGC's obligation under section 9(c),
9(d) or 9(f)(ii) of the GM-PBGC Agreement to execute or deliver
specific executed Releases and Covenants Not to Sue.
(ii) GM has heretofore delivered to EDS a true and correct copy
of the GM-PBGC Agreement, including the GM-PBGC Agreement Amendment.
(b) Certification Process.
(i) GM has followed and complied in all material respects with
the provisions of section 9(d) of the GM-PBGC Agreement that are
contemplated to be followed prior to the Effective Time. Without
limiting the generality of the foregoing, GM has delivered or has
caused to be delivered to the PBGC the certificates, statements and
reports described in section 9(c)(2)(A) through (I) of the GM-PBGC
Agreement. GM has heretofore delivered to EDS a true and correct copy
of each such certificate, statement and report.
(ii) The PBGC has not delivered to GM a written notice of
disagreement as described in section 9(d)(iii) of the GM-PBGC
Agreement.
(c) Deposit of Releases in Escrow. GM has heretofore delivered to EDS
a true and correct copy of the GM-PBGC Escrow Agreement. The PBGC has
heretofore notified GM that the PBGC has, pursuant to the GM-PBGC Agreement
and the Escrow Agreement, delivered to the Escrow Agent 15 sets of final
executed Releases and Covenants Not to Sue.
3.2 GM COVENANTS.
(a) Delivery of Documents and Other Information.
(i) GM shall deliver or cause to be delivered to the GM-PBGC
Escrow Agent at the Effective Time (or, if not possible at the
Effective Time, as soon as practicable thereafter), an executed
certificate in the form of Appendix E1 to the GM-PBGC Agreement.
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(ii) GM shall deliver or cause to be delivered to the PBGC at the
Effective Time (or, if not possible at the Effective Time, as soon as
practicable thereafter), (x) the documents and records described in
section 9(c)(3)(i)(A) or (B) of the GM-PBGC Agreement and (y) the
statement described in section 9(c)(3)(ii)(A) of the GM-PBGC
Agreement.
(iii) At the Effective Time (or, if not possible at the Effective
Time, as soon as practicable thereafter), GM shall request that the
PBGC deliver or cause to be delivered to the GM-PBGC Escrow Agent,
within two Business Days after the PBGC's receipt of the documents,
records and statement referred to in subparagraph (ii) above, an
executed certificate in the form of Appendix E2 to the GM-PBGC
Agreement.
(iv) GM shall promptly provide EDS with copies of all material
information, certificates, statements and reports delivered by or on
behalf of GM to the PBGC in connection with the actions to be taken
under this Section 3.2.
(b) Delivery of Releases and Covenants Not to Sue.
(i) GM shall use commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or expeditious pursuant to the GM-PBGC
Agreement and the GM-PBGC Escrow Agreement to effect the delivery to
EDS of the executed Releases and Covenants Not To Sue, including
providing such information, certificates, statements and reports to
the PBGC and the GM-PBGC Escrow Agent to effect the same and the
institution of such legal action as may be reasonably necessary to
enforce the related obligations of the PBGC under the GM-PBGC
Agreement or the obligations of the GM-PBGC Escrow Agent under the GM-
PBGC Escrow Agreement.
(ii) GM shall keep EDS informed on a timely basis as to the
status of the actions to be taken under this Section 3.2 and the
delivery to EDS of the Releases and Covenants Not to Sue.
(c) Additional Releases. If executed Releases and Covenants Not to Sue
have theretofore been delivered to EDS, at any time and from time to time
thereafter at the request of EDS (i) subject to the limitation on the
number of occasions that the PBGC is obligated to provide additional
Releases and Covenants Not to Sue, as set forth in section 9(i) of the GM-
PBGC Agreement, GM shall request that the PBGC provide to EDS, pursuant to
section 9(i) of the GM-PBGC Agreement, such additional executed Releases
and Covenants Not to Sue as are reasonably requested by EDS (with EDS to
bear the cost thereof as provided in section 9(i) of the GM-PBGC
Agreement), and (ii) GM shall request that the PBGC certify and deliver,
pursuant to section 9(j) of the GM-PBGC Agreement, such additional copies
of
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Releases and Covenants Not to Sue as are reasonably requested by EDS (with
EDS to bear the PBGC's standard costs and charges for copying and
production of such documents as provided in section 9(j) of the GM-PBGC
Agreement). Except as may be requested by EDS pursuant to the preceding
sentence, GM shall not request that the PBGC provide any additional
executed Releases and Covenants Not to Sue pursuant to section 9(i) of the
GM-PBGC Agreement without the prior written consent of EDS.
(d) Identification of Specific EDS Transferees. At the request of EDS,
GM shall identify to the PBGC any specific EDS Transferee(s) whose name(s)
are to be inserted in an executed Release and Covenant Not to Sue
substantially in the form of Appendix R3 to the GM-PBGC Agreement at the
time of execution and delivery thereof and shall use commercially
reasonable efforts to obtain such executed Release and Covenant Not to Sue
from the PBGC for the benefit of such EDS Transferee(s) as set forth in the
GM-PBGC Agreement.
(e) Amendment or Waiver of GM-PBGC Agreement. Without the prior
written consent of EDS, GM shall not (i) modify or amend the GM-PBGC
Agreement, (ii) permit or consent to any modification or amendment of the
GM-PBGC Agreement, (iii) waive the benefit of any material term of the GM-
PBGC Agreement, or (iv) take any other action, or omit to take any action,
if in each such case such modification, amendment, waiver, action or
omission would (x) impair the validity of any of the Releases and Covenants
Not to Sue or (y) impair the rights of GM (to the extent related to
delivering to EDS executed Releases and Covenants Not to Sue), EDS, any EDS
Releasee or any EDS Transferee under the GM-PBGC Agreement or any of the
Releases and Covenants Not to Sue. Without limiting the generality of the
foregoing, GM shall not waive the PBGC's obligation under section 9(c),
9(d) or 9(f)(ii) of the GM-PBGC Agreement to execute or deliver specific
executed Releases and Covenants Not to Sue.
4. CONFIDENTIALITY.
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4.1 TREATMENT OF CONFIDENTIAL INFORMATION.
(a) Restrictions on Disclosure. From and after the Effective Time,
each of EDS and GM agrees that it shall not, and shall not permit any of
its Affiliates or Representatives to, disclose any Confidential Information
to any Person. Notwithstanding the foregoing, each of EDS and GM and its
respective Affiliates and Representatives may disclose such Confidential
Information, and such information shall no longer be deemed Confidential
Information, to the extent that such party can demonstrate that such
Confidential Information is or was (i) available to such party outside the
context of the parties' parent-subsidiary relationship on a nonconfidential
basis prior to its disclosure by the other party, (ii) in the public domain
other than by the breach of this Separation Agreement, or (iii) lawfully
acquired outside the context of the parties' parent-subsidiary relationship
on
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a nonconfidential basis or independently developed by, or on behalf of,
such party by Persons who do not have access to, or descriptions of, any
such Confidential Information.
(b) Restrictions on Use. From and after the Effective Time, each of
EDS and GM agrees that it shall not, and shall not permit any of its
Affiliates or Representatives to, use any Confidential Information other
than for the specific purposes and within the specific relationships for
which it was originally disclosed to such party, Affiliate or
Representative, as the case may be. In particular, the parties acknowledge
that they have disclosed to each other a significant amount of highly
confidential and proprietary information during the course of the parties'
parent-subsidiary relationship, and each party agrees that any such
information which was provided outside the context of a Service Agreement
shall not be made available to or used by any Person engaged or
participating in the negotiation, implementation or review of any vendor-
customer relationship between EDS or any EDS Affiliate and GM or any GM
Affiliate. Without limiting the generality of the foregoing, GM shall not
use, and shall not permit its Affiliates or Representatives to use, for any
purpose, including without limitation in connection with the sourcing,
pricing or evaluation of information technology or other services provided,
or to be provided, pursuant to any Service Agreement, any information
relating to EDS that has been previously provided to or obtained by GM in
connection with any audit or review (including without limitation any
review of the transactions and arrangements relating to or arising out of
the Split-Off) conducted by or on behalf of the Board of Directors of GM,
including without limitation its Capital Stock Committee; provided,
however, that the Board of Directors of GM and its Capital Stock Committee
may continue to use such information solely for the purposes for which it
was originally provided. GM and EDS acknowledge and agree that information
obtained by either party pursuant to any vendor-customer relationship
(including the negotiation of any Service Agreement) and not as a result of
the parties' parent-subsidiary relationship may continue to be used by such
parties in connection with such vendor-customer relationship; provided,
however, that such continued use shall remain subject to any applicable
confidentiality provisions or restrictions on use that may be contained in
an applicable GM-EDS Contract.
(c) Policies and Procedures. EDS and GM shall each maintain current
policies and procedures, and develop such further policies and procedures
as shall from time to time become necessary or appropriate, to ensure
compliance with this Section 4.1.
4.2 LEGALLY REQUIRED DISCLOSURE OF CONFIDENTIAL INFORMATION. If either
party to this Separation Agreement or any of its respective Affiliates or
Representatives becomes legally required to disclose any Confidential
Information, such disclosing party shall promptly notify the other, owning party
and use commercially reasonable efforts to cooperate with the owning party so
that the owning party may seek a protective order or other appropriate remedy
and/or waive compliance with this Section 4. All expenses incurred in seeking a
protective order or other remedy shall be borne by the owning party. If such
protective order or other remedy is not obtained, or if the owning party waives
compliance with this Section 4, the disclosing party or its Affiliate or
Representative,
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as applicable, shall (a) disclose only that portion of the Confidential
Information which its legal counsel advises it is compelled to disclose or else
stand liable for contempt or suffer other similar significant corporate censure
or penalty, (b) use commercially reasonable efforts to obtain reliable assurance
requested by the owning party that confidential treatment will be accorded such
Confidential Information, and (c) promptly provide the owning party with a copy
of the Confidential Information so disclosed, in the same form and format so
disclosed.
5. CONTINUING INFORMATION SUPPORT.
------------------------------
5.1 ACCESS TO INFORMATION. Until the ten-year anniversary of the
Effective Time, EDS and GM each shall afford to the other, and shall cause their
respective Affiliates and Representatives to afford, reasonable access and
duplicating rights upon reasonable advance request and during normal business
hours to all information (other than information subject to the attorney-client
privilege) within such party's possession relating to such other party's
Business, assets or liabilities to the extent that such access is reasonably
required by such other party as a result of the parties' prior parent-subsidiary
relationship for audit, accounting, claims, litigation (except for litigation
between the parties hereto), regulatory or tax purposes, or for purposes of
fulfilling disclosure and reporting obligations. In connection therewith, EDS
and GM shall upon the request of the other party make available their respective
officers and employees (and those of their respective Affiliates) to the extent
that they are reasonably necessary to discuss and explain such information with
and to the other party. GM and EDS shall each cooperate with the other, and
shall cause their respective Affiliates to cooperate, in the provision of access
to information reasonably necessary for the preparation of reports required by
or filed under the Exchange Act with respect to any period entirely or partially
prior to the Effective Time. The access provided pursuant to this Section 5.1
shall be subject to such additional confidentiality and security provisions as
the disclosing party may reasonably deem necessary. This Section 5.1 shall not
supersede or be applicable in lieu of any provision governing access to
information contained in any Service Agreement or any GM-EDS Contract entered
into in connection with existing or potential litigation relating to Split-Off
Losses.
5.2 PRODUCTION OF WITNESSES. Until the six-year anniversary of the
Effective Time, each of EDS and GM shall use commercially reasonable efforts,
and shall cause each of their respective Affiliates to use commercially
reasonable efforts, to make available to the other, upon written request, its
directors, officers, employees and other Representatives as witnesses to the
extent that any such Person may reasonably be required (giving consideration to
the business demands upon such Persons) in connection with any legal,
administrative or other proceedings in which the requesting party may from time
to time be involved.
5.3 REIMBURSEMENT. Except with respect to costs and expenses incurred
in connection with any legal, administrative or other proceeding to which
Section 2.3, 7 or 8 applies, each party to this Separation Agreement providing
access, information or witnesses to the other party pursuant to Section 5.1 or
5.2 shall be entitled to receive from the recipient, upon the presentation of
invoices therefor, payment for all reasonable out-of-pocket costs and expenses
(excluding allocated
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compensation, salary and overhead expense) as may be reasonably incurred in
providing such information or witnesses.
5.4 RETENTION OF RECORDS. Except as otherwise required by law, each of
EDS and GM shall use commercially reasonable efforts to accommodate the other
with respect to retention and provision of copies of any significant information
in such party's possession or under its control relating to the Business,
assets, or liabilities of the other party. This Section 5.4 shall not supersede
or be applicable in lieu of any provision governing retention of records
contained in any Service Agreement.
6. EXPENSES.
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6.1 GENERAL. Except as otherwise provided in this Separation Agreement
or any GM-EDS Contract entered into in connection with the Split-Off, all costs
and expenses of any party hereto in connection with the Split-Off shall be paid
by the party that incurs such costs and expenses.
6.2 FEES OF PROFESSIONAL ADVISORS.
(a) With respect to the legal, accounting, financial and other
advisors listed on Exhibit F, EDS shall be responsible for (i) the payment
of the fees and expenses incurred by such advisors in connection with the
Split-Off and (ii) any indemnification, reimbursement or contribution
obligation EDS may have to such advisors. In addition, EDS shall be
responsible for any indemnification, reimbursement or contribution
obligation GM may have pursuant to those two separate engagement letters,
dated March 20, 1996, between GM and each of Lehman Brothers Inc. and
Morgan Stanley & Co. Incorporated. GM shall afford to EDS all of GM's
rights and benefits under paragraphs 4, 5 and 6 of such engagement letters.
(b) With respect to the legal, accounting, financial and other
advisors listed on Exhibit G, GM shall be responsible for (i) the payment
of the fees and expenses incurred by such advisors in connection with the
Split-Off and (ii) any indemnification, reimbursement or contribution
obligation GM may have to such advisors.
6.3 COSTS OF PREPARATION AND DISTRIBUTION OF CONSENT SOLICITATION AND
FORM S-4. Subject to Section 6.2, all reasonable out-of-pocket costs and
expenses of printing and distributing the Form S-4, the fees associated with
filing the Form S-4 with the SEC, the fees associated with making any other
federal, state, local or foreign governmental securities law filings in
connection with the Split-Off, and the fees and expenses of the Exchange Agent
or any consent solicitation agents, information agents or similar consultants
engaged by EDS or GM in connection with effecting the Split-Off (including the
expenses of printing and distributing the letter of transmittal and instructions
for the exchange of stock certificates and notices to holders of GM common stock
of actions taken by written consent) shall be paid as follows: (i) GM shall pay
all such costs, fees and expenses up to an aggregate of $3,000,000; and (ii) all
such costs, fees and expenses in excess of an aggregate of $3,000,000 shall be
paid 50% by GM and 50% by EDS.
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6.4 CERTAIN COSTS RELATING TO EDS COMMON STOCK. All costs of printing
and engraving and fees of any transfer agent engaged by EDS, and all fees
relating to listing EDS Common Stock on any stock exchange or similar
organization shall be paid by EDS.
6.5 ANNUAL FEE FOR LISTING OF STOCK GM hereby represents and warrants
that it has paid in full the continuing annual fee required by the New York
Stock Exchange for the listing of the Class E Stock thereon with respect to
1996. As soon as practicable after the Effective Time, EDS shall reimburse GM
for the portion of such fee allocable to the period within 1996 following the
Effective Time.
6.6 ALLOWANCE. In connection with the establishment of the amount of
the Special Inter-Company Payment, a $50,000,000 allowance (the "Allowance") is
hereby provided to EDS with respect to the resolution of various uncertain,
contingent and other matters arising directly or indirectly out of the
separation of GM and EDS. GM and EDS acknowledge and agree that prior to the
date hereof, a portion of such Allowance has been utilized by EDS and, as of the
Effective Time, $9,340,000 of such Allowance (the "Remainder") will remain.
EDS shall be entitled to apply such Remainder against any amounts that are or
may become payable by EDS or any EDS Affiliate to GM or any GM Affiliate in
connection with any uncertain, contingent or other matter arising prior to the
Effective Time directly or indirectly out of the separation of GM and EDS;
provided, however, that such Remainder shall not be applied against any items
specifically provided for in the Tax Allocation Agreement or this Separation
Agreement (other than any amounts payable by EDS pursuant to Section 2.2(f) or,
if applicable, amounts that are or become payable by EDS as a result of the
application of Section 8.1(f)). If any portion of the Remainder has not been
utilized by EDS or the EDS Affiliates as of the 18-month anniversary of the
Effective Time, the parties shall negotiate in good faith to ensure, to the
maximum extent practicable, that EDS will be able to utilize the full amount of
the Remainder in accordance with the intended scope of the Remainder. Any
portion of the Remainder that has not been utilized by EDS or the EDS Affiliates
as of the two-year anniversary of the Effective Time (the "Expiration Date")
shall be eliminated and shall be no longer available for utilization by EDS;
provided, however, that if the negotiations described above have not been
concluded and implemented by the Expiration Date, the Expiration Date shall be
automatically extended until such negotiations are concluded and the results
thereof implemented.
7. COVENANT TO PRESERVE TAX-FREE STATUS OF SPLIT-OFF.
-------------------------------------------------
7.1 REPRESENTATIONS AND WARRANTIES. EDS hereby represents and warrants
that (i) it has examined the Ruling Request and the Ruling, and (ii) the facts
presented and the representations made therein, to the extent descriptive of EDS
or the EDS Business (including, without limitation, the business purposes for
the Split-Off, the representations in the Ruling to the extent that they relate
to EDS or the EDS Business, and the plans, proposals, intentions and policies of
EDS), are true, correct and complete in all material respects.
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7.2 RESTRICTIONS ON EDS.
(a) Secondary Capital Stock Transactions. Until the first day after
the two-year anniversary of the Effective Time, EDS shall not enter into
any Proposed Acquisition Transaction or, to the extent EDS has the right to
prohibit any Proposed Acquisition Transaction, permit any Proposed
Acquisition Transaction to occur (whether by (i) redeeming rights under a
stockholders rights plan, (ii) finding a tender offer to be a "permitted
offer" under any such plan or otherwise causing any such plan to be
inapplicable or neutralized with respect to any Proposed Acquisition
Transaction, or (iii) approving any Proposed Acquisition Transaction,
whether for purposes of Section 203 of the DGCL or any similar corporate
statute, any "fair price" or other provision of EDS' charter or bylaws or
otherwise) unless prior to the consummation of such Proposed Acquisition
Transaction:
(x) GM has determined, in its sole and absolute discretion, which
discretion shall be exercised in good faith solely to preserve the
Tax-Free Status of the Split-Off, that such Proposed Acquisition
Transaction either (1) would constitute a Tax-Free Reorganization, or
(2) would not otherwise jeopardize the Tax-Free Status of the Split-
Off; or
(y) There has been obtained a ruling from the IRS, in form and
substance reasonably satisfactory to GM, that such Proposed
Acquisition Transaction would constitute a Tax-Free Reorganization.
The foregoing shall not prohibit EDS from entering into a contract or
agreement to consummate any Proposed Acquisition Transaction if such
contract or agreement requires satisfaction of the requirements of
subparagraph (x) or (y) above prior to the consummation of such Proposed
Acquisition Transaction.
(b) Primary Capital Stock Transactions. Until the first day after the
six-month anniversary of the Effective Time, EDS shall not enter into any
transaction with any Person or group of related Persons if, as a result of
such transaction, such Person or group of related Persons would acquire
from EDS a number of shares of EDS Capital Stock that, when aggregated with
all other shares of EDS Capital Stock then owned by such Person or group of
related Persons, would constitute (i) more than 20% of the total combined
voting power of all outstanding shares of Voting Stock of EDS or (ii) more
than 20% of the total number of outstanding shares of any class or series
of EDS Capital Stock other than Voting Stock of EDS, unless prior to the
consummation of such transaction GM has determined, in its sole and
absolute discretion, which discretion shall be exercised in good faith
solely to preserve the Tax-Free Status of the Split-Off, that such
transaction would not jeopardize the Tax-Free Status of the Split-Off.
Solely for purposes of this Section 7.2(b), any option, warrant or other
security that would permit such Person or group of related Persons to
acquire shares of Voting Stock of EDS or other EDS Capital Stock, or any
security convertible into or
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exchangeable for shares of Voting Stock of EDS or other EDS Capital Stock,
shall be treated as if it had been fully exercised, converted or exchanged.
Notwithstanding the foregoing, (i) the provisions of this Section 7.2(b)
shall not prohibit EDS from implementing, or otherwise complying with the
provisions of, any stockholders rights plan of EDS, and (ii) issuances of
shares of EDS Capital Stock that are coupled with (x) the redemption or
repurchase of outstanding shares of EDS Capital Stock and/or (y) the
distribution of an extraordinary dividend (as defined in Section 1059(c) of
the Code) shall be regarded as sales of outstanding shares of EDS Capital
Stock and shall be subject to the restrictions of Section 7.2(a). Solely
for purposes of the preceding sentence, an issuance is coupled with a
redemption, repurchase or extraordinary dividend distribution if, at the
time of such issuance, there exists a plan or intention on the part of EDS
to use the proceeds therefrom to fund such redemption, repurchase or
extraordinary dividend distribution, directly or indirectly, in whole or in
part. Such a plan or intention shall be deemed to exist at the time of such
issuance if such redemption, repurchase or extraordinary dividend
distribution occurs within the period that begins three months before the
date of such issuance and ends three months after the date of the issuance.
Notwithstanding the foregoing, EDS shall not be prohibited from issuing
shares of EDS Capital Stock and using the proceeds therefrom to redeem or
repurchase shares of EDS Capital Stock that were issued by EDS after the
Effective Time.
(c) Active Trade or Business. Until the first day after the two-year
anniversary of the Effective Time, EDS, either directly or through one or
more Subsidiaries directly or indirectly controlled by EDS, shall continue
the active conduct of the trade or business (as defined in Section
355(b)(2) of the Code) conducted at the Effective Time. EDS shall not (i)
liquidate, dispose of, or otherwise discontinue the conduct of any material
portion of such trade or business or (ii) dispose of any business or assets
that would cause EDS to be operated in a manner inconsistent in any
material respect with the business purposes for the Split-Off as set forth
in the Ruling Request unless GM has determined, in its sole and absolute
discretion, which discretion shall be exercised in good faith solely to
preserve the Tax-Free Status of the Split-Off, that such liquidation,
disposition, or discontinuance would not jeopardize the Tax-Free Status of
the Split-Off. EDS shall not under any circumstances liquidate, dispose of,
or otherwise discontinue the conduct of any portion of such trade or
business if such liquidation, disposition or discontinuance would breach
Section 7.2(d). EDS shall continue the active conduct of such trade or
business primarily through officers and employees of EDS or its
Subsidiaries (and not primarily through independent contractors) who are
not officers or employees of GM or of any GM Affiliates. Notwithstanding
the foregoing, (i) liquidations of any of EDS' Subsidiaries into EDS or one
or more Subsidiaries directly or indirectly controlled by EDS shall not be
deemed to breach this Section 7.2(c) and (ii) EDS shall not be prohibited
from liquidating, disposing of or otherwise discontinuing the conduct of
one or more trades or businesses, or any portion thereof, provided that, in
the case of this clause (ii), the aggregate value of the trades or
businesses, or portions thereof, so liquidated, disposed of or discontinued
shall not exceed $1 billion (as determined as of the Effective Time). For
purposes of the preceding sentence, asset retirements and discontinuances
of product lines within a trade or business the active conduct of which is
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continued shall not be deemed a liquidation, disposition or discontinuance
of a trade or business or portion thereof. Solely for purposes of this
Section 7.2(c), EDS shall not be treated as directly or indirectly
controlling a Subsidiary unless EDS owns, directly or indirectly, shares of
capital stock of such Subsidiary constituting (i) 80% or more of the total
combined voting power of all outstanding shares of Voting Stock of such
Subsidiary and (ii) 80% or more of the total number of outstanding shares
of each class or series of capital stock of such Subsidiary other than
Voting Stock.
(d) Continuity of Business. Until the first day after the two-year
anniversary of the Effective Time, (i) EDS shall not voluntarily dissolve
or liquidate, and (ii) except in the ordinary course of business, neither
EDS nor any Subsidiaries directly or indirectly controlled by EDS shall
sell, transfer, or otherwise dispose of or agree to dispose of assets
(including, for such purpose, any shares of capital stock of such
Subsidiaries) that, in the aggregate, constitute more than (x) 60% of the
gross assets of EDS or (y) 60% of the consolidated gross assets of EDS and
such Subsidiaries, unless prior to the consummation of such transaction GM
has determined, in its sole and absolute discretion, which discretion shall
be exercised in good faith solely to preserve the Tax-Free Status of the
Split-Off, that such transaction would not jeopardize the Tax-Free Status
of the Split-Off. The amount of gross assets of EDS and such Subsidiaries
shall be based on the fair market value of each such asset as of the
Effective Time. Sales, transfers or other dispositions by EDS or any of its
Subsidiaries to EDS or one or more Subsidiaries directly or indirectly
controlled by EDS shall not be included in any determinations under this
Section 7.2(d) of whether such 60% or more of the gross assets of EDS or
60% of the consolidated gross assets of EDS and such Subsidiaries have been
sold, transferred or otherwise disposed of. Solely for purposes of this
Section 7.2(d), EDS shall not be treated as directly or indirectly
controlling a Subsidiary unless EDS owns, directly or indirectly, shares of
capital stock of such Subsidiary constituting (i) 80% or more of the total
combined voting power of all outstanding shares of Voting Stock of such
Subsidiary and (ii) 80% or more of the total number of outstanding shares
of each class or series of capital stock of such Subsidiary other than
Voting Stock.
(e) Miscellaneous. Until the first day after the two-year anniversary
of the Effective Time, EDS shall not take, or permit any of its
Subsidiaries to take, any other actions or enter into any transaction or
series of transactions or agree to enter into any other transactions that
would be reasonably likely to jeopardize the Tax-Free Status of the Split-
Off, including any action or transaction that would be reasonably likely to
be inconsistent with any representation made to the IRS in connection with
the Ruling Request, unless prior to the consummation of such action or
transaction GM has determined, in its sole and absolute discretion, which
discretion shall be exercised in good faith solely to preserve the Tax-Free
status of the Split-Off, that such action or transaction would not
jeopardize the Tax-Free Status of the Split-Off. Notwithstanding the
foregoing, if and to the extent that any action or transaction is described
in and permitted pursuant to Section 7.2(a), (b), (c) or (d), such action
or transaction shall not be prohibited by this Section 7.2(e).
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7.3 COOPERATION AND OTHER COVENANTS.
(a) Notice of Subsequent EDS Ruling Requests. Until the first day
after the two-year anniversary of the Effective Time, EDS shall furnish GM
with a copy of any Subsequent EDS Ruling Request that relates to the Split-
Off or that could otherwise be reasonably expected to have an impact on the
Tax-Free Status of the Split-Off.
(b) Cooperation. EDS shall cooperate with GM and shall take (or
refrain from taking) all such actions as GM may reasonably request in
connection with obtaining (i) any GM determination referred to in Section
7.2(a), (b), (c), (d) or (e) or (ii) GM's receipt of a Subsequent Split-Off
Ruling. Such cooperation shall include, without limitation, providing any
information and/or representations reasonably requested by GM to enable GM
(or counsel for GM) to obtain and maintain any Subsequent Split-Off Ruling.
From and after any Representation Date in connection with obtaining any
such determination or GM's receipt of a Subsequent Split-Off Ruling and
until the first day after the two-year anniversary of the date of such
determination or receipt, EDS shall not take (nor shall it refrain from
taking) any action that, if EDS had intended to take (or refrain from
taking) such action at the relevant Representation Date, would have caused
such representation to be untrue.
(c) Notice. Until all restrictions set forth in Section 7.2 have
expired, EDS shall give GM written notice of any intention to effect or
permit a transaction described in Section 7.2 within a period of time
reasonably sufficient to enable GM to make the determination referred to in
Section 7.2(a), (b), (c), (d) or (e) or to prepare and seek any Subsequent
Split-Off Ruling in connection with such proposed transaction. Each such
notice shall set forth the terms and conditions of the proposed
transaction, including, without limitation, as applicable, the nature of
any related action proposed to be taken by the board of directors of EDS,
the approximate number of shares of EDS Capital Stock proposed to be
transferred or issued, the approximate value of EDS' assets (or assets of
any of EDS' Subsidiaries) proposed to be transferred, the proposed
timetable for such transaction, and the number of shares of EDS Capital
Stock otherwise then owned by the other party to the proposed transaction,
all with sufficient particularity to enable GM to make any such required
determination, including information required to prepare and seek a
Subsequent Split-Off Ruling in connection with such proposed transaction.
All information provided by EDS to GM pursuant to this Section 7 shall be
deemed subject to the confidentiality obligations of Section 4. Promptly,
but in any event within 15 days, after GM receives such written notice from
EDS, GM shall evaluate such information and notify EDS in writing of such
determination or of GM's intent to seek a Subsequent Split-Off Ruling and
the proposed date for submission of the request therefor, which date shall
not be more than 45 days after the date GM so notifies EDS of GM's intent
to seek a Subsequent Split-Off Ruling, provided that such 45-day period
shall be appropriately extended for any period of noncompliance by EDS with
Section 7.3(b). GM shall notify EDS promptly, but in any event within two
Business Days, after the receipt of a Subsequent Split-Off Ruling. If GM
makes a determination that a transaction described in Section 7.2 would
jeopardize the Tax-Free
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Status of the Split-Off, such notice to EDS shall set forth, in reasonable
detail, the reasons therefor and the reasons for not requesting a
Subsequent Split-Off Ruling.
7.4 INDEMNIFICATION FOR TAX LIABILITIES.
(a) General. Notwithstanding any other provision of this Agreement or
any provision of any of the Tax Allocation Agreements to the contrary but
subject to Section 7.4(b), EDS shall indemnify, defend and hold harmless GM
and each GM Affiliate (or any successor to any of them) against any and all
Tax-Related Losses incurred by GM in connection with any proposed tax
assessment or tax controversy with respect to the Split-Off to the extent
caused by any breach by EDS of any of its representations, warranties or
covenants made pursuant to this Section 7. All interest or penalties
incurred in connection with such Tax-Related Losses shall be computed for
the time period up to and including the date that EDS pays its
indemnification obligation in full.
(b) Exceptions to EDS' Indemnification. If GM (i) makes a
determination pursuant to Section 7.2(a), (b), (c), (d) or (e), by a
Subsequent Split-Off Ruling or otherwise, and (ii) delivers to EDS written
notice of such determination pursuant to Section 7.3(c), EDS shall have no
obligation pursuant to Section 7.4(a), except to the extent that any Tax-
Related Losses so incurred resulted from the inaccuracy, incorrectness or
incompleteness, in any material respect, of any representation provided by
EDS upon which such Subsequent Split-Off Ruling and/or determination was
based.
(c) Timing and Method of Tax Indemnification Payments. EDS shall pay
any amount due and payable to GM pursuant to this Section 7 on or before
the 90th day following the earlier of agreement or determination that such
amount is due and payable to GM. All payments pursuant to this Section 7.4
shall be made by wire transfer to the bank account designated by GM for
such purpose, and on the date of such wire transfer EDS shall give GM
notice of the transfer.
7.5 PROCEDURE FOR INDEMNIFICATION FOR TAX LIABILITIES.
(a) Notice of Claim. If GM receives notice of the assertion of any
Third-Party Claim with respect to which EDS is obligated under Section 7.4
to provide indemnification, GM shall give EDS notice thereof (together with
a copy of such Third-Party Claim, process or other legal pleading) promptly
after becoming aware of such Third-Party Claim; provided, however, that the
failure of GM to give notice as provided in this Section shall not relieve
EDS of its obligations under Section 7.4, except to the extent that EDS is
actually prejudiced by such failure to give notice. Such notice shall
describe such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party. GM and EDS shall jointly
control the defense of, and cooperate with each other with respect to
defending, any Third-Party Claim
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with respect to which EDS is obligated under Section 7.4 to provide
indemnification, provided that EDS shall forfeit such joint control right
with respect to a particular Third-Party Claim if EDS or any EDS Affiliate
makes any public statement or filing, or takes any action (including, but
not limited to, the filing of any submission or pleading, or the giving of
a deposition or production of documents, in any administrative or court
proceeding) in connection with such Third-Party Claim that could reasonably
result in the shifting of liability for any Losses arising out of such
Third-Party Claim from EDS to GM (or any of its Affiliates). EDS and GM
shall exercise their rights to jointly control the defense of any such
Third-Party Claim solely for the purpose of defeating such Third-Party
Claim and neither EDS nor GM shall make any statements or take any actions
that could reasonably result in the shifting of liability for any Losses
arising out of such Third-Party Claim from the party making such statement
or taking such action (or any of its Affiliates) to the other party (or any
of its Affiliates). Statements made or actions taken by either EDS or GM in
connection with the defense of any such Third-Party Claim shall not
prejudice the rights of such party in any subsequent action or proceeding
between the parties. If either GM or EDS fails to jointly defend any such
Third-Party Claim, the other party shall solely defend such Third-Party
Claim and the party failing to jointly defend shall use commercially
reasonable efforts to cooperate with the other party in its defense of such
Third Party Claim; provided, however, that GM may not compromise or settle
any such Third-Party Claim without the prior written consent of EDS, which
consent shall not be unreasonably withheld. All costs and expenses of
either party in connection with, and during the course of, the joint
control of the defense of any such Third-Party Claim shall be initially
paid by the party that incurs such costs and expenses. Such costs and
expenses shall be reallocated and reimbursed in accordance with the
respective indemnification obligations of the parties at the conclusion of
the defense of such Third-Party Claim.
7.6 ARBITRATION. Any dispute between the parties arising out of or
relating to this Section 7, including the interpretation of this Section 7, or
any actual or purported breach of this Section 7, shall be resolved only in
accordance with the following provisions:
(a) Negotiation. GM and EDS shall attempt in good faith to resolve any
such dispute promptly through negotiations of the parties. In the event of
any such dispute, either party may deliver a Dispute Notice to the other
party, and within 20 Business Days of the receipt of such Dispute Notice,
the appropriate representatives of GM and EDS shall meet to attempt to
resolve such dispute. If such dispute has not been resolved within the
Negotiation Period, or if one of the parties fails or refuses to negotiate
such dispute, the issue shall be settled by arbitration pursuant to Section
7.6(b). The results of such arbitration shall be final and binding on the
parties.
(b) Arbitration Procedure. Either party may initiate arbitration with
regard to such dispute by giving the other party written notice either (i)
at any time following the end of the Negotiation Period, or (ii) if the
parties do not meet within 20 Business Days of the receipt of the Dispute
Notice, at any time thereafter. The arbitration shall be conducted
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by three arbitrators in accordance with the CPR Rules, except as otherwise
provided in this Section 7.6. Within 20 days following receipt of the
written notice of arbitration, GM and EDS shall each appoint one
arbitrator. The two arbitrators so appointed shall appoint the third
arbitrator. If either GM or EDS shall fail to appoint an arbitrator within
such 20-day period, the arbitration shall be by the sole arbitrator
appointed by the other party. Whether jointly selected by GM and EDS or
otherwise, each arbitrator selected to resolve such dispute shall be a tax
attorney who is generally recognized in the tax community as a qualified
and competent tax practitioner with experience in the tax area involved in
the issue or issues to be resolved. Such arbitrators shall be empowered to
determine whether EDS is required to indemnify GM pursuant to Section 7.4
and to determine the amount of the related indemnification payment. Each
party shall bear 50% of the aggregate expenses of the arbitrators. The
arbitration shall be governed by the United States Arbitration Act, 9
U.S.C. (S)1-14. The place of arbitration shall be New York, New York. The
final decision of the arbitrators shall be rendered no later than one year
from the date of the written notice of arbitration.
7.7 EXCLUSIVE REMEDIES. Except for the right to pursue equitable
remedies, the remedies provided in this Section 7 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of Section 7.4.
8. INDEMNIFICATION.
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8.1 INDEMNIFICATION BY EDS. Subject to Section 8.3, from and after the
Effective Time, EDS shall indemnify, defend and hold harmless GM, all GM
Affiliates and each of their respective directors, officers and employees (in
their capacities as such), from and against:
(a) all Losses of GM or any GM Affiliate relating to, arising out of,
or due to, directly or indirectly, any breach of any of the provisions of
this Separation Agreement by EDS.
(b) all Losses of GM, any GM Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact contained
in the EDS Disclosure Portions or the omission or alleged omission to state
in the EDS Disclosure Portions a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that EDS shall not be liable in any such case to the
extent that any such Losses relate to, arise out of or are based upon any
plans, proposals, intentions or policies of GM or any GM Affiliates
existing at the time of the effectiveness of the Form S-4 and of which EDS
did not then have knowledge.
(c) all Losses of GM, any GM Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact contained
in the Joint Disclosure Portions or the omission
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or alleged omission to state in the Joint Disclosure Portions a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that EDS shall be liable in any
such case only to the extent that any such Losses arise out of or are based
upon any plans, proposals, intentions or policies of EDS or any EDS
Affiliate existing at the time of the effectiveness of the Form S-4 and of
which GM did not then have knowledge.
(d) all Losses of GM, any GM Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact relating to
EDS or any EDS Affiliate contained in any report of GM with respect to any
period entirely or partially prior to the Effective Time required by or
filed under the Exchange Act relating to the EDS Business or the Class E
Stock, or any filing made prior to the Effective Time under the Securities
Act relating to the Class E Stock by GM, or the omission or alleged
omission to state in any such report or filing a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that EDS shall be liable in any such case
only to the extent that any such Losses arise out of or are based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made in any such report or filing in reliance upon and in
conformity with written information furnished to GM, any GM Affiliate or
any of their respective Representatives by or on behalf of EDS, any EDS
Affiliate or any of their respective Representatives specifically for use
in preparing such report or filing by GM; provided, further, that EDS shall
not be liable in any such case to the extent that any such Losses relate
to, arise out of or are based upon any plans, proposals, intentions or
policies of GM or any GM Affiliate existing at the time such report or
filing was made; provided, further, that this Section 8.1(d) shall not
apply to the Form S-4.
(e) all Losses of GM, any GM Affiliate or any of their respective
directors, officers or employees relating to or arising out of actions
taken (or omitted to be taken) from and after the Effective Time by EDS,
any EDS Affiliate or the EDS Transfer Agent in connection with (i)
effecting the exchange of certificates representing shares of EDS Common
Stock for certificates representing shares of Class E Stock, (ii)
recognizing the Persons who were record holders of Class E Stock
immediately prior to the Effective Time as the record holders of EDS Common
Stock or (iii) affording such Persons the dividend, voting and other rights
and privileges incident to the EDS Common Stock.
(f) except as otherwise provided in Section 8.1(a), (b), (c), (d) or
(e), all Losses of GM, any GM Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to,
directly or indirectly, the EDS Business, whether relating to, arising out
of, or due to occurrences or conditions prior to, on, or after the
Effective Time; provided, however, that EDS shall have no obligations under
this Section 8.1(f) with respect to any Losses relating to, arising out of
or due to, directly or indirectly, any intentional or negligent act or
omission to act by GM, any GM Affiliate or any of their respective
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Representatives, unless such intentional or negligent act or omission was
at the express direction of EDS, any EDS Affiliate or any of their
respective Representatives.
8.2 INDEMNIFICATION BY GM. Subject to Section 8.3, from and after the
Effective Time, GM shall indemnify, defend, and hold harmless EDS, all EDS
Affiliates, and each of their respective directors, officers and employees (in
their capacities as such), from and against:
(a) all Losses of EDS or any EDS Affiliate relating to, arising out
of, or due to, directly or indirectly, any breach of any of the provisions
of this Separation Agreement by GM.
(b) all Losses of EDS, any EDS Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact contained
in the GM Disclosure Portions or the omission or alleged omission to state
in the GM Disclosure Portions a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided,
however, that GM shall not be liable in any such case to the extent that
any such Losses relate to, arise out of or are based upon any plans,
proposals, intentions or policies of EDS or any EDS Affiliates existing at
the time of the effectiveness of the Form S-4 and of which GM did not then
have knowledge.
(c) all Losses of EDS, any EDS Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact contained
in the Joint Disclosure Portions or the omission or alleged omission to
state in the Joint Disclosure Portions a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that GM shall be liable in any such case only to the
extent that any such Losses arise out of or are based upon any plans,
proposals, intentions or policies of GM or any GM Affiliate existing at the
time of the effectiveness of the Form S-4 and of which EDS did not then
have knowledge.
(d) all Losses of EDS, any EDS Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact contained
in any report of GM with respect to any period entirely or partially prior
to the Effective Time required by or filed under the Exchange Act, or any
filing made prior to the Effective Time under the Securities Act by GM, or
the omission or alleged omission to state in any such report or filing a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that GM shall not be
liable in any such case to the extent that any such Losses relate to, arise
out of or are based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made in any such report or filing
in reliance upon and in conformity with written information furnished to
GM, any GM Affiliate or any of their respective Representatives by or on
behalf of EDS, any EDS Affiliate or any of their
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respective Representatives specifically for use in preparing such report or
filing by GM; provided, further, that the foregoing proviso shall be deemed
inapplicable to the extent that the Losses referred to in such proviso
relate to, arise out of or are based upon any plans, proposals, intentions
or policies of GM or any GM Affiliate existing at the time such report or
filing was made; provided, further, that GM shall not be liable in any such
case to the extent that any such Losses relate to, arise out of or are
based upon any plans, proposals, intentions or policies of EDS or any EDS
Affiliates existing at the time such report or filing was made; provided,
further, that this Section 8.2(d) shall not apply to the Form S-4.
(e) all Losses of EDS, any EDS Affiliate or any of their respective
directors, officers or employees relating to or arising out of actions
taken (or omitted to be taken) at or prior to the Effective Time by GM, any
GM Affiliate or the GM Transfer Agent (or any predecessor thereof) in
connection with (i) recognizing any Person who is or was at any time a
record holder of Class E Stock as a record holder of Class E Stock or (ii)
affording such Persons the dividend, voting and other rights and privileges
incident to the Class E Stock.
(f) except as otherwise provided in Section 8.2(a), (b), (c), (d) or
(e), all Losses of EDS, any EDS Affiliate or any of their respective
directors, officers or employees relating to, arising out of, or due to,
directly or indirectly, the GM Business, whether relating to, arising out
of or due to occurrences or conditions prior to, on, or after the Effective
Time, including, without limitation, all Losses relating to, arising out
of, or due to any GM Pension Liability; provided, however, that GM shall
have no obligations under this Section 8.2(f) with respect to any Losses
relating to, arising out of or due to, directly or indirectly, any
intentional or negligent act or omission to act by EDS, any EDS Affiliate
or any of their respective Representatives, unless such intentional or
negligent act or omission was at the express direction of GM, any GM
Affiliate or any of their respective Representatives.
8.3 OTHER LIABILITIES.
(a) This Section 8 shall not be applicable to (i) any Tax-Related
Losses, which shall be governed by Section 7 of this Separation Agreement,
or (ii) except as provided in Section 8.4, any other Losses relating to,
arising out of, or due to Taxes, which shall be governed by the Tax
Allocation Agreements, as applicable.
(b) This Section 8 shall not be applicable to any Losses relating to,
arising out of, or due to any breach of the provisions of any GM-EDS
Contract, which Losses shall be governed by the terms of such GM-EDS
Contract.
(c) This Section 8 shall not be applicable to any Split-Off Losses,
except as provided in Section 2.3(g).
(d) Subject to Sections 8.1(c) and 8.2(c), with respect to all Losses
of GM, EDS or any of their respective Affiliates, directors, officers or
employees relating to, arising
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out of, or due to (i) any untrue statement or alleged untrue statement of a
material fact contained in any Joint Disclosure Portion or (ii) the
omission or alleged omission to state in any Joint Disclosure Portion a
material fact required to be stated therein or necessary to make the
statements therein not misleading, such Losses shall be equally divided
between, and paid by, EDS and GM.
8.4 TAX EFFECTS OF INDEMNIFICATION. The amount of any Loss for which
indemnification is provided under this Separation Agreement (other than pursuant
to Section 7) shall be (i) increased to take account of any net Tax cost
incurred by the Indemnitee arising from the receipt or accrual of an Indemnity
Payment hereunder (grossed up for such increase) and (ii) reduced to take
account of any net Tax benefit realized by the Indemnitee arising from incurring
or paying such Loss. In computing the amount of any such Tax cost or Tax
benefit, the Indemnitee shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising from the
receipt or accrual of any Indemnity Payment hereunder or incurring or paying any
indemnified Loss. Any Indemnity Payment hereunder shall initially be made
without regard to this Section 8.4 and shall be increased or reduced to reflect
any such net Tax cost (including gross-up) or net Tax benefit only after the
Indemnitee has actually realized such cost or benefit. For purposes of this
Agreement, an Indemnitee shall he deemed to have "actually realized" a net Tax
cost or a net Tax benefit to the extent that, and at such time as, the amount of
Taxes payable by such Indemnitee is increased above or reduced below, as the
case may be, the amount of Taxes that such Indemnitee would be required to pay
but for the receipt or accrual of the Indemnity Payment or the incurrence or
payment of such Loss, as the case may be. The amount of any increase or
reduction hereunder shall be adjusted to reflect any final determination (which
shall include the execution of Form 870-AD or successor form) with respect to
the Indemnitee's liability for Taxes, and payments between GM and EDS to reflect
such adjustment shall be made if necessary.
8.5 EFFECT OF INSURANCE UPON INDEMNIFICATION. The amount which an
Indemnifying Party is required to pay to any Indemnitee pursuant to this Section
8 shall be reduced (including retroactively) by any Insurance Proceeds and other
amounts actually recovered by such Indemnitee in reduction of the related Loss,
it being understood and agreed that each of EDS and GM shall use commercially
reasonable efforts to collect any such proceeds or other amounts to which it or
any of its Affiliates is entitled, without regard to whether it is the
Indemnifying Party hereunder. No Indemnitee shall be required, however, to
collect any such proceeds or other amounts prior to being entitled to
indemnification from an Indemnifying Party hereunder. If an Indemnitee receives
an Indemnity Payment in respect of a Loss and subsequently receives Insurance
Proceeds or other amounts in respect of such Loss, then such Indemnitee shall
pay to such Indemnifying Party an amount equal to the difference between (a) the
sum of the amount of such Indemnity Payment and the amount of such Insurance
Proceeds or other amounts actually received and (b) the amount of such Loss,
adjusted (at such time as appropriate adjustment can be determined) in each case
to reflect any premium adjustment attributable to such claim. Settlements of
any claims covered by any Insurance Policies shall be subject to Section 2.2(h).
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8.6 PROCEDURE FOR INDEMNIFICATION INVOLVING THIRD-PARTY CLAIMS.
(a) Notice of Claim. If any Indemnitee receives notice of the
assertion of any Third-Party Claim with respect to which an Indemnifying
Party is obligated under this Separation Agreement to provide
indemnification, such Indemnitee shall give such Indemnifying Party notice
thereof (together with a copy of such Third-Party Claim, process or other
legal pleading) promptly after becoming aware of such Third-Party Claim;
provided, however, that the failure of any Indemnitee to give notice as
provided in this Section shall not relieve any Indemnifying Party of its
obligations under this Section 8, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice.
Such notice shall describe such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party. An Indemnifying Party, at such
Indemnifying Party's own expense and through counsel chosen by such
Indemnifying Party (which counsel shall be reasonably acceptable to the
Indemnitee), may elect to defend any Third-Party Claim. If an Indemnifying
Party elects to defend a Third-Party Claim, then, within ten Business Days
after receiving notice of such Third-Party Claim (or sooner, if the nature
of such Third Party Claim so requires), such Indemnifying Party shall
notify the Indemnitee of its intent to do so, and such Indemnitee shall
cooperate in the defense of such Third-Party Claim. Such Indemnifying Party
shall pay such Indemnitee's reasonable out-of-pocket expenses incurred in
connection with such cooperation. Such Indemnifying Party shall keep the
Indemnitee reasonably informed as to the status of the defense of such
Third-Party Claim. After notice from an Indemnifying Party to an Indemnitee
of its election to assume the defense of a Third-Party Claim, such
Indemnifying Party shall not be liable to such Indemnitee under this
Section 8 for any legal or other expenses subsequently incurred by such
Indemnitee in connection with the defense thereof other than those expenses
referred to in the preceding sentence; provided, however, that such
Indemnitee shall have the right to employ one law firm as counsel, together
with a separate local law firm in each applicable jurisdiction ("Separate
Counsel"), to represent such Indemnitee in any action or group of related
actions (which firm or firms shall be reasonably acceptable to the
Indemnifying Party) if, in such Indemnitee's reasonable judgment at any
time, either a conflict of interest between such Indemnitee and such
Indemnifying Party exists in respect of such claim, or there may be
defenses available to such Indemnitee which are different from or in
addition to those available to such Indemnifying Party, and in that event
(i) the reasonable fees and expenses of such Separate Counsel shall be paid
by such Indemnifying Party (it being understood, however, that the
Indemnifying Party shall not be liable for the expenses of more than one
Separate Counsel (excluding local counsel) with respect to any Third-Party
Claim (even if against multiple Indemnitees)) and (ii) each of such
Indemnifying Party and such Indemnitee shall have the right to conduct its
own defense in respect of such claim. If an Indemnifying Party elects not
to defend against a Third-Party Claim, or fails to notify an Indemnitee of
its election as provided in this Section within the period of ten Business
Days described above, the Indemnitee may defend, compromise, and settle
such Third Party Claim
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and shall be entitled to indemnification hereunder (to the extent permitted
hereunder); provided, however, that no such Indemnitee may compromise or
settle any such Third-Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the Indemnifying Party shall not, without
the prior written consent of the Indemnitee, (i) settle or compromise any
Third-Party Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnitee of a written release from all liability in
respect of such Third-Party Claim or (ii) settle or compromise any Third-
Party Claim in any manner that would be reasonably likely to have a
material adverse effect on the Indemnitee.
(c) Joint Defense of Certain Claims. Notwithstanding the provisions of
Section 8.6(b), GM and EDS shall jointly control the defense of, and
cooperate with each other with respect to defending, any Third-Party Claim
with respect to which each party is claiming that it is entitled to
indemnification under Section 8.1 or 8.2. If either GM or EDS fails to
jointly defend any such Third-Party Claim, the other party shall solely
defend such Third-Party Claim and the party failing to jointly defend shall
use commercially reasonable efforts to cooperate with the other party in
its defense of such Third Party Claim; provided, however, that neither
party may compromise or settle any such Third-Party Claim without the prior
written consent of the other party, which consent shall not be unreasonably
withheld. All costs and expenses of either party in connection with, and
during the course of, the joint control of the defense of any such Third-
Party Claim shall be initially paid by the party that incurs such costs and
expenses. Such costs and expenses shall be reallocated and reimbursed in
accordance with the respective indemnification obligations of the parties
at the conclusion of the defense of such Third-Party Claim.
8.7 PROCEDURE FOR INDEMNIFICATION NOT INVOLVING THIRD-PARTY CLAIMS. If
any Indemnitee desires to assert against an Indemnifying Party any claim for
indemnification under this Section 8 other than a Third-Party Claim (a "Claim"),
the Indemnitee shall deliver to the Indemnifying Party notice of its demand for
satisfaction of such Claim (a "Request"), specifying in reasonable detail the
amount of such Claim and the basis for asserting such Claim. Within 30 days
after the Indemnifying Party has been given a Request, the Indemnifying Party
shall either (i) satisfy the Claim requested to be satisfied in such Request by
delivering to the Indemnitee payment by wire transfer or a certified or bank
cashier's check payable to the Indemnified Party in immediately available funds
in an amount equal to the amount of such Claim, or (ii) notify the Indemnitee
that the Indemnifying Party contests such Claim by delivering to the Indemnitee
a Dispute Notice pursuant to Section 9.1, stating that the Indemnifying Party
objects to such Claim and specifying in reasonable detail the basis for
contesting such Claim. Thereafter, the Indemnifying Party and the Indemnitee
shall resolve the Claim in accordance with Section 9.1.
8.8 EXCLUSIVE REMEDIES. Except for the right to pursue equitable
remedies, the remedies provided in this Section 8 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of this Section 8.
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9. MISCELLANEOUS.
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9.1 DISPUTE RESOLUTION. GM and EDS shall attempt in good faith to
resolve any dispute between the parties arising out of or relating to this
Separation Agreement promptly through negotiations of the parties. In the event
of any such dispute, either party may deliver a Dispute Notice to the other
party, and within 20 Business Days of the receipt of such Dispute Notice, the
appropriate representatives of GM and EDS shall meet to attempt to resolve such
dispute.
9.2 SURVIVAL. The representations and warranties contained in this
Separation Agreement shall survive the Effective Time until the expiration of
all applicable statutes of limitations.
9.3 COMPLETE AGREEMENT. This Separation Agreement, and the exhibits and
schedules hereto shall constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and shall supersede all prior
and contemporaneous agreements and understandings, whether written or oral,
between the parties with respect to such subject matter.
9.4 AUTHORITY. Each of the parties hereto represents to the other that
(a) it has the corporate power and authority to execute, deliver and perform
this Separation Agreement, (b) the execution, delivery and performance of this
Separation Agreement by it has been duly authorized by all necessary corporate
action, (c) it has duly and validly executed and delivered this Separation
Agreement, and (d) this Separation Agreement is a legal, valid and binding
obligation, enforceable against it in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equity principles.
9.5 GOVERNING LAW. This Separation Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (other than the
laws regarding conflicts of laws) as to all matters, including matters of
validity, construction, effect, performance and remedies.
9.6 CONSENT TO JURISDICTION. Any action, suit or proceeding arising out
of any claim that the parties cannot settle through good faith negotiations
(except any claim to which Section 7.6 applies) shall be litigated exclusively
in the state courts of Delaware. Each of the parties hereto hereby irrevocably
and unconditionally (a) submits to the jurisdiction of the state courts of
Delaware for any such action, suit or proceeding, (b) agrees not to commence any
such action, suit or proceeding except in the state courts of Delaware, (c)
waives, and agrees not to plead or to make, any objection to the venue of any
such action, suit or proceeding in the state courts of Delaware, (d) waives, and
agrees not to plead or to make, any claim that any such action, suit or
proceeding brought in the state courts of Delaware has been brought in an
improper or otherwise inconvenient forum, (e) waives, and agrees not to plead or
to make, any claim that the state courts of Delaware lack personal jurisdiction
over it, and (f) waives its right to remove any such action, suit or proceeding
to the federal courts except when such courts are vested with sole and exclusive
jurisdiction by statute. GM and EDS shall cooperate with each other in
connection with any such action, suit or proceeding to obtain reliable
assurances that confidential treatment will be accorded
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any information that either party shall reasonably deem to be confidential or
proprietary. Each of the parties hereto irrevocably designates and appoints its
respective Service Agent as its agent to receive service of process in any such
action, suit or proceeding. Each of the parties hereto further covenants and
agrees that, until the expiration of all applicable statutes of limitations
relating to potential claims under this Separation Agreement, each such party
shall maintain a duly appointed agent for the service of summonses and other
legal process in the State of Delaware, and shall promptly notify the other
party hereto of any change in the name or address of its Service Agent and the
name and address of any replacement for its Service Agent, if such agent is no
longer the Service Agent named herein. This Section 9.6 is meant to comply with
6 Del. C. (S) 2708.
9.7 NOTICES. All Notices shall be in writing and shall be deemed given
upon (a) a transmitter's confirmation of a receipt of a facsimile transmission
(but only if followed by confirmed delivery of a standard overnight courier the
following Business Day or if delivered by hand the following Business Day), or
(b) confirmed delivery of a standard overnight courier or delivered by hand, to
the parties at the following addresses (or at such other addresses for a party
as shall be specified by like notice):
If to GM to:
General Motors Corporation
3044 West Grand Boulevard
Detroit, Michigan 48202
Facsimile transmission: (313) 974-4529
Attention: Chief Executive Officer
With a copy (which shall not constitute effective notice) to:
General Motors Corporation
3031 West Grand Boulevard
Detroit, MI 48202
Facsimile transmission: (313) 974-0209
Attention: General Counsel
If to EDS, to:
Electronic Data Systems Corporation
Mail Stop: H2-7W-40
5400 Legacy Drive
Plano, Texas 75024
Facsimile transmission: (214) 605-2122
Attention: Chief Executive Officer
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With a copy (which shall not constitute effective notice) to:
Electronic Data Systems Corporation
Mail Stop: H3-3D-05
5400 Legacy Drive
Plano, Texas 75024
Facsimile transmission: (214) 605-5610
Attention: General Counsel
or to such other address as either party hereto may have furnished to the other
party by a Notice in writing in accordance with this Section. Any Notice
delivered pursuant to Section 2.2 shall also be sent to EDS Risk Management.
Any Notice delivered pursuant to Section 7 shall also be sent to GM's Chief Tax
Officer.
9.8 AMENDMENT AND MODIFICATION. This Separation Agreement may not be
amended or modified in any respect except by a written agreement signed by both
of the parties hereto.
9.9 BINDING EFFECT; ASSIGNMENT. This Separation Agreement and all of
the provisions hereof shall be binding upon the parties hereto and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except with respect to a merger of either party with another Person,
neither this Separation Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either party hereto without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
9.10 THIRD PARTY BENEFICIARIES. The EDS Indemnified Parties, the
Indemnitees and their respective successors, heirs, executors, administrators
and other estate representatives shall be third party beneficiaries of the
indemnification provisions of Sections 2.3, 7 and 8, as applicable, and shall be
entitled to enforce those provisions, and in connection with such enforcement
shall be subject to Section 9.6, in each such case as fully and to the same
extent as if they were parties to this Separation Agreement. Except as provided
in the previous sentence, nothing in this Separation Agreement, express or
implied, is intended to or shall confer upon any Person any legal or equitable
right, benefit or remedy of any nature whatsoever under or by reason of this
Separation Agreement, and no Person (other than as provided in the previous
sentence) shall be deemed a third party beneficiary under or by reason of this
Separation Agreement.
9.11 COUNTERPARTS. This Separation Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.12 WAIVER. The observance of any term of this Separation
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce such term, but
such waiver shall be effective only if it is in writing signed by the
46
<PAGE>
party against which such waiver is to be asserted. Unless otherwise expressly
provided in this Separation Agreement, no delay or omission on the part of any
party in exercising any right or privilege under this Separation Agreement shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any right or privilege under this Separation Agreement operate as a waiver of
any other right or privilege under this Separation Agreement nor shall any
single or partial exercise of any right or privilege preclude any other or
further exercise thereof or the exercise of any other right or privilege under
this Separation Agreement. No failure by either party to take any action or
assert any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.
9.13 SEVERABILITY. Any provision of this Separation Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.14 REMEDIES. Each of GM and EDS shall be entitled to enforce its
rights under this Separation Agreement specifically, to recover damages and
costs (including reasonable attorneys' fees) caused by any breach of any
provision of this Separation Agreement and to exercise all other rights existing
in its favor. Each of GM and EDS acknowledges and agrees that under certain
circumstances the breach by GM or any of its Subsidiaries or EDS or any of its
Subsidiaries of a term or provision of this Separation Agreement will
materially and irreparably harm the other party, that money damages will
accordingly not be an adequate remedy for such breach and that the non-
defaulting party, in its sole discretion and in addition to its rights under
this Separation Agreement and any other remedies it may have at law or in
equity, may apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any breach of the provisions of
this Separation Agreement.
9.15 PERFORMANCE. Each of the parties hereto shall use
commercially reasonable efforts to cause to be performed all actions, agreements
and obligations set forth herein to be performed by any Affiliate of such party.
9.16 REFERENCES; CONSTRUCTION. The table of contents and the
section and other headings and subheadings contained in this Separation
Agreement and the Exhibits hereto are solely for the purpose of reference, are
not part of the agreement of the parties hereto, and shall not in any way affect
the meaning or interpretation of this Separation Agreement. All references to
days or months shall be deemed references to calendar days or months. All
references to "$" shall be deemed references to United States dollars. Unless
the context otherwise requires, any reference to a "Section" or "Exhibit" shall
be deemed to refer to a section of this Separation Agreement or an exhibit to
this Separation Agreement. The words "hereof," "herein" and "hereunder" and
words of
47
<PAGE>
similar import referring to this Separation Agreement refer to this Separation
Agreement as a whole and not to any particular provision of this Separation
Agreement. Whenever the words "include," "includes" or "including" are used in
this Separation Agreement, unless otherwise specifically provided, they shall be
deemed to be followed by the words "without limitation."
48
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Separation
Agreement to be duly executed and delivered as of the date and year first
written above.
ELECTRONIC DATA SYSTEMS CORPORATION
By: /s/ Joseph M. Grant
---------------------------------
Name: Joseph M. Grant
-------------------------
Title: Senior Vice President
------------------------
GENERAL MOTORS CORPORATION
By: /s/ Leon J. Krain
---------------------------------
Name: Leon J. Krain
-------------------------
Title: Vice President
------------------------
49
<PAGE>
EXHIBIT A
TRANSFER AGREEMENT
DATED the ____ day of ____________, 1996
BETWEEN:
GENERAL MOTORS OF CANADA LIMITED
(hereinafter "GM")
- and -
E.D.S. OF CANADA, LTD.
(hereinafter "EDS")
WHEREAS GM maintains the General Motors Canada Retirement Program for Salaried
Employees (hereinafter the "GM Canada Plan"); and
WHEREAS some employees of EDS are participating in the GM Canadian Plan; and
WHEREAS pursuant to a Separation Agreement dated ____________________ between
Electronic Data Systems Corporation and General Motors Corporation (the
"Separation Agreement") in connection with the split-off of EDS from GM, GM and
EDS have agreed to enter into an agreement whereby EDS will establish a
successor pension plan which will recognize the benefits and service which
eligible members have accrued under the GM Canada Plan to the Effective Time and
GM will arrange to transfer assets to that successor plan in respect of the
transferred liabilities;
IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN THE PARTIES HERETO AGREE AS
FOLLOWS:
1. DEFINITIONS.
1.1 "EDS ACTUARY" means the actuary or firm of actuaries appointed by
EDS for the purposes of the EDS Canada Plan. This actuary shall be (or the firm
of actuaries shall include) a Fellow of the Canadian Institute of Actuaries.
1.2 "EDS CANADA PLAN" means the plan of EDS described in Section 2 of
this Agreement.
1.3 "EFFECTIVE TIME" means the Effective Time as defined in the
Separation Agreement.
A-1
<PAGE>
1.4 "GM ACTUARY" means the actuary or firm of actuaries appointed by
GM for the purposes of the GM Canada Plan. This actuary shall be (or the firm
of actuaries shall include) a Fellow of the Canadian Institute of Actuaries.
1.5 "GM CANADA PLAN CREDITED SERVICE" of a Transferring Member means
the years and fractions of years prior to the Effective Time which are
recognized as Credited Service (Contributory Credited Service and Non-
Contributory Credited Service as applicable) of the Transferring Member under
the terms of the GM Canada Plan.
1.6 "GRANTED SERVICE" means service credited pursuant to Section 6.01
of this Agreement.
1.7 "TRANSFER AMOUNT" means the amount determined pursuant to Section
4 of this Agreement to be transferred in cash or (if agreed to by GM and EDS)
assets in kind or in some combination thereof from the pension fund of the GM
Canada Plan to the pension fund of the EDS Canada Plan in accordance with
Section 5 hereof.
1.8 "TRANSFER DATE" means the date that the transfer of the Transfer
Amount contemplated by this Agreement occurs after approval by relevant
authorities as set out in paragraph 5 of this Agreement.
1.9 "TRANSFERRING MEMBER" means a person who is employed by EDS,
Electronic Data Systems Corporation, or a subsidiary thereof and participating
in the GM Canada Plan on the day preceding the Effective Time, who becomes a
member of the EDS Canada Plan as of the Effective Time, and who has not received
a return of member contributions or a lump sum transfer, and who is not
receiving periodic payment of a pension from the GM Canada Plan in respect of GM
Canada Plan Credited Service.
2. SUCCESSOR PLAN. EDS shall adopt a pension plan (or amend an existing
plan) to provide pension benefits for the Transferring Members and shall
register such plan (or amendment) with the appropriate regulatory authorities.
This successor plan shall contain provisions regarding service prior to the
Effective Time which provide benefits that are identical to the relevant
provisions of the GM Canada Plan in effect immediately prior to the Effective
Time (other than plant closure and permanent layoff benefits, which, subject to
regulatory approval obtained by EDS, need not be included in the EDS Canada
Plan). The EDS Canada Plan shall remain in effect, with identifical benefits to
those of the GM Canada Plan in effect immediately prior to the Effective Time
(other than plant closure and permanent layoff benefits if EDS obtains
regulatory approval with respect to the exclusion of such benefits), for a
minimum of two years following the Effective Time. The Transferring Members
shall cease accruing benefits under the GM Canada Plan as of the Effective Time.
A-2
<PAGE>
3. TRANSFER REPORT. The GM Actuary shall calculate the Transfer Amount
pursuant to Section 4 of this Agreement and prepare a draft transfer report.
The draft transfer report shall contain the information required by Policy
Statement No. 2 "Transfer of Assets Resulting from Sale of Business" as issued
by the Pension Commission of Ontario on July 28, 1988 (hereinafter the "Policy
Statement"). GM shall deliver the draft transfer report to EDS for review and
approval by the EDS Actuary. Such approval shall not be unreasonably withheld.
Once the EDS Actuary has approved the draft transfer report, the GM Actuary
shall finalize the report and file it with the Ontario Superintendent of
Pensions (the "Superintendent"), along with a request for the
Superintendent's approval to transfer assets pursuant to the terms of this
Agreement.
4. DETERMINATION OF TRANSFER AMOUNT. The Transfer Amount shall be
determined as of the Effective Time in respect of the benefits which
Transferring Members have accrued under the GM Canada Plan based on their
earnings and GM Canada Plan Credited Service to the Effective Time (as recorded
by GM) and shall be equal to the lesser of:
(a) the "solvency liabilities" (as that term is defined in section 1 of
Regulation 909 under the Pension Benefits Act, R.S.O. 1990, Chapter
P.8 (the "PBA") and excluding "plant closure benefits" and "permanent
layoff benefits" as permitted where an employer makes an election
under section 5(18) of the Regulation);
(b) the "asset transfer value" (as that term is defined in the Policy
Statement); and
(c) the "going concern liabilities" (as that term is defined in section 1
of Regulation 909 under the PBA);
in respect of the Transferring Members' benefits.
The GM Actuary shall calculate these liabilities and values using the
methods and assumptions specified in the attached Schedule A.
Notwithstanding the preceding paragraphs of this Section, if the
Superintendent will not approve the transfer unless the EDS Canada Plan
receives an amount greater than the Transfer Amount determined pursuant to
the preceding paragraphs of this Section, then EDS shall pay into the EDS
Canada Plan the amount of excess (the "Excess"), on such terms as are
acceptable to the Superintendent in order for the Superintendent to approve
the transfer of the Transfer Amount into the EDS Canada Plan in conjunction
with the contribution of the Excess by EDS. EDS shall, at is discretion, be
entitled to request the Superintendent to approve a lower Excess
contribution, and, if approved by the Superintendent, such lower excess
amount shall be contributed by EDS.
A-3
<PAGE>
5. TRANSFER OF ASSETS. GM shall arrange to have the Transfer Amount
(adjusted as set out below) paid by the custodian of the GM Canada Plan pension
fund to the custodian of the pension fund of the EDS Canada Plan within sixty
days of receiving approval for the transfer from the Superintendent. Such
amount shall be paid by cheque, by bank draft, by assets in kind or by some
combination thereof (as agreed to by GM and EDS). The Transfer Amount as
determined under Section 4 of this Agreement shall be adjusted forward to the
Transfer Date as follows:
5.1 The Transfer Amount calculated pursuant to Section 4 shall be
credited with:
(a) the rate of return earned by the pension fund of the GM Canada
Plan for the period from the Effective Time to the end of the
month preceding the Transfer Date, determined net of general plan
and fund administration expenses attributable to all members
allocated on a pro-rata basis as a percentage of total assets;
plus
(b) interest at the rate given on thirty day Government of Canada T-
bills from the first day of the month containing the Transfer
Date to the Transfer Date.
5.2 The Transfer Amount calculated pursuant to Section 5.01 shall be
reduced by the amount of any benefits paid from the GM Canada Plan to or in
respect of Transferring Members after the Effective Time and prior to the
Transfer Date (adjusted to reflect the applicable net rate of returns and
interest determined under Section 5.01 above).
6. TRANSFER OF BENEFITS. EDS shall cause the EDS Canada Plan to grant past
service benefits to Transferring Members on the basis described below:
6.1 Each Transferring Member shall be granted "pensionable service"
under the terms of the EDS Canada Plan for service prior to the Effective Time
equal to the Transferring Member's GM Canada Plan Credited Service.
6.2 Each Transferring Member's period of membership under the EDS
Canada Plan shall be deemed to include the period of participation recognized in
respect of the Transferring Member under the terms of the GM Canada Plan as of
the day prior to the Effective Time.
6.3 Each Transferring Member shall be credited under the EDS Canada
Plan with the total of the Transferring Member's required contributions plus
interest as of the Effective Time, as reported by GM pursuant to Section 9.01 of
this Agreement.
6.4 The record of earnings under the EDS Canada Plan for each
Transferring Member shall be deemed to include the record of earnings reported
in respect of the Transferring Member by GM pursuant to Section 9.01 of this
Agreement.
A-4
<PAGE>
6.5 The benefits of each Transferring Member in respect of Granted
Service shall not be less than the benefits which the Transferring Member would
have received for such service under the terms of the GM Canada Plan as it
existed at the Effective Time, determined after taking account of the
Transferring Member's earnings and participation in the EDS Canada Plan to the
date that is the earlier of (1) two years following the Effective Time, or (2)
the date the Transferring Member terminates participation in the EDS Canada
Plan. In the event an amendment to the EDS Canada Plan results in an actuarial
surplus attributable to the Transfer Amount and earnings thereon, such surplus
shall be used solely for the benefit of Transferring Members, and shall not (i)
be applied against employer contribution obligations (attributable to employees
other than Transferring Members) under the EDS Canada Plan or a successor plan
or (ii) be used to create a contribution holiday for the EDS Canada Plan or a
successor plan.
7. ASSUMPTION OF LIABILITIES. When the custodian of the pension fund for
the EDS Canada Plan receives the Transfer Amount as adjusted pursuant to Section
5 of this Agreement the EDS Canada Plan shall grant the benefits described in
Section 6 of this Agreement as at the Effective Time. Upon the completion of
such transfer, the benefits of the Transferred Members in respect of the service
credited under the EDS Canada Plan pursuant to Section 6.01 shall be determined
solely in accordance with the terms of the EDS Canada Plan as if the
Transferring Members had been members of the EDS Canada Plan during such period
of service and the GM Canada Plan shall be relieved of any further obligation to
the Transferring members.
8. STATEMENT OF BENEFITS. Within one year of the Transfer Date, EDS shall
provide each Transferring Member with a statement regarding the Transferring
Member's benefits, rights and obligations granted by the EDS Canada Plan
pursuant to Section 6 of this Agreement.
9. COOPERATION BETWEEN THE PARTIES. EDS and GM shall cooperate fully and
take the steps necessary to complete the transaction contemplated by this
Agreement. Without limiting the generality of the foregoing:
9.1 GM shall arrange to provide EDS with such data and records
regarding the Transferring Members as EDS (and the EDS Actuary) may require to:
(a) verify the draft transfer report;
(b) establish a record of earnings and service for each Transferring
Member; and
(c) establish a record of required contributions plus interest for
each Transferring Member;
plus such other data and records as EDS may reasonably require to
implement this Agreement.
A-5
<PAGE>
9.2 EDS shall arrange to distribute to the Transferring Members a
notice prepared by GM to satisfy the requirements of the Policy Statement.
10. THIRD PARTY RIGHTS. Nothing in this Agreement shall give any third
party, including, but not limited to, any employee of GM, EDS, and any
participant or beneficiary in the GM Canada Plan or the EDS Canada Plan, any
right or claim to any payment, except to the extent of benefits provided under a
plan sponsored by GM or EDS, or any right or claim to continued employment with
GM or EDS. GM and EDS expressly reserve the right to terminate any of their
employees.
11. GOVERNING LAW. This Agreement shall be governed by the laws of the
Province of Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF the parties hereto execute this Agreement as of the date
indicated above.
GENERAL MOTORS OF CANADA LIMITED
___________________________________
___________________________________
E.D.S. OF CANADA, LTD
___________________________________
___________________________________
A-6
<PAGE>
SCHEDULE A
GENERAL MOTORS CANADIAN RETIREMENT PROGRAM
FOR SALARIED EMPLOYEES
ACTUARIAL BASIS - GOING CONCERN
GOING CONCERN ACTUARIAL ASSUMPTIONS
The following assumptions will be used in conducting the going concern funding
valuation at the Effective Time.
Economic Assumptions
- --------------------
Investment Yield/Discount Rate
- ------------------------------
An underlying long-term investment yield rate of 7% per annum net after payment
of investment and routine administration expenses will be used. This rate was
adjusted for current conditions in effect at the valuation date by assuming a
higher rate to be applicable for the period between the valuation date and
November 30, 2006. For this valuation at the Effective Time, the initial yield
rate was assumed to be 9%. These rates will be used to discount the expected
benefit payments to determine the actuarial liabilities.
Expenses
- --------
Costs of administering the Plan in excess of the investment and routine
administration expenses are assumed to be paid directly by the Employer as
incurred, and no provision was made for these.
Salary Increase
- ---------------
A long term salary increase assumption of 5% per annum will be assumed.
Employee Contributions
- ----------------------
Employee contributions will be assumed to be credited with interest at a rate of
8% per annum.
Year's Maximum Pensionable Earnings (YMPE)
- ------------------------------------------
The YMPE was projected to increase by 5% per annum. The 1996 YMPE of $35,400
was used as a starting point for the projected values.
Maximum Pension
- ---------------
A-7
<PAGE>
The current dollar limit on lifetime pensions under the Income Tax Act of
$1,722.22 applicable to each year of service (with a 35-year cap placed on pre-
January 1, 1992 service) will be assumed to remain unchanged until 2004 and to
increase by 5% per annum thereafter.
Inflation and Future Benefit Increases
- --------------------------------------
The benefits reflected in the going concern valuation will be those in effect at
the valuation date. No further benefit increases are provided under the plan
beyond the Effective Time.
Demographic Assumptions
- -----------------------
Retirement
- ----------
Under the Plan, different levels of benefits are available on retirement
depending upon the member's age and service and type of retirement. To reflect
these differences, we adopted retirement assumptions in accordance with the
following table.
A-8
<PAGE>
<TABLE>
<CAPTION>
AGE RETIREMENT RATES PER 1,000 MEMBERS
- ------------------------------------------
<S> <C> <C>
Voluntary Early
Attained Retirement Other Early
Age With 30 Years Retirement*
- ------------------------------------------
46 333.333
47 38.462
48 95.238
49 91.603
50 70.381
51 85.627
52 72.072
53 17.391
54 76.555
55 187.990 97.854
56 183.544 62.632
57 233.962 37.391
58 244.138 82.569
59 157.676 92.784
60 351.020 218.905
61 389.474 138.889
62 409.091 285.714
63 342.857 250.000
64 470.588 390.244
65 1,000.000 1,000.000
- ----------------------------------------
</TABLE>
* All other early retirements prior to age 60 are assumed to be mutually
satisfactory early retirements.
Layoffs (potential retirements) were assumed to retire immediately or at age 55
if later. Terminated vested members were assumed to retire at age 65.
Termination Rates
- -----------------
Moderate rates of termination of employment prior to death or retirement were
used. Sample values are given below.
Mortality
- ---------
A-9
<PAGE>
Mortality rates for non-disabled lives will be assumed to be equal to rates from
the 1983 Group Annuity Mortality Table with margins added for males and females.
Sample rates of mortality are given below.
Disability
- ----------
Disability incidence rates were based on 150% of the rates shown for Class 1 in
the Wyatt 1985 Disability Study. Sample values are given below. Mortality
rates after disability will be assumed to be equal to rates from the 1983 Group
Annuity Mortality Table with margins for males and females.
<TABLE>
<CAPTION>
----------------------------------------------------------------
Mortality, Disability Incidence
and Termination Rates Per 1,000 Members
---------------------------------------------------------
Mortality
----------------------- Disability
Age Male Female Incidence Termination
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
20 0.377 0.189 0.450 99.176
25 0.464 0.253 0.645 65.947
30 0.607 0.342 0.960 45.949
35 0.860 0.476 1.470 32.418
40 1.238 0.665 2.370 18.593
45 2.183 1.010 3.885 11.066
50 3.909 1.647 6.720 2.924
55 6.131 2.541 12.675
60 9.158 4.241 18.060
65 15.592 7.064
70 27.530 12.385
75 44.597 23.992
80 74.070 42.945
85 114.836 69.918
- -----------------------------------------------------------------
</TABLE>
Survivor Option/Automatic Survivor Benefit
- ------------------------------------------
The cost of providing the survivor option/automatic survivor benefit will be
calculated assuming 90% of the members would be eligible for the benefits at
retirement, 88.89% of the eligible members would not reject the automatic
survivor benefit and husbands would be three years older than their wives.
GOING CONCERN ACTUARIAL METHODS
A-10
<PAGE>
Liabilities
- -----------
The going concern valuation of the liabilities will be conducted using the
Projected Unit Credit actuarial cost method. This method is designed to
accumulate assets systematically to provide security for the benefits provided
under the terms of the plan in respect of service that has already been
rendered, without further recourse to the assets of the plan sponsor. Under
this method, for each member, the normal actuarial cost rate for benefits for
one year of service is determined as the present value of all benefits accrued
to the projected date of retirement or earlier termination divided by the
projected total service of the member at retirement or such earlier termination
of service.
The accrual actuarial liabilities for active members are determined as the
normal actuarial costs rate multiplied by the credited service of the member at
the date of the valuation. For inactive members, the accrued actuarial
liabilities are determined as the actuarial present value of benefits accrued in
respect of service up to the date of valuation. The accrued actuarial
liabilities are then compared with the actuarial value of the assets in the
pension fund to determine the funded position of the plan at the valuation date.
If any unfunded actuarial liability exists, it may be funded in one sum or over
a period of years, subject to any legislative restrictions.
Benefits Valued
- ---------------
The benefits valued will be those in effect at the Effective Time.
We assume that the supplementary benefits available to members on disability
retirement would be fully offset by disability pensions payable under the
Canada/Quebec Pension Plan.
A-11
<PAGE>
GENERAL MOTORS CANADIAN RETIREMENT PROGRAM
FOR SALARIED EMPLOYEES
ACTUARIAL BASIS - SOLVENCY
SOLVENCY VALUATION ACTUARIAL ASSUMPTIONS
The following assumptions will be used to determine the funded position on a
solvency basis as at the Effective Time.
Economic Assumptions
- --------------------
Interest Rates
- --------------
The interest rate assumption used will be in accordance with the September, 1993
Canadian Institute of Actuaries Transfer Value Recommendations and will be those
rates in effect on the Effective Time.
Expenses
- --------
All expenses associated with terminating the Plan will be assumed to be payable
by the Employer. No provision was made for any further expenses.
Salary Increase
- ---------------
No allowance will be made for salary increases beyond the valuation date.
Year's Maximum Pensionable Earnings (YMPE)
- ------------------------------------------
No allowance will be made for increases in the YMPE beyond the valuation date.
Maximum Pension
- ---------------
The current dollar limit on lifetime pensions under the Income Tax Act of
$1,722.22 applicable to each year of service (with a 35-year cap placed on
January 1, 1992 service) is assumed.
Demographic Assumptions
- -----------------------
Disability
- ----------
No allowance will be made for the possibility of becoming disabled after the
valuation date.
A-12
<PAGE>
Termination
- -----------
All employees will be assumed to terminate employment at the valuation date with
full vesting of accrued benefits.
Survivor Option/Automatic Survivor Benefit
- ------------------------------------------
It is assumed that 90% of the employee group were males and 10% were females.
It is assumed that 82% of employees (85% of males and 55% of females) would not
reject the automatic survivor benefit election at retirement and that on average
an employee is 29 months older than a non-employee spouse.
Mortality
- ---------
Mortality rates after retirement will be taken from the 1983 Group Annuity
Mortality Table with margins. A unisex table was derived by using 90% of the
male rates and 10% of the female rates. These rates were then applied to all
plan members regardless of sex. Sample values are given below.
<TABLE>
<CAPTION>
Mortality Rates
Age Per 1,000 Members
- ------------------------
<S> <C>
20 0.361
25 0.439
30 0.583
35 0.822
40 1.182
45 2.027
50 3.684
55 5.771
60 8.668
65 14.737
70 26.015
75 42.539
80 70.958
85 110.348
- ------------------------
</TABLE>
A-13
<PAGE>
SOLVENCY VALUATION ACTUARIAL METHODS
Liabilities
- -----------
The traditional unit credit actuarial cost method will be used. Under this
method, for each member, the accrued actuarial liabilities are determined as the
present value of all benefits accrued to the valuation date.
Benefits Valued
- ---------------
Under the Plan, different levels of benefits are available on retirement
depending on the member's age and service and type of retirement. For each
employee, we determined when, if ever, the employee would be eligible for
retirement under each of the retirement provisions and the amounts of benefits
payable based on the employee's credited service at the valuation date.
Employees with age plus Plan membership totaling at least 50 years were assumed
to grow into the benefits provided under the Plan for layoffs due to remote plan
closure. Employees with at least 10 years of service and age plus continuous
employment or plan membership totaling at least 55 years will be also assumed to
grow into a pro-rata special allowance if they would have completed 30 years of
service prior to age 60. In valuing the special allowance, we assumed no offset
for earnings from subsequent employment.
For each member, we determine the commuted value at the valuation date of all
benefits payable under each of the retirement possibilities and established the
solvency liability for such employee to be the commuted value for the retirement
possibility which produces the largest commuted value, but excluding the
additional liabilities for benefits in respect of future plant closures and
future permanent layoffs and for special allowances for employees who had not
completed 30 years of service at the valuation date.
Basic Benefit Rate and Special Allowance
- ----------------------------------------
For members still in service, the Basic Benefit Rate used in calculating the
Minimum Basic Benefit and Non-Contributory Pension and the monthly special
allowance rate will be the rates in effect at the valuation date (i.e., $44.30
and $2,260 respectively, at the Effective Time).
Inflation and Future Benefit Increases
- --------------------------------------
The benefits reflected in the valuation will be those in effect at the valuation
date. No allowance was made for subsequent benefit increases provided under the
Plan beyond the valuation date.
Pre-Retirement Death Benefits
- -----------------------------
A-14
<PAGE>
We make allowance for the pre-retirement death benefit related to the basic
lifetime pension by assuming no discount for mortality prior to retirement when
determining the commuted values of these benefits.
A-15
<PAGE>
EXHIBIT F
PROFESSIONAL ADVISOR FEES TO BE PAID BY EDS
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
KPMG Peat Marwick LLP (with respect to any services provided to EDS or any EDS
Affiliate and not to include services provided to GM or any GM Affiliate)
Baker & Botts, L.L.P.
Prickett, Jones, Elliott, Kristol & Schnee
Hughes & Luce, L.L.P.
F-1
<PAGE>
EXHIBIT G
PROFESSIONAL ADVISOR FEES TO BE PAID BY GM
Merrill Lynch & Co.
Deloitte & Touche LLP
Kirkland & Ellis
Richards, Layton & Finger
Milbank, Tweed, Hadley & McCloy
Weil, Gotshal & Manges
McKinsey & Co., Inc.
KPMG Peat Marwick LLP (with respect to any services provided to GM or any GM
Affiliate and not to include services provided to EDS or any EDS Affiliate)
Groom & Nordberg
G-1
<PAGE>
EXHIBIT 99(a)
For Immediate Release: Friday, June 7, 1996 CONTACTS: Todd Carstensen
General Motors
(212) 418-6385
Tony Good
EDS
(214) 605-6777
EDS SPLIT-OFF FROM GM COMPLETED TODAY
NEW YORK - General Motors Corporation and EDS (Electronic Data
Systems) announced that the split-off of EDS from General Motors was completed
today after receiving the requisite vote from GM stockholders. Stockholders also
voted to approve the "Amended Incentive Plan" for EDS.
EDS common stock will begin trading on the New York Stock Exchange on
Monday, June 10, 1996, under the symbol "EDS." The stock will also trade on the
London Stock Exchange beginning on June 11, 1996. GM Class E common stock will
cease trading on the New York Stock Exchange at the close of business today.
Each share of GM Class E common stock will be exchanged for one share of EDS
common stock.
In August 1995, GM announced it was pursuing a split-off of EDS to
holders of GM's Class E common stock in a tax-free transaction. In December, GM
announced that it had received a ruling from the U.S. Internal Revenue Service
stating that the contemplated split-off would be tax free to GM and its common
stockholders for U.S. federal income tax purposes. In April 1996, GM announced
that its Board of Directors had approved a proposal for the EDS split-off
subject to obtaining consent of GM stockholders.
