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EXHIBIT 10.15
SEVERANCE AGREEMENT
THIS AGREEMENT made and effective this 6th day of August, 1997 by
and between AFFILIATED COMPUTER SERVICES, INC. (the "Company") and
________________________ (the "Executive").
The Company has determined that both the Executive's performance
and the Company's ability to retain the Executive as an employee will be
significantly enhanced if the Executive is provided with fair and reasonable
protection from a Change of Control of the Company. Accordingly, the Company
and the Executive agree as follows:
1. Defined Terms. Unless otherwise indicated, capitalized
terms used in this Agreement shall have the meanings set forth herein or in
Schedule A.
2. Effective Date; Term. This Agreement shall be effective on
the date hereof and shall remain in effect until the Company terminates this
Agreement by giving the Executive at least one (1) year advance written notice
of termination. Notwithstanding the foregoing, this Agreement shall, if in
effect on the date of a Change of Control, remain in effect for at least three
(3) years following such Change of Control, and such additional time as may be
necessary to give effect to the terms of the Agreement.
3. Change of Control Benefits. Upon a Change of Control, the
Executive shall be entitled to the benefits provided herein.
(a) Severance Payments. Within two (2) business days after a
Change of Control, the Company shall pay the Executive a lump sum amount, in
cash, equal to:
(i) three (3) times the sum of:
(A) the Executive's per annum base salary in effect on
the date of the Change of Control ("Base Salary"),
and
(B) the Executive's bonus for the immediately preceding
fiscal year; and
(ii) the Executive's target bonus for the current fiscal year
multiplied by a fraction, the numerator of which shall be
the number of days the Executive was employed by the Company
in the fiscal year in which the Change of Control occurs and
the denominator of which shall be 365.
(b) Continued Benefits. Until the earlier of the third
anniversary of the termination of the Executive's employment with the Company
after a Change of Control or the date on which the Executive becomes employed
by a new employer, the Company shall, at its expense, provide the Executive
with medical, dental, life insurance, disability and accidental death and
dismemberment benefits ("Insurance Benefits") at the highest level provided to
the
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Executive immediately prior to the Change of Control, provided, however, that
if the Executive becomes employed by a new employer which maintains Insurance
Benefits that either (i) do not cover the Executive with respect to a
pre-existing condition which was covered under the Company's Insurance
Benefits, or (ii) do not cover the Executive for a designated waiting period,
the Executive's coverage under the Company's Insurance Benefits shall continue,
without limitation, until the earlier of the end of the applicable period of
noncoverage under the new employer's Insurance Benefits or the third
anniversary of the Change of Control.
(c) Payment of Accrued But Unpaid Amounts. Within two (2)
business days after a Change of Control, the Company shall pay the Executive
(i) any unpaid portion of compensation previously earned by the Executive; and
(ii) all compensation previously deferred by the Executive but not yet paid.
(d) Post-Retirement Welfare Benefits. For purposes of
determining the Executive's eligibility for post-retirement benefits under any
welfare benefit plan (as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended) maintained by the Company immediately
prior to the Change of Control and in which the Executive then participated,
the Executive shall be credited with the excess of three (3) years of
participation in the applicable plan and three (3) years of age over the actual
years of participation and age credited to the Executive on the date of the
Change of Control. If, after taking into account the credited participation
and age, the Executive would have been eligible for post-retirement benefits,
the Executive shall receive, commencing on the date of the Change of Control,
post-retirement benefits based on the terms and conditions of the applicable
plans in effect immediately prior to the Change of Control.
(e) Effect on Existing Plans. All Change of Control provisions
applicable to the Executive and contained in any plan, program, agreement or
arrangement maintained on or after the date hereof by the Company (including,
but not limited to, any stock option, restricted stock or pension plan) shall
remain in effect for such period after the date of a Change of Control as is
necessary to carry out such provisions and provide the benefits payable
thereunder, and may not be altered in a manner which adversely affects the
Executive without the Executive's prior written approval.
(f) Outplacement Counseling. The Company shall reimburse all
reasonable expenses incurred by the Executive for professional outplacement
services by qualified consultants selected by the Executive.
4. Mitigation. The Executive shall not be required to seek
other employment after a Change of Control and any compensation earned from
other employment shall not reduce the amounts otherwise payable under this
Agreement.
5. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the Company, or any trust
established by the Company for the
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benefit of its employees, to or for the benefit of the Executive (whether
payable pursuant to the terms of this Agreement (a "Payment")) would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code and any
interest or penalties are incurred by the Executive with respect to such excise
tax (the excise tax, together with interest and penalties thereon, hereinafter
collectively referred to as the "Excise Tax"), the Executive shall be entitled
to receive an additional payment (a "Gross-up Payment") in an amount such that
after payment by the Executive of all taxes, including, without limitation, any
income taxes and the Excise Tax imposed upon the Gross-up Payment, the
Executive retains an amount of the Gross-up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 5(c), all
determinations required to be made under this Section 5, including whether and
when a Gross-up Payment is required and the amount of such Gross-up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally recognized certified public accounting firm as may be
designated by the Executive (the "Accounting Firm"). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-up
Payment, as determined pursuant to this Section 5, shall be paid by the Company
to the Executive within five (5) days after the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall so indicate to the Executive in writing.
Any determination by the Accounting Firm shall be binding upon the Company and
the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-up Payment. Such notification shall be given
no later than ten (10) business days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature of the claim and the
date of requested payment. The Executive shall not pay the claim prior to the
expiration of the thirty (30) day period following the date on which it gives
notice to the Company. If the Company notifies the Executive in writing prior
to the expiration of the period that it desires to contest such claim, the
Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim;
(2) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company;
(3) cooperate with the Company in good faith in order to
effectively contest such claim; and
(4) permit the Company to participate in any proceedings
relating to such claim;
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Without limitation on the foregoing provisions of this Section 5(c), the
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administration tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of the
contest; provided, further, that it the Company directs the Executive to pay
any claim and xxx for a refund, the Company shall advance the amount of the
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to the advance or with respect to any imputed income with respect to
the advance.
(d) In the event that the Company exhausts its remedies pursuant
to Section 5(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the Gross-up
Payment required and such payment shall be promptly paid by the Company to or
for the benefit of the Executive.
(e) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-up Payment required to
be paid.
6. Termination for Cause. Nothing in this Agreement shall be
construed to prevent the Company from terminating the Executive's employment
for Cause.
7. Indemnification; Director's and Officer's Liability
Insurance. The Executive shall, after the Change of Control, retain all rights
to indemnification under applicable law or under the Company's Certificate of
Incorporation or Bylaws, as they may be amended or restated from time to time.
In addition, the Company shall maintain Director's and Officer's liability
insurance on behalf of the Executive, at the level in effect immediately prior
to the Change of Control, for the five (5) year period following the Change of
Control.
8. Executive Covenants. During the twelve (12) month period
following the Change of Control, the Executive shall not disclose to any
person, or use to the significant
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disadvantage of any of the Company, any non-public information relating to
business plans, marketing plans, customers or employees of the Company other
than information the disclosure of which cannot reasonably be expected to
adversely affect the business of the Company ("Confidential Information"),
provided that nothing contained in this Section 8 shall prevent the Executive
from being employed by a competitor of the Company or utilizing the Executive's
general skills, experience, and knowledge, including those developed while
employed by the Company.
9. Disputes. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Dallas, Texas, or, at the option of the Executive, in the county where the
Executive then resides, in accordance with the Rules of the American
Arbitration Association then in effect to be completed within 45 days after
notice of such dispute or controversy is given pursuant to Section 13.
Judgment may be entered on an arbitrator's award relating to this Agreement in
any court having jurisdiction.
10. Costs of Proceedings. The Company shall pay all costs and
expenses, including attorneys' fees and disbursements, at least monthly, of the
Executive in connection with any legal proceeding (including arbitration),
whether or not instituted by the Company or the Executive, relating to the
interpretation or enforcement of any provision of this Agreement, except that
if the Executive instituted the proceeding and the judge, arbitrator or other
individual presiding over the proceeding affirmatively finds that the Executive
instituted the proceeding in bad faith, the Executive shall pay all costs and
expenses, including attorney's fees and disbursements, of the Executive.
11. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder can be assigned or delegated by the
Executive, without the prior written consent of the Company. Except as
otherwise provided herein, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Company and the Executive and their
respective heirs, legal representatives, successors and assigns. If the
Company shall be merged into or consolidated with another entity, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the entity surviving such merger or resulting from such consolidation. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company, by agreement in form and substance satisfactory to
the Executive, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. The provisions of this
Section 11 shall continue to apply to each successive employer of the Executive
hereunder in the event of any merger, consolidation or transfer of assets of a
successor employer.
12. Withholding. Notwithstanding the provisions of Sections 4
and 5 hereof, the Company may, to the extent required by law, withhold
applicable federal, state and local income and other taxes from any payments
due to the Executive hereunder.
13. Notices. All notices and other communications hereunder
must be in writing and will be deemed to have been duly given if delivered
personally, mailed by certified
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mail (return receipt requested) or sent by overnight delivery service or
facsimile transmission to the Executive at the Executive's most recent address
in the records of the Company and to the Company at:
Affiliated Computer Services, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: President and General Counsel
Fax: 214/000-0000
14. Confidentiality. The parties agree to keep the terms and
conditions of this Agreement in strictest confidence, it being understood that
this restriction shall not prohibit disclosure required by applicable law, rule
or regulation.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED THEREIN.
16. Entire Agreement. This Agreement (along with grants of
stock options, if any, to the Executive, pursuant to the Company's 1988 Stock
Option Plan, as amended) constitutes the entire agreement between the parties
and, except as expressly provided herein, supersedes all other prior agreements
concerning the effect of a Change of Control on the relationship between the
Company and the Executive. This Agreement may be changed only by a written
agreement executed by the Company and the Executive.
The parties have executed this Agreement on the 6th day of August, 1997.
AFFILIATED COMPUTER SERVICES, INC.
By:
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Name:
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Title:
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EXECUTIVE
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SCHEDULE A
CERTAIN DEFINITIONS
An used in this Agreement, and unless the context requires a
different meaning, the following terms, when capitalized, have the meaning
indicated;
"Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board
which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
For purpose of this provision, no act or failure to act, on the part of the
Executive, shall be considered willful unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The
termination of employment of the Executive shall not be deemed to be for cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in subparagraph (i) or (ii) above and
specifying the particulars thereof in detail.
"Change of Control" shall mean the first to occur of any of the
following dates:
(1) if the Board of Directors does not approve and recommend to
the stockholders a Corporate Event, the date such Corporate Event is
consummated:
(2) if the Board of Directors does approve and recommend to the
stockholders a Corporate Event and such Corporate Event is consummated, then
the date the Executive's employment is terminated without Cause or the date
Constructive Termination occurs if such termination occurs within three years
of such Corporate Event;
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(3) the date of any person (as such term as used in Section
13(d) of the Securities Exchange Act of 1934, hereinafter the "1934 Act"),
other than one or more trusts established by the Company for the benefit of
employees of the Company or its subsidiaries, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the 0000 Xxx) of Rule 13d-3 under the
0000 Xxx) of fifteen percent (15%) or more of the Company's outstanding Common
Stock, other than holders of such amounts as of the date hereof; or
(4) the date, during any period of twenty-four (24) consecutive
months, on which individuals who at the beginning of such period constitute the
entire Board of Directors of the Company shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director comprising the
majority was approved by a vote of at least a majority of the Continuing
Directors in office on the date of such election or nomination for election of
the new director. For purposes hereof, a "Continuing Director" shall mean:
(A) any member of the Board of Directors at the close of
business on August 5, 1997;
(B) any member of the Board who succeeds any Continuing Director
described in subparagraph (A) above if such successor was
elected, or nominated for election by the Company's
stockholders, by a majority of the Continuing Directors then
still in office; or
(C) any director elected, or nominated for election by the
Company's stockholders to fill any vacancy or newly created
directorship on the Board of Directors of the Company by a
majority of the Continuing Directors then still in office.
"Constructive Termination" shall mean any of the following:
(i) the failure to elect, reelect or otherwise maintain
the Executive in the office or position in the Company which the
Executive held immediately prior to the Corporate Event, or the
removal of the Executive as a Director of the Company (or any
successor thereto) if the Executive shall have been a Director of
the Company immediately prior to the Corporate Event;
(ii) a significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities or duties
attached to the position with the Company which the Executive held
immediately prior to the Corporate Event or a reduction in the
aggregate of the Executive's base pay, incentive pay or employee
benefits to which the Executive was entitled to prior to the
Corporate Event;
(iii) a determination by the Executive made in good faith
that as a result in the Corporate Event and change in
circumstances thereafter significantly
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affecting the Executive's position, the Executive has been
rendered substantially unable to carry out, has been substantially
hindered in the performance of, or has suffered a substantial
reduction in, any of the authorities, powers, functions,
responsibilities or duties attached to the position held by the
Executive immediately prior to the Corporate Event, which
situation is not remedied within 10 calendar days after written
notice to the Company from the Executive of such determination;
(iv) the Company shall relocate its principal executive
offices, or require the Executive to have the Executive's
principal location of work changed, to any location which is in
excess of 30 miles from the location thereof immediately prior to
the Corporate Event or the Company shall require the Executive to
travel away from the Executive's office in the course of
discharging the Executive's responsibilities or duties
significantly more (in terms of either consecutive days or
aggregate days in any calendar year) than was required of the
Executive prior to the Corporate Event; or
(v) any material breach of this Agreement by the Company
or any successor thereto.
"Corporate Event" shall mean any of the following:
(i) any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than any
consolidation or merger of the Company in which the holders of the
Company's Common Stock immediately prior to the consolidation or
merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the consolidation or
merger;
(ii) any sale, lease, or other transfer of all, or
substantially all, of the assets of the Company, other than any
sale, lease, or other transfer to any corporation where the
Company owns, directly or indirectly, at least eighty percent
(80%) of the outstanding voting securities of the corporation
after the transfer; or
(iii) any plan or proposal for the liquidation or
dissolution of the Company.
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