Exhibit 10.1
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is made and effective this 1st
day of March 2004 by and between AFFILIATED COMPUTER SERVICES, INC. (the
"Company") and [ ], [ ] of the Company (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 (a) the Company terminates this
Agreement by giving the Executive at least one (1) year advance written notice
of termination or (b) the effective date of any termination of the Executive's
employment with the Company, whether voluntary, involuntary, or for Cause, and
regardless of the reason for such termination. Notwithstanding the foregoing,
this Agreement shall, if in effect on the date of a Change of Control, remain in
effect for such time following a Change of Control 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 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 for a period
of 12 months following a Change of Control.
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 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:
(i) give the Company any information reasonably requested by
the Company relating to such claim;
(ii) 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;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the company to participate in any proceedings
relating to such claim.
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 administrative
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 if
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 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 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
Attn: General Counsel
Fax: 000-000-0000
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 1997 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.
[Signature Page Follows]
The parties have executed this Agreement to be effective as of the 1st day
March, 2004.
AFFILIATED COMPUTER SERVICES, INC.
By:
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EXECUTIVE
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SCHEDULE A
CERTAIN DEFINITIONS
As 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 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:
(i) the date a Corporate Event is consummated;
(ii) the date any person (as such term is 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 fifteen
percent (15%) or more of the Company's outstanding Common Stock, other
than holders of such amounts as of the date hereof; or
(iii) 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 January 1, 2004;
(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.
"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.
