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EXHIBIT 10.15
FORM OF CHANGE IN CONTROL EXECUTIVE RETENTION
AGREEMENT FOR SENIOR EXECUTIVES
Date
NameTitle
Address
c/o American Management Systems, Incorporated
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Change in Control Retention Agreement
Dear Name:
The Compensation Committee of the Board of Directors of American
Management Systems, Incorporated (the "Corporation") has concluded that it is in
the best interest of the Corporation to ensure that, during any period of
uncertainty preceding and after a change in control of the Corporation, key
personnel of the Corporation not be distracted or encouraged to seek other
employment because of concerns over employment security following the change in
control. The Compensation Committee has concluded that the best way to achieve
this goal is to provide for the payment of severance benefits to key personnel
whose employment terminates under certain circumstances following an actual
change in control of the Corporation.
The Corporation has identified you as among the key personnel of the
Corporation whose services it is in the best interest of the Corporation to
retain during the period surrounding a change in control. Therefore, the
Corporation is pleased to offer severance benefits to you on the terms set forth
below:
AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
CHANGE IN CONTROL EXECUTIVE RETENTION AGREEMENT
ARTICLE I: DEFINITIONS
The following capitalized words and phrases as used in this Agreement
shall have the following meanings, unless a different meaning is clearly
required by the context:
1.1 AGREEMENT. The American Management Systems, Incorporated
Change in Control Executive Retention Agreement, as set forth in this document
and as amended from time to time.
1.2 BOARD. The Board of Directors of the Corporation.
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1.3 CHANGE IN CONTROL. The first of the following events to occur:
(a) Any person or group (within the meaning of Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Act")), other than
the Corporation or a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or a corporation owned directly or
indirectly by the stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation, becomes the
beneficial owner (within the meaning of Rule 13d-3 under the Act), directly or
indirectly, of securities representing 50 percent or more of the combined voting
power of the Corporation's then-outstanding securities entitled generally to
vote for the election of directors;
(b) The Corporation's stockholders approve an agreement
to merge or consolidate with another corporation (other than a
majority-controlled subsidiary of the Corporation) unless the Corporation's
stockholders immediately before the merger or consolidation are to own more than
two-thirds (66-2/3 percent) of the combined voting power of the resulting
entity's voting securities entitled generally to vote for the election of
directors;
(c) The Corporation's stockholders approve an agreement
(including, without limitation, an agreement of liquidation) to sell or
otherwise dispose of all or substantially all of the business or assets of the
Corporation; or
(d) During any period of two (2) consecutive years,
individuals who, at the beginning of the period, constituted the Board cease for
any reason to constitute at least a majority thereof, unless the election or the
nomination for election by the Corporation's stockholders of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
However, no Change in Control shall be deemed to have occurred by
reason of (i) any event involving a transaction in which you or a group of
persons or entities with whom or with which you act in concert, acquires,
directly or indirectly, 50 percent or more of the combined voting power of the
Corporation's then-outstanding voting securities or the business or assets of
the Corporation; or (ii) any event involving or arising out of a proceeding
under Title 11 of the United States Code or the provisions of any future United
States bankruptcy law, an assignment for the benefit of creditors or an
insolvency proceeding under state or local.
1.4 COMPENSATION. The sum of the following: (a) your base salary
in effect immediately before the Change of Control, plus (b) two shares of
incentive compensation, each such share being calculated by multiplying (i) your
target percentage in your incentive compensation plan as in effect immediately
before the Change of Control, by (ii) your base salary in effect immediately
before the Change of Control.
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1.5 CORPORATION. American Management Systems, Incorporated, a
corporation organized under the laws of the State of Delaware.
1.6 GOOD REASON. Any of the following occurring on or after a
Change in Control:
(a) a significant reduction in the nature or scope of
your authority or the duties that you perform;
(b) a reduction in your annual base salary and/or
incentive compensation target percentage;
(c) a significant reduction in your employee benefits as
a whole or the number of your incentive compensation shares, or a significant
increase in your incentive compensation goals (other than a change made as part
of a program or plan modification that applies generally to you and the other
persons then party to agreements identical to this Agreement);
(d) a change of more than 25 miles in your principal
place of employment (not including business travel); or
(e) a determination by the Board that you are unable to
exercise your authority or perform your duties as a result of a Change in
Control.
1.7 GROSS MISCONDUCT. Any of the following:
(a) theft, dishonesty, or falsification of any employment
or Corporation records;
(b) improper disclosure of the Corporation's confidential
or proprietary information;
(c) any action that has a material detrimental effect on
the Corporation's financial condition or position, reputation or business;
(d) conviction of any criminal act that impairs your
ability to perform your duties for the Corporation; or
(e) willful and material breach by you of your duties and
responsibilities, which breach is committed in bad faith or without reasonable
belief that such breaching conduct is in the best interests of the Company , but
only if the Board adopts a resolution by a vote of at least 75 percent of its
members so finding after giving you and your attorney an opportunity to be heard
by the Board.
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1.8 TERMINATION DATE. The date that you cease to perform services
as an employee for the Corporation.
ARTICLE II: SEVERANCE BENEFIT
If (a) your employment with the Corporation is terminated, either (i)
by the Corporation for any reason other than for Gross Misconduct or (ii) by you
for Good Reason not resulting from Gross Misconduct, (b) your Termination Date
occurs during the one (1) year period beginning on the date of the Change of
Control, and (c) you execute a release substantially identical to the release
attached hereto, the Corporation shall pay to you a benefit equal to two times
your Compensation. Such benefit shall be paid in a lump sum in cash as soon as
reasonably practicable after the later of your Termination Date and the last day
for revoking such release.
ARTICLE III: MISCELLANEOUS
3.1 AMENDMENTS. The Board shall have complete power and authority
to amend or modify this Agreement at any time, provided that no such action by
the Board shall adversely affect your rights under this Agreement.
3.2 ASSIGNMENT AND ALIENATION. Neither you nor any other person
shall have the right to assign, alienate, transfer, encumber, or otherwise
subject to lien the benefit provided under this Agreement.
3.3 BENEFIT SOLELY FROM GENERAL ASSETS. The benefit provided under
this Agreement shall be paid solely from the general assets of the Corporation.
Nothing herein shall be construed to require the Corporation to maintain any
fund or to segregate any amount for your benefit or the benefit of any other
person, and neither you nor any other person shall have any claim against, right
to, or security or other interest in any fund, account, or other specific asset
of the Corporation from which any payment pursuant to this Agreement may be
made.
3.4 COMPLETE STATEMENT OF AGREEMENT. This Agreement constitutes
the entire Agreement of the parties hereto with respect to the subject matter
hereof.
3.5 DEATH. If you become entitled to receive a benefit under this
Agreement but die before receiving the benefit, the Corporation shall pay the
benefit to which you were entitled to your surviving spouse, or to your personal
representative if there is no surviving spouse.
3.6 EXPENSE REIMBURSEMENT. In the event that any dispute arises
between you and the Corporation as to the terms or interpretation of this
Agreement, whether instituted by formal legal proceedings or otherwise, the
Corporation shall reimburse you
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for all costs and expenses (including reasonable attorneys' fees) arising from
such dispute, regardless of the outcome thereof. Such reimbursement shall be
paid within ten (10) days after you furnish the Corporation written evidence
reasonably satisfactory to the Corporation of any costs or expenses incurred by
you.
3.7 GOVERNING LAW. This Agreement shall be construed,
administered, and enforced in accordance with the laws of the State of Delaware.
3.8 HEADINGS. The headings and subheadings of this Agreement have
been inserted for convenience of reference only and shall not affect the
construction of the provisions thereof.
3.9 INTERNAL REVENUE CODE SECTION 280G.
(a) The benefit provided under this Agreement shall be
provided without regard to any limitations imposed by Section 280G or 4999 of
the Internal Revenue Code of 1986, as amended (the "Code").
(b) In the event that you become entitled to the benefits
provided under this Agreement (the "Agreement Benefits"), if any of the
Agreement Benefits will be subject to the tax (the "Excise Tax") imposed by
Section 4999 of the Code (or any similar tax that may hereafter be imposed), the
Corporation shall pay to you an additional amount (the "Gross-up Payment") such
that the net amount retained by you, after deduction of any Excise Tax on the
Total Benefits (as hereinafter defined) and any federal, state and local income
tax and Excise Tax upon the Gross-up Payment provided for by this subsection
(vi), but before deduction for any federal, state or local income tax on the
Agreement Benefits, shall be equal to the "Total Benefits," as defined below.
(c) For purposes of determining whether any of the
Agreement Benefits will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments or benefits received or to be received by you
in connection with a change in control of the Corporation or your termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Corporation, any person whose actions result
in a change of control of the Corporation or any person affiliated with the
Corporation or such person) (which, together with the Agreement Benefits, shall
constitute the "Total Benefits") shall be treated as "parachute payments" within
the meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, unless in the opinion of tax counsel selected by
the Corporation's independent auditors such other payments or benefits (in whole
or in part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess
of the base amount within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise
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Tax, (ii) the amount of the Total Benefits which shall be treated as subject to
the Excise Tax shall be equal to the lessor of (A) the total amount of the Total
Benefits or (B) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying clause (i), above), and (iii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Corporation's independent auditors in accordance with the
principles of Sections 280(G)(d)(3) and (4) of the Code.
(d) For purposes of determining the amount of the
Gross-up Payment, you shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made and the applicable state and local income taxes a
the highest marginal rate of taxation for the calendar year in which the
Gross-up Payment is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes. In
the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made,
you shall repay to the Corporation at the time that the amount of such reduction
in Excise Tax is finally determined the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the portion of the Gross-up Payment being repaid by you if such
repayment results in a reduction in Excise Tax and/or a federal and state and
local income tax deduction), plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time the Gross-up Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-up
Payment), the Corporation shall make an additional gross-up payment in respect
of such excess (plus any interest payable with respect to such excess) at the
time that the amount of such excess is finally determined.
3.10 LIMITATION OF RIGHTS. Neither the establishment of this
Agreement nor any amendment thereof shall be construed as giving you or any
other person any legal or equitable right against the Corporation (including the
creation of any employment contract), except as provided by the express terms of
this Agreement, and in no event shall your terms of employment or service
(including your eligibility for any plan, program, policy or practice provided
by the Corporation) be modified or in any way affected by the establishment of
this Agreement or any amendment hereof. This Agreement is not in substitution
for any other rights and claims you may have against the Corporation with
respect to accrued amounts due you on your Termination Date, such as base salary
for periods worked and not yet paid, expense reimbursements which may be due
you, and other claims for accrued sums to the Termination Date.
3.11 NO MITIGATION OR SETOFF. In no event shall you be required to
seek other employment or take any other action to mitigate the amount of the
benefit provided under this Agreement, and such amount shall not be reduced
whether or not you obtain other
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employment. The Corporation's obligation to pay the benefit provided under this
Agreement shall not be subject to or affected by any setoffs, counterclaims or
defenses that the Corporation might have against you or others.
3.12 NOTICE OF TERMINATION. Any termination by the Corporation for
Gross Misconduct, or by you for Good Reason, shall be communicated to the other
party hereto given in accordance with Section 3.16 of this Agreement. The notice
shall (i) indicate the specific termination provision in this Agreement being
relied upon, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated, and (iii) specify the date of
termination.
3.13 NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, when received and signed for,
or (iii) sent by facsimile with receipt confirmed:
(a) If to you, to:
(b) If to the Corporation, to:
American Management Systems, Incorporated
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
fax: (000) 000-0000
Attention: Chief Financial Officer
With a copy (which shall not constitute notice) to:
Xxxx Xxxxxxx 0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
or to such other address as may have been furnished to you by the Corporation or
to the Corporation by you, as the case may be.
3.14 SEVERABILITY. In the event that any provision of this
Agreement is held unlawful, such provision shall be of no force and effect, and
this Agreement shall be treated as if such provision had not been contained
herein.
3.15 SUCCESSORS. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Corporation, by a merger or
consolidation in which the
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Corporation is not the surviving corporation, by a transfer of all or
substantially all of the Corporation's assets, or by any other event that
constitutes a Change in Control. In the event of such merger, consolidation,
transfer or other event, the provisions of this Agreement shall be binding upon
and shall inure to the benefit of the surviving corporation or the corporation
to which the stock or assets of the Corporation are transferred or the
Corporation's other legal successors, and the Corporation shall require such
successor to agree expressly to be bound by the provisions of this Agreement.
3.16 WITHHOLDING. The Corporation may make any appropriate
arrangements to deduct from all benefits provided under this Agreement any taxes
reasonably determined to be required to be withheld by any government or
government agency. You (or your representative or beneficiary, if applicable)
shall bear all taxes on benefits provided under this Agreement to the extent
that no taxes are withheld, irrespective of whether withholding is required.
* * * *
Thank you for your ongoing service to American Management Systems,
Incorporated. Please sign and date this letter on the spaces provided below to
acknowledge your acceptance of this Agreement.
Sincerely,
AMERICAN MANAGEMENT SYSTEMS,
INCORPORATED
By:
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Name:
-----------------------------------
I hereby agree to and accept the terms and conditions of this Change in
Control Executive Retention Agreement.
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Name: NameTitle
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Date:
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