Document:

exv10w3

 

Exhibit 10.3

October 16, 2002

William M. Purdy

2804 North Harrison Street

Arlington, VA 22207

Dear Bill,

This letter serves to confirm the terms and conditions associated with your
pending retirement from AMS.

Your current employment arrangements will continue through your last day of
work which will be Friday, December 27, 2002.

Beginning January 2003, you will receive payments of $25,000 per month, payable
on the 15th of each month, and subject to applicable withholdings, for a period
of 12 months; thereafter, subject to review between us. This will take the
form of an unfunded, unsecured promise to pay on the part of the Company. This
payment will be made to your estate in the event of your death. Your COBRA
rights and rights under the AMS Retiree Health Plan will be explained in a
separate letter. In addition, you will receive an on target bonus payment on
December 30, 2002 of $360,000.

The payments are in consideration of your agreement to provide consulting
services to the CEO and the Board, not to exceed 100 days per year following
retirement. Appropriate office space and administrative support will be made
available to you during the period of your consulting services. We will also
reimburse against receipts for reasonable expenses incurred on behalf of the
Company.

 

 

You may use the title of Director Emeritus, should you so choose. The use of
this title does not carry Executive Authority, nor confer any decision-making
authority on behalf of AMS.

In addition, you agree to resign from the Board of Directors of AMS effective
December 9, 2002.

This agreement shall be binding on AMS and you and upon their respective heirs,
representatives, successors and assigns. If a person or entity will become a
successor to substantially all of the assets of AMS as a result of a
transaction of any kind, and AMS does not obtain an assumption in writing of
its obligations under this agreement from the successor, all remaining payments
will be paid to you immediately before the transaction occurs. AMS also will
make you whole for any golden parachute excise tax due as a result of the
accelerated payment.

Bill, your years of loyal and dedicated service to the Company are very much
appreciated. I particularly appreciate your assistance to me during this past
year. Continue access to your knowledge, guidance and advice is vital to our
success as we transition to a new management team and a new AMS and return AMS
to a growth path.

I am very pleased with these arrangements and wish you well in your retirement.
Please indicate your acceptance of the foregoing by signing the acceptance
copy of this letter and returning it to my attention.

Yours sincerely,

/s/ Alfred T. Mockett

Alfred T. Mockett

Chairman and Chief Executive Officer

	 	 	 	 	 
	Accepted this day,	
10/16/02
	 	 	/s/ William M. Purdy
	 	

	 	 	

	 	 	 	 	William M. Purdyexv10w4

 

Exhibit 10.4

SEPARATION AGREEMENT BETWEEN

AMERICAN MANAGEMENT SYSTEMS, INCORPORATED AND

PATRICK W. GROSS

     THIS AGREEMENT (the “Agreement”) is made and entered into as of August 30,
2002 by and between Patrick W. Gross (“Mr. Gross”) and American Management
Systems, Incorporated (“AMS”).

     WHEREAS, Mr. Gross will be leaving the employ of AMS, and the parties wish
to set forth the terms of his departure;

     NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, the sufficiency of which the parties
acknowledge, it is agreed as follows:

     1.     Mr. Gross’s last day as an AMS employee (the “Separation Date”) shall
be September 30, 2002, or, if his employment is terminated earlier for cause,
such earlier date. Through and including the Separation Date, Mr. Gross shall,
at the direction of AMS’s Chief Executive Officer, devote a substantial portion
of his business time and effort to providing assistance in transitioning
customer relationships to senior AMS executives.

     2.     In consideration for Mr. Gross’s promises in this Agreement, Mr. Gross
shall be entitled to each of the following:

             (a)     Through and including the Separation Date, Mr. Gross shall continue to
receive the base salary to which he was entitled as an employee of AMS on the
date of this Agreement and shall continue to be eligible for the benefits
(other than incentive compensation) to which he would have been eligible as an
employee of AMS if he had continued in his position on that date.

             (b)     No more than two (2) business days after the Separation Date, or any
other date agreed to in writing by the parties, and provided that all necessary
time sheet data and reimbursement requests have been submitted by Mr. Gross on
or before the Separation Date, Mr. Gross shall receive payment of any unpaid
portion of his salary and vacation pay (annual leave) through the Separation
Date, and reimbursement for any outstanding reasonable business

 

 

expenses as approved in advance by the Chief Executive Officer of AMS that
he has incurred in performing his duties for AMS through the Separation Date.

             (c)     Mr. Gross shall be entitled to such rights and payment of such
benefits as might be provided by the terms of any employee benefit plan or
program of AMS based on his service and compensation (to the extent relevant)
through the Separation Date.

             (d)     Mr. Gross shall receive a severance benefit of $1,200,000.
One-quarter of the severance benefit ($300,000) shall be paid in a lump sum in
immediately available funds on the Separation Date, or any other date agreed to
in writing by the parties. The remaining three-quarters of the severance
benefit ($900,000) shall be paid in a lump sum in immediately available funds
no later than January 15, 2003. Notwithstanding the foregoing, in no event
will any portion of the severance benefit be paid before Mr. Gross has executed
a release substantially in the form attached hereto as Attachment A (the
“Release”) and the revocation period set forth in the Release has expired.

             (e)     Mr. Gross shall be granted a nonqualified stock option for 20,000
shares of common stock of AMS (the “Option”). The Option shall be granted as
of July 31, 2002, under American Management Systems, Incorporated 1996 Amended
Stock Option Plan F, and shall be fully vested and exercisable.

             (f)     Mr. Gross shall be reimbursed for any premiums for health insurance
continuation coverage charged to Mr. Gross or his beneficiaries under any AMS
health plans that is elected by Mr. Gross or his beneficiaries pursuant to
Section 4980B of the Internal Revenue Code for a maximum of twenty-four (24)
months. Such reimbursements shall be paid at a time or times mutually agreed
to by the parties, but not before Mr. Gross has executed the Release and the
revocation period set forth in the Release has expired.

             (g)     On Mr. Gross’s instructions to sell shares of AMS stock, his broker
may contact AMS. AMS will then contact Shaw Pittman LLP. Shaw Pittman will
then issue an opinion letter on AMS’s behalf in connection with the disposition
of the shares, stating that any legend can be removed from the shares. This is
a two-paragraph form letter that would be sent to AMS’s transfer agent. The
transfer agent will then contact Mr. Gross’s broker to complete the sale.

Mr. Gross shall not be entitled to the benefits described in paragraphs (d),
(e) and (f) above if his employment is terminated for cause. All benefits
under this Agreement shall be subject to all legally required and legally
permitted withholdings and deductions.

     3.     The parties agree that AMS’s promises in Section 2 are in full, final
and complete settlement of all claims Mr. Gross may have against AMS, its
affiliates, past and present officers, directors, employees, agents, successors
and assigns, and exceed those to which Mr. Gross would be entitled absent his
promises in this Agreement.

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     4.     Nothing in this Agreement shall be construed as an admission of
liability by AMS, its affiliates, or its past and present officers, directors,
employees or agents, and AMS specifically disclaims liability to or wrongful
treatment of Mr. Gross on the part of itself, its affiliates, and its past and
present officers, directors, employees and agents.

     5.     Mr. Gross represents that he has not filed any complaints or charges
against AMS with the U.S. Department of Labor, the Equal Employment Opportunity
Commission, or with any other federal, state or local agency or court, and
covenants that he will not seek to recover on any claim released in this
Agreement. To the extent permitted by law, Mr. Gross promises that he will not
voluntarily assist any third party in pursuing any legal claim against AMS, and
he will immediately notify AMS if he is asked to provide such assistance.

     6.     Mr. Gross agrees to cooperate fully with AMS and its counsel in the
defense or prosecution of any claims or actions (including litigation,
investigation or governmental proceeding) that relate to events or occurrences
that transpired while he was employed by AMS. Such cooperation shall include
appearing from time to time at the offices of AMS or AMS’s counsel for
conferences and interviews, making himself available to testify on behalf of
AMS, and in general providing the officers of AMS and its counsel with the full
benefit of his knowledge with respect to any such matter. AMS agrees to make
reasonable efforts to schedule any cooperation at such times as will not
unreasonably interfere with Mr. Gross’s employment or other business
activities, and to reimburse Mr. Gross for his time in excess of 20 hours per
year and reasonable out-of-pocket costs and expenses that are required to
provide such cooperation. Any such time shall be reimbursed at the rate that
Mr. Gross establishes for his regular consulting services. Mr. Gross shall
provide AMS with verification of any such rate.

     7.     Mr. Gross and AMS, its directors, officers and employees agree that
neither will make any negative or disparaging statements about the other,
provided, however, that both may testify truthfully in a legal proceeding
pursuant to compulsory legal process.

     8.     AMS and Mr. Gross agree that, until the Agreement is publicly disclosed
as part of AMS’s filings with the U.S. Securities and Exchange Commission or in
AMS’s proxy statement to its shareholders, they will treat the terms and
existence of this Agreement as confidential and will not discuss the Agreement
or the negotiations and communications leading to this Agreement, with anyone
other than: (i) their counsel or tax advisor, as necessary to seek their
professional advice, (ii) as determined by AMS in good faith to be required by
law or by the rules and regulations of Nasdaq or any stock exchange on which
AMS’s stock may be traded, or (iii) in AMS’s case, members of AMS’s Board of
Directors and those persons necessary to implement the provisions contained in
this Agreement.

     9.     Mr. Gross and AMS shall agree in advance to any public and/or internal
announcement regarding Mr. Gross’s change in status. During the time he is no
longer a director or officer but still employed by AMS, his title shall be
“Senior Advisor.”

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     10.    This Agreement shall be binding on AMS and Mr. Gross and upon their
respective heirs, administrators, representatives, executors, successors and
assigns.

     11.    Mr. Gross acknowledges that all confidential information regarding the
business of AMS and its subsidiaries and affiliates is the exclusive property
of AMS. Upon or before the Separation Date, Mr. Gross shall return to AMS all
copies of any material involving such confidential information to AMS, and Mr.
Gross agrees that he will not, directly or indirectly, divulge or use such
information, whether or not such information is in written or other tangible
form. Mr. Gross also shall return to AMS, upon or before the Separation Date
any other items in his possession, custody or control that are the property of
AMS. Mr. Gross understands that he is and will remain bound by the terms of
the American Management Systems, Incorporated Intellectual Property Rights
Agreement, the AMS Employee Confidentiality Agreement, the AMS Guide for
Ethical Business Conduct after the Separation Date. This paragraph is intended
to cover confidential information of AMS that relates to the business of AMS
that has not otherwise been made public and shall not apply to employee
responses that may be required by proper governmental or judicial inquiry.

     12.    Mr. Gross acknowledges that, in the course of his employment with AMS
he has been exposed to a significant amount of highly confidential information
about AMS and its affiliates, and its and their clients, business practices and
strategies, and that even inadvertent disclosure of this information would
cause AMS great harm. Accordingly, Mr. Gross agrees that:

             (a)     Until and for twenty-four (24) months following the Separation Date
(the “Restricted Period”), he will not, on his own behalf or on behalf of any
other person or entity, directly or indirectly solicit for the provision of or
provide Competitive Products or Services to persons or entities that are AMS’s
clients at that time or persons or entities who Mr. Gross is, or reasonably
should be, aware that AMS is actively soliciting at that time to become
clients. “Competitive Products or Services” means products or services, which
are in whole or in part similar to or otherwise competitive with AMS’s
proprietary products or to or with services then available from AMS. Mr. Gross
may do corporate or personal consulting, during the Restricted Period so long
as his actions are consistent with the foregoing.

             (b)     During the Restricted Period he will not, directly or indirectly, on
his own behalf or in aid of another person or entity, hire or engage or solicit
for hire or engagement any individual who was an employee of AMS or any of its
affiliates then or at any time within the preceding twelve (12) months, without
the written permission of AMS.

             (c)     During the Restricted Period he will not own a five percent or greater
interest in, or be employed by or a director of, any organization that provides
Competitive Products or Services, unless he receives written authorization from
AMS to do so.

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Mr. Gross agrees that the above restrictions are reasonable including the short
length of time, and the limitation as to identified clients or prospective
clients and employees. Mr. Gross also agrees that in addition to any other
remedies, including an action for damages, AMS may seek injunctive relief
against him for violation of this Section without the need to post a bond.

     13.    AMS, on behalf of itself, its subsidiaries and affiliates, its current
and former officers and directors in their official capacities, and its and
their heirs, successors and assigns, unconditionally releases Mr. Gross and his
heirs, successors, and assigns from any and all claims, demands, actions, and
liabilities that AMS otherwise might have asserted arising out of Mr. Gross’s
employment or other association with AMS and the termination of that employment
or association, and covenants not to sue Mr. Gross or any of his heirs,
successors, or assigns based, in whole or in part, on any such claims, demands,
actions, or liabilities. The foregoing release and covenant shall not apply to
(i) any claims, demands, actions, or liabilities arising after the date on
which AMS executes this Agreement or from acts or omissions that constitute
crimes, (ii) AMS’s right to enforce the terms of this Agreement, (iii) the
rights of AMS and its current and former officers and directors to make claims
or demands against Mr. Gross in the event that claims or demands are made
against them arising out of or relating to acts or omissions of AMS, its
officers or directors, including Mr. Gross. The foregoing release and covenant
shall be effective when Mr. Gross has executed the Release and the revocation
period set forth in the Release has expired.

     14.    Any dispute or controversy arising under or in connection with this
Agreement shall, if AMS or Mr. Gross so elects, be settled by arbitration, in
accordance with the Commercial Arbitration Rules procedures of the American
Arbitration Association. Arbitration shall occur before a single arbitrator,
provided, however, that if the parties cannot agree on the selection of such
arbitrator within 30 days after the matter is referred to arbitration, each
party shall select one arbitrator and those arbitrators shall jointly designate
a third arbitrator to comprise a panel of three arbitrators. The decision of
the arbitrator shall be rendered in writing, shall be final, and may be entered
as a judgment in any court in the Commonwealth of Virginia. AMS and Mr. Gross
each irrevocably consent to the jurisdiction of the federal and state courts
located in Virginia for this purpose. The arbitrator shall be authorized to
allocate the costs of arbitration between the parties. Notwithstanding the
foregoing, AMS, in its sole discretion, may bring an action in any court of
competent jurisdiction to seek injunctive relief in order to avoid irreparable
harm and such other relief as AMS shall elect to enforce Mr. Gross’s covenants
in Sections 10 and 11 hereof.

     15.    Should any provision of this Agreement be declared or be determined by
any court, administrative agency or arbitrator to be invalid or unenforceable,
and that provision cannot be modified so as to be valid and enforceable, then
that provision shall be deemed severed from the agreement and the validity of
the remaining parts, terms or provisions shall not be affected thereby and
shall be given their intended meaning and effect.

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     16.    This Agreement sets forth the entire agreement between Mr. Gross and
AMS, and fully supersedes any and all prior agreements or understandings
between them regarding its subject matter; provided, however, that nothing in
this Agreement is intended to or shall be construed to modify, impair or
terminate any obligation of Mr. Gross pursuant to any agreement with regard to
the protection of AMS’s confidential information, intellectual property rights,
or client or employee relationships, that by its terms continues after Mr.
Gross’s separation from AMS’s employment. This Agreement may only be modified
by written agreement signed by both parties. Mr. Gross acknowledges that he
has not relied upon any statement or representation, written or oral, by AMS or
its affiliates, past or present officers, directors, employees or agents that
is not set forth or referenced in this Agreement.

     17.    This Agreement shall be governed in all respects by Virginia law,
without regard to its conflict of laws principles.

	 	 	 	 	 
	Dated:	 	
9/30/02	 	 
	 	
	 	/s/ Patrick W.
Gross 
	 	 	 	

	 	 	 	 	Patrick W. Gross
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Dated:	 	
9/30/02
	 	AMERICAN MANAGEMENT SYSTEMS,
	 	
	 	INCORPORATED
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	By:	/s/ Garry Griffiths 
	 	 	 	 	

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ATTACHMENT A

GENERAL RELEASE AND COVENANT NOT TO SUE

     In consideration of the receipt of specified benefits under my Separation
Agreement (the “Agreement”) with American Management Systems, Incorporated
(“AMS”), which Agreement hereby is incorporated by reference in this general
release and covenant not to sue (the “Release”), I, Patrick W. Gross, on behalf
of myself, and on behalf of my heirs, successors and assigns, hereby release
unconditionally AMS, all of its past, present and future subsidiaries,
affiliates, directors, officers, employees; and all of its and their respective
heirs, successors, and assigns from any and all claims, demands, actions, and
liabilities that I otherwise might have asserted, including but not limited to
those arising out of my employment or other association with AMS and the
termination of that employment or association; and covenant not to sue AMS, any
of its past, present and future subsidiaries, affiliates, directors, officers,
employees, agents, and representatives; or any of its or their respective
heirs, successors, and assigns based, in whole or in part, on any such claims,
demands, actions, or liabilities.

     The foregoing release and covenant do not apply to (1) any claims that
arise after the date on which I sign this Release, (2) my right to enforce the
terms of the Agreement, (3) any rights that I might have to benefits under the
American Management Systems, Inc. 401(k) Plan, the American Management Systems,
Inc. Simplified Employee Pension Plan, or any successor to either, (4) any
rights that I might have to benefits under any other employee benefit plan or
arrangement, to the extent those benefits are subject to sections 203 and 204
of the Employee Retirement Income Security Act of 1974, as amended, (5) any
rights that I might have to benefits or other compensation under any other
employee benefit plan or arrangement, to the extent those benefits or
compensation were accrued and vested before my termination of employment under
the terms of the plan or arrangement as in effect at that time, or (6) my right
to make claims or demands against AMS and its current and former officers and
directors in the event that claims or demands are made against me arising out
of or relating to acts or omissions of AMS, its officers or directors. Those
rights, and only those rights, survive unaffected by this Release.

     I understand that as a consequence of my signing this Release I am giving
up, with respect to my AMS employment and the termination of that employment,
any and all rights I otherwise might have under the Age Discrimination in
Employment Act of 1967, as amended and the Older Workers Benefit Protection Act
of 1990 and any and all other federal, state or municipal laws prohibiting
discrimination in employment on the basis of age.

     I acknowledge and agree that (1) the consideration described in the
Agreement constitutes consideration in addition to the regular severance and
other benefits I would be entitled to receive from AMS upon leaving its
employment, (2) I was and am hereby advised by AMS to consult with an attorney
before signing this Release, (3) I was given a period of at least

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21 days within which to consider whether to sign this Release, and (4) I
was and am hereby advised by AMS of my statutory right to revoke this Release
within seven (7) days of my signing this Release and advised that the Release
will not become effective or enforceable until the revocation period has
expired.

     I warrant and represent that my decision to enter into this Release was
(1) entirely voluntary on my part; (2) not made in reliance on any inducement,
promise or representation, whether express or implied, other than the
inducements, representations and promises expressly set forth in the Agreement;
and (3) not influenced by any threats or other coercive activities to induce
acceptance of this Release.

     I further warrant and represent that I fully understand and appreciate the
consequences of my signing this Release.

* * * *

     IN WITNESS WHEREOF, I hereby acknowledge receipt of consideration and
execute the foregoing Release this      30      day of      September     , 2002.

	 
	/s/ Patrick W. Gross
	

	Patrick W. Gross

Witnessed by           /s/ Garry Griffiths           on this      30      day of      September     , 2002.

	 
	Garry Griffiths
	

	WITNESS

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