Document:

exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

Larry R. Seidel

     This EMPLOYMENT AGREEMENT (the “Agreement”) is made effective July 1, 2002
between American Management Systems, Incorporated, a corporation formed under
the laws of the State of Delaware with its principal place of business at 4000
and 4050 Legato Road, Fairfax, VA 22033 (“AMS”), and Larry R. Seidel, residing
at 4431 Dittmar Road, Arlington, VA 22207 (the “Employee”).

     WHEREAS, AMS desires to engage the services of the Employee as Executive
Vice President, and the Employee is willing to render such services to AMS in
consideration of the terms and conditions agreed to by the parties; and

     WHEREAS, AMS has approved the employment of the Employee on the terms and
conditions set forth in this Agreement;

     NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, AMS agrees
to employ the Employee, and the Employee agrees to perform services for AMS as
an employee, effective as of July 1, 2002 upon the terms and conditions set
forth herein.

	1.	 	Term.
	 
	 	 	The initial term of this Agreement shall end on June 30, 2004, unless it
is terminated earlier as provided herein. Beginning on that date, and on
each anniversary thereafter, unless it is terminated earlier as provided
herein or AMS delivers written notice to the Employee of its intention
not to extend the Agreement at least 90 days before such anniversary
date, the term of this Agreement shall automatically be extended for one
additional year. The restrictive covenants in Sections 10 and 11 hereof
shall survive the termination of this Agreement.
	 
	2.	 	Title and Duties.
	 
	 	 	The Employee shall be employed as Executive Vice President of AMS. The
Employee shall perform such services consistent with his position as
might be assigned to him from time to time and are consistent with the
bylaws of AMS.

 

 

	3.	 	Location.
	 
	 	 	The Employee’s place of employment shall be within a 25-mile radius of
the location of the offices described above as AMS shall reasonably
direct, or at any other location that may be mutually agreed upon in the
future.
	 
	4.	 	Extent of Services.

	 	a.	 	General.
	 
	 	 	 	The Employee agrees not to engage in any business activities during
the term of this Agreement except those that are for the benefit of
AMS, and to devote his entire business time, attention, skill and
effort to the performance of his duties under this Agreement.
Notwithstanding the foregoing, the Employee may engage in
charitable, professional and civic activities that do not impair
the performance of his duties to AMS, as the same may be changed
from time to time, or otherwise adversely affect AMS’s interest,
reputation, business or welfare. Nothing contained herein shall
prevent the Employee from managing his own personal investments and
affairs, including but not limited to investing his assets in the
securities of publicly traded companies; provided, however, that
the Employee’s activities do not constitute a conflict of interest,
violate securities laws, or otherwise interfere with the
performance of his duties and responsibilities as described herein.
The Employee agrees to adhere to AMS’s published policies and
procedures affecting directors, officers, employees, and agents and
shall use his best efforts to promote AMS’s interest, reputation,
business and welfare.
	 
	 	b.	 	Corporate Opportunities.
	 
	 	 	 	The Employee agrees that he will not take personal advantage of any
AMS business opportunities that arise during his employment with
AMS and that might be of benefit to AMS. All material facts
regarding such opportunities must be promptly reported to the Board
for consideration by AMS.

	5.	 	Compensation and Benefits.

	 	a.	 	Base Salary.
	 
	 	 	 	The Employee’s initial annualized base salary shall be $400,000.
The base salary shall be payable in accordance with AMS’s standard
payroll practices. The Employee’s annual base salary shall be
reviewed no less frequently than annually by the AMS Compensation
Committee and/or Board; provided, however, that at no time during
the term of this Agreement shall the Employee’s base salary be
decreased from the base salary then in effect except as part of a
general program of salary adjustment by AMS applicable to all
similarly-situated employees.
	 
	 	b.	 	Incentive Compensation.

	 	(i)	 	The Employee shall be eligible for an annual cash
bonus having a value of

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	 	 	 	from 0% to 120% of his annual base salary for the relevant
year, depending on AMS’s and the Employee’s performance with
a target percentage of 60% (“Target Annual Bonus”). Such
annual cash bonuses shall be paid at the usual times for the
payment of annual cash bonuses by AMS. If the Employee’s
employment terminates before the end of a fiscal year for any
reason other than Cause, as defined herein, the Employee
shall be entitled to the annual cash bonus for that year,
based on actual results for the entire year but prorated for
the period of actual employment, at the time that the annual
cash bonus otherwise would have been paid.
	 
	 	(ii)	 	The Employee shall be eligible to participate in
all long term incentive plans in which other executive vice
presidents are eligible to participate.

	 	c.	 	Other Benefits.
	 
	 	 	 	The Employee shall be entitled to paid compensatory leave and
vacation, sick leave, and holiday pay in accordance with AMS’s
policies in effect from time to time, and to participate in such
life, health, and disability insurance, pension, deferred
compensation and incentive compensation plans, stock options and
awards, performance bonuses and other benefits as AMS extends, as a
matter of policy, to its executive vice presidents.
	 
	 	d.	 	Special Retiree Health Benefit.
	 
	 	 	 	On the date that the Employee’s employment terminates for any
reason, regardless of the Employee’s actual age he shall be treated
as satisfying the requirements under the AMS Retiree Medical
Program that he must be at least age 55 and that his age plus years
of AMS service must equal at least 65; provided, however, that if
the Employee is precluded from participating in the Program as
described, for any reason, he shall be provided with the after-tax
economic equivalent of the benefits he would have received under
the Program. The economic equivalent of the benefits he would have
received under the Program shall be the lowest cost that would be
incurred by the Employee in obtaining health insurance coverage for
himself and his eligible dependents that will provide benefits
comparable to the benefits offered under the AMS Retiree Medical
Program, as AMS shall modify the Program from time to time, less
any required contributions under the Program.
	 
	 	e.	 	Supplemental Disability Benefit.
	 
	 	 	 	Subject to the Employee’s provision of evidence of insurability
reasonably acceptable to AMS, AMS shall make available to the
Employee during the term of this Agreement a disability benefit,
paid by AMS, that is supplemental to the disability benefits
provided under its existing group long term disability policy and
under which benefits are not payable unless the Employee is
disabled as defined in the existing policy, and that will be
sufficient to ensure that the benefits otherwise payable to the
Employee under the terms of the existing policy, together with the
supplemental benefit and any compensation or benefits from other
sources that are

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	 	 	 	taken into account in determining the amount of benefits payable
under the existing policy, are at least 60% of his base pay at the
time he became disabled and continue, during the term of this
Agreement, for as long as he remains disabled, up to age 65.

	6.	 	Termination of Employment.

	 	a.	 	In General.
	 
	 	 	 	Except as specifically provided below or elsewhere in this
Agreement, the Employee’s employment may be terminated by either
party at any time with or without Cause. In any event, the
Employee’s employment shall terminate immediately upon his death.
	 
	 	 	 	Except as specifically provided below or elsewhere in this
Agreement, in the event that the Employee’s employment is
terminated, this Agreement shall terminate and the Employee shall
be entitled only to such rights and payment of such benefits as
might be provided by the terms of any employee benefit plan or
program of AMS, or any other agreement between AMS and the
Employee.
	 
	 	 	 	Except as specifically provided below or elsewhere in this
Agreement, constructive termination of the Employee’s employment by
AMS shall be treated the same as actual termination for purposes of
this Agreement. Constructive termination shall mean a termination
of the Employee’s employment at his own initiative following the
occurrence, without the Employee’s prior written consent, of one or
more of the following events:

	 	(i)	 	a significant diminution in the nature or scope
of the Employee’s authority or the duties that the Employee
performs, unless the Employee is given new authority or
assigned new duties (whichever is applicable) that are
substantially comparable to his previous authority and duties;
	 
	 	(ii)	 	a significant reduction in the Employee’s then
current base salary, a significant reduction in his
opportunities for earnings under his incentive compensation
plans, or a significant reduction in his employee benefits as
a whole (in each case except as part of a general reduction
that applies to other similarly-situated employees); or
	 
	 	(iii)	 	the relocation of the Employee’s office from its
location at the time of the change to a location more than 25
miles away without his prior written consent.

	 	 	 	The mere failure of AMS to extend (or notice of its intention not
to extend) the Agreement shall not result in actual or constructive
termination; provided, however, that if AMS fails to extend the
Agreement its obligation to provide the benefits set forth in
Section 6.c. hereof, on the terms and conditions set forth in that
section, and without regard to any other section hereof, shall
survive the termination of the Agreement. Under no circumstances
shall a termination or constructive termination be deemed to occur
for purposes of Section 6.c. hereof if AMS’s obligation to

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	 	 	 	perform this Agreement is assigned or transferred to a successor
employer pursuant to Section 17 hereof or if the Employee otherwise
becomes employed without a significant period of unemployment under
substantially similar terms and conditions by a successor to some
or all of the business of AMS.
	 
	 	b.	 	Voluntary Termination.
	 
	 	 	 	The Employee’s voluntary termination of employment shall be
effective upon 30 days’ prior written notice to AMS, unless the
parties mutually agree to advance or delay the effective date.
	 
	 	c.	 	Termination Without Cause.
	 
	 	 	 	AMS’s termination of the Employee’s employment (or taking of any
action or actions resulting in constructive termination of
employment) without Cause shall be effective upon 30 days’ prior
written notice to the Employee, unless the parties mutually agree
to advance or delay the effective date.
	 
	 	 	 	If the Employee’s employment is terminated without Cause and not on
account of Disability, the Employee shall be entitled to receive
from AMS the following benefits in addition to any other benefits
to which he might be entitled:

	 	(i)	 	a severance benefit in an amount equal to 100% of
the Employee’s annual base salary in effect immediately
preceding such termination, but only if (1) the Employee
executes a release substantially identical to the release
attached hereto, (2) the period for revoking such release has
expired, and (3) the Employee has complied with the
requirements of Sections 10 and 11 hereof;
	 
	 	(ii)	 	full vesting of any unexercised stock options;
and
	 
	 	(iii)	 	payment of amounts equal (before reduction for
taxes) to any premiums for health and dental insurance
continuation coverage under any AMS health plans that is
elected by the Employee or his beneficiaries pursuant to
Section 4980B of the Internal Revenue Code of 1986, as amended
(the “Code”), at a time or times mutually agreed to by the
parties, but only so long as the Employee is not eligible for
coverage under a health plan of another employer (whether or
not he elects to receive coverage under that plan).

	 	 	 	AMS shall pay 75% of the severance benefit in paragraph (i) within
30 days after all of the applicable conditions are satisfied. AMS
shall pay the other 25% of the severance benefit with interest 12
months afterall of the applicable conditions are satisfied,
provided that the Employee complies with the covenants in Sections
10 and 11 hereof throughout that period. If the Employee does not
comply with the requirements of Sections 10 and 11 hereof at any
time during that period, the other 25% of the severance benefit
shall not be paid to the Employee. All severance benefits paid to
the Employee shall be paid subject to all legally required payroll
deductions and withholdings for sums owed by the Employee to AMS.

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	 	 	 	For purposes of this Agreement, “Cause” shall mean: (1) the
conviction of the Employee of, or the entry of a plea of guilty or
nolo contendere by the Employee to, any felony or misdemeanor
involving moral turpitude; (2) fraud, misappropriation or
embezzlement by the Employee; (3) the Employee’s willful failure,
gross negligence or gross misconduct in the performance of his
assigned duties for AMS; (4) the Employee’s breach of a fiduciary
duty to AMS; (5) any act or omission of the Employee not at the
express direction of the board or other appropriate authority that
reflects adversely on the integrity and reputation for honesty and
fair dealing of AMS or has a material detrimental effect on AMS’s
financial condition, position or business; or (6) the breach by the
Employee of any material term of this Agreement. For purposes of
this Agreement, “Disability” shall mean disability as defined in
AMS’s existing long term disability policy.

	7.	 	Effect of Change in Control.

	 	a.	 	Additional Benefits.
	 
	 	 	 	If the Employee’s employment is terminated within twelve (12)
months following a Change of Control of AMS, and a severance
benefit is payable pursuant to Section 6.c.(i) hereof, (i) the
amount of the severance benefit shall be increased to 200% of the
sum of the Employee’s base salary and Target Annual Bonus, (ii) the
25% hold-back of the severance benefit shall not apply, and (iii)
the Employee shall be entitled to the Gross-up Payment, if any,
described in subsection c below.
	 
	 	b.	 	Definition of Change of Control.
	 
	 	 	 	A “Change of Control” shall mean the first of the following events
to occur:

	 	(i)	 	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 AMS or a trustee or other
fiduciary holding securities under an employee benefit plan of
AMS or a corporation owned directly or indirectly by the
stockholders of AMS in substantially the same proportions as
their ownership of stock of AMS, becomes the beneficial owner
(within the meaning of Rule 13d-3 under the Act), directly or
indirectly, of securities representing 50% or more of the
combined voting power of AMS’s then-outstanding securities
entitled generally to vote for the election of directors;
	 
	 	(ii)	 	AMS’s stockholders approve an agreement to merge
or consolidate with another corporation unless AMS’s
stockholders immediately before the merger or consolidation
are to own more than two-thirds (66-2/3%) of the combined
voting power of the resulting entity’s voting securities
entitled generally to vote for the election of directors;
	 
	 	(iii)	 	AMS’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 AMS; or

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	 	(iv)	 	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 AMS’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 (either by a specific vote or by approval of the
proxy statement of AMS in which such person is named as a
nominee for director, without objection to such nomination).

	 	 	 	However, no Change of Control shall be deemed to have occurred by
reason of (1) any event involving a transaction in which the
Employee or a group of persons or entities with whom or with which
the Employee acts in concert, acquires, directly or indirectly, 50%
or more of the combined voting power of AMS’s then-outstanding
voting securities or the business or assets of AMS, (2) 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 law.
	 
	 	c.	 	Effect of Section 280G.
	 
	 	 	 	The benefit provided under this Section 7 or Section 6 hereof, if
applicable, shall be provided without regard to any limitations
imposed by Section 280G or 4999 of the Code.

	 	(i)	 	In the event that the Employee becomes entitled
to the benefits (including the acceleration of certain
benefits) provided under this Section 7 or Section 6 hereof,
if applicable (the “Benefits”), if any of the 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), AMS shall pay to the Employee an additional amount
(the “Gross-up Payment”) such that the net amount retained by
the Employee, 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 subparagraph (i), but before deduction
for any federal, state or local income tax on the Benefits,
shall be equal to the “Total Benefits,” as defined below.
	 
	 	(ii)	 	For purposes of determining whether any of the
Benefits will be subject to the Excise Tax and the amount of
such Excise Tax:

	 	(1)	 	Any other payments or benefits
received or to be received by the Employee in connection
with a change of control of AMS or the Employee’s
termination of employment (whether pursuant to the terms
of this Agreement or any other plan, arrangement or
agreement with AMS, any person whose actions result in a
change of control of AMS, or any person affiliated with
AMS or such person) (which, together with the Benefits,
shall constitute the “Total Benefits”) shall be treated
as “parachute payments” within the meaning of Section

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	 	 	 	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 AMS’s
independent auditors such other payments or benefits
(in whole or in part) will 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 Tax,
and such tax counsel shall provide such opinion in
writing to the Employee such that he and his tax
advisors can rely on it,
	 
	 	(2)	 	The amount of the Total Benefits
which shall be treated as subject to the Excise Tax
shall be equal to the lesser of (I) the total amount of
the Total Benefits and (II) the amount of excess
parachute payments within the meaning of Section
280G(b)(1) of the Code (after applying paragraph (1),
above), and
	 
	 	(3)	 	The value of any non-cash benefits or
any deferred payment or benefit shall be determined by
AMS’s independent auditors in accordance with the
principles of Section 280G(d)(3) and (4) of the Code.

	 	(iii)	 	For purposes of determining the amount of the
Gross-up Payment, the Employee 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
at 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, the Employee shall repay to AMS
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 the Employee 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), AMS shall make an additional gross-up payment in
respect of

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	 	 	 	such excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is finally
determined.

	 	d.	 	Effect on Pre-existing Change in Control Retention Agreement.
	 
	 	 	 	The American Management Systems, Incorporated Change in Control
Executive Retention Agreement between AMS and the Employee shall be
cancelled and all rights granted to the Employee under that
agreement shall become null and void upon the effective date of
this Agreement.

	8.	 	Mitigation and Offset.
	 
	 	 	If the Employee’s employment is terminated during the term of this
Agreement without Cause, the Employee shall be under no duty or
obligation to seek or accept other employment, and no payment or benefits
of any kind due him under this Agreement shall be reduced, suspended or
in any way offset by any subsequent employment.
	 
	9.	 	Entitlement to Other Benefits.
	 
	 	 	Except as expressly provided herein, this Agreement shall not be
construed as limiting in any way any rights or benefits the Employee, his
spouse, dependents or beneficiaries may have pursuant to any other
employee benefits plans or programs.
	 
	10.	 	Confidentiality.
	 
	 	 	The Employee acknowledges that all confidential information regarding the
business of AMS and its subsidiaries and affiliates is the exclusive
property of AMS. On or before the date that his employment with AMS
terminates, the Employee shall return to AMS all copies of any material
involving such confidential information to AMS, and the Employee 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. The Employee also shall return to AMS by that date any
other items in his possession, custody or control that are the property
of AMS. The Employee understands that even after the date that his
employment with AMS terminates he will remain bound by the terms of the
American Management Systems, Incorporated Confidentiality and
Intellectual Property Rights Agreement, the AMS Ethical Business Conduct
policy statement, and the restrictive covenants contained in this Section
10 and Section 11 hereof. This Section 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. No breach of
this Section shall be deemed to have occurred unless AMS provides written
notice to the Employee of the breach within 90 days after AMS becomes
aware of it.
	 
	11.	 	Non-Solicitation.
	 
	 	 	Effective on the date that his employment with AMS terminates and for a
period of 12 months thereafter, the Employee shall not directly (a)
employ or solicit for employment, or

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	 	 	assist in any way in solicitation for employment, any person employed by
AMS or any of its affiliates then or at any time within the preceding 12
months; or (b) solicit, or assist in any way in the solicitation of
business from any of AMS’s or its affiliates’ clients or prospective
clients, either for the Employee’s own benefit or the benefit of anyone
other than AMS, unless the business being solicited is not competitive
with the services or products provided by AMS or its affiliates. Clause
(b) shall not apply unless the business being solicited is in a line of
business in which AMS was already engaged or already had under active
consideration while the Employee was employed by AMS or is a natural
extension of such a line business with a client that was an existing
client of AMS during that time.
	 
	12.	 	Employee Representation.
	 
	 	 	The Employee represents and warrants to AMS that he is not now under any
obligation of a contractual or other nature to any person, business or
other entity that is inconsistent or in conflict with this Agreement or
that would prevent him from performing his obligations under this
Agreement.
	 
	13.	 	Arbitration.
	 
	 	 	Any dispute or controversy arising under or in connection with this
Agreement shall, if AMS or the Employee 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 the
Employee 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 the Employee’s covenants in Sections 10 and 11 hereof.
	 
	14.	 	Legal Expenses.
	 
	 	 	Except as provided in Section 13 hereof, if any dispute or controversy
arises under or in connection with this agreement, AMS shall promptly pay
all the Employee’s legal fees and expenses relating to the dispute or
controversy, including, by way of example rather than limitation,
reasonable attorneys’ fees incurred by the Employee in seeking to obtain
or enforce any right or benefit under this Agreement, provided, however,
that this obligation of AMS shall not apply unless the Employee prevails
in whole or in part on the dispute or controversy. This obligation shall
apply irrespective of whether the dispute or controversy is resolved by
arbitration, litigation, or a settlement thereof.

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	15.	 	Interest.
	 
	 	 	AMS shall pay to the Employee interest at the prime lending rate as
announced from time to time by Citibank, N.A. or its successors or
another substantially similar rate on all or any part of any amount to be
paid to the Employee hereunder that is not paid when due or that is
deferred under an express obligation to pay interest.
	 
	16.	 	Indemnification.

	 	a.	 	AMS agrees that if the Employee is made a party, or, is
threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative, or investigative (a
“Proceeding”), by reason of the fact that he is or was a director,
officer or employee of AMS, or is or was serving at the request of
AMS as a director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or
not the basis of such Proceeding is the Employee’s alleged action in
an official capacity while serving as a director, officer, member,
employee or agent, the Employee shall be indemnified and held
harmless by AMS to the fullest extent permitted or authorized by
AMS’s certificate of incorporation and by-laws. To the extent
consistent with the foregoing, this obligation to indemnify the
Employee and hold him harmless shall continue even if he has ceased
to be a director, officer, member, employee or agent of AMS or other
such entity described above, and shall inure to the benefit of the
Employee’s heirs, executors and administrators. AMS shall advance
to the Employee all reasonable costs and expenses incurred by him in
connection with a Proceeding within 20 days after receipt by AMS of
a written request for such advance. Such request shall include an
undertaking by the Employee to repay the amount of such advance if
it shall ultimately be determined that the Employee is not entitled
to be indemnified against such costs and expenses.
	 
	 	b.	 	Neither the failure of AMS (including its Board, independent
legal counsel or stockholders) to have made a determination before
such Proceeding concerning payment of amounts claimed by the
Employee under subsection a above that indemnification of the
Employee is proper because he has met the applicable standards of
conduct, nor a determination by AMS (including its Board,
independent legal counsel or stockholders) that the Employee has not
met such applicable standards of conduct, shall create a presumption
that the Employee has not met the applicable standards of conduct.

	17.	 	Assignability and Binding Nature.
	 
	 	 	This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, heirs (in the case of the
Employee) and assigns. No rights or obligations may be assigned or
transferred by AMS except that such rights or obligations may be assigned
or transferred pursuant to a merger or consolidation in which AMS is not
the continuing entity, or the sale or liquidation of all or substantially
all of the assets of AMS, provided that the assignee or transferee is the
successor to all or substantially all of

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	 	 	the assets of AMS and such assignee or transferee assumes the
liabilities, obligations, and duties of AMS, as contained in this
Agreement, either contractually, or as a matter of law. AMS further
agrees, that in the event of a sale of assets or liquidation as described
in the foregoing sentence, it shall take whatever action it is legally
entitled to take in order to cause the assignee or transferee to
expressly assume the liabilities, obligations, and duties of AMS under
this Agreement. Notwithstanding any such assignment, AMS shall not be
relieved from liability under this Agreement. No rights or obligations
of the Employee under this Agreement may be assigned or transferred by
the Employee other than his right to receive compensation and benefits,
provided such assignment or transfer is otherwise permitted by law.
	 
	18.	 	Notices.
	 
	 	 	All notices required or permitted hereunder shall be in writing and shall
be deemed effective: (a) upon personal delivery; (b) upon deposit with
the United States Postal Service, by registered or certified mail,
postage prepaid; or (c) in the case of delivery by nationally recognized
overnight delivery service, when received, addressed as follows:
	 
	 	 	If to AMS to:American Management Systems, Incorporated

4050 Legato Road

Fairfax, VA 22033

Attention: Garry Griffiths, Chief Human Resources Officer

With a copy (which shall not constitute notice) to:

Shaw Pittman LLP

2300 N Street, N.W.

Washington, DC 20037

Attention: Barbara M. Rossotti, Esq.

If to the Employee, to:

Larry R. Seidel

4431 Dittmar Road

Arlington, VA 22207

	 	 	or to such other address or addresses as either party shall designate to
the other in writing from time to time by like notice. At AMS’s sole
discretion it may substitute, for any advance notification otherwise
required in this Agreement (including the right to a delayed effective
date provided in Section 6 hereof in lieu of advance notice), continued
payment of regular salary and benefits during the otherwise required
advance notification period.
	 
	19.	 	Amendment.
	 
	 	 	This agreement may be amended or modified only by a written instrument
executed by both AMS and the Employee.

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	20.	 	Captions.
	 
	 	 	The captions appearing herein are for convenience of reference only and
in no way define, limit or affect the scope or substance of any section
hereof.
	 
	21.	 	Time.
	 
	 	 	All reference herein to periods of days are to calendar days, unless
expressly provided otherwise. Where the time period specified herein
would end on a weekend or holiday, the time period shall be deemed to end
on the next business day.
	 
	22.	 	Entire Agreement.
	 
	 	 	Except for other agreements specifically referenced herein, this
Agreement constitutes the entire agreement between AMS and the Employee
and supersedes all prior agreements and understandings, whether written
or oral relating to the subject matter hereof.
	 
	23.	 	Severability.
	 
	 	 	In case any provision hereof shall be held by a court or arbitrator with
jurisdiction over AMS or the Employee to be invalid, illegal or otherwise
unenforceable, such provision shall be restated to reflect as nearly as
possible the original intentions of AMS and the Employee in accordance
with applicable law, and the validity, legality and enforceability of the
remaining provisions shall in not way be affected or impaired thereby.
	 
	24.	 	Waiver.
	 
	 	 	No delays or omission by AMS or the Employee in exercising any right
hereunder shall operate as a waiver of that or any other right. A waiver
or consent given by AMS or the Employee or any one occasion shall be
effective only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.
	 
	25.	 	Governing Law.
	 
	 	 	This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the Commonwealth of Virginia, without regard to its
conflicts of laws principles.
	 
	26.	 	Withholding.
	 
	 	 	AMS may make any appropriate arrangements to deduct from all benefits
provided hereunder any taxes reasonably determined to be required to be
withheld by any government or government agency. The Employee shall bear
all taxes on benefits provided hereunder to the extent that no taxes are
withheld, irrespective of whether withholding is required.

- 13 -

 

	27.	 	Counterparts.
	 
	 	 	This 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 instruments.

IN WITNESS WHEREOF, AMS and the Employee have executed this Agreement effective
as of July 1, 2002.

	 	 	 
	 	 	 
	EMPLOYEE	 	
AMERICAN MANAGEMENT
	 	 	
SYSTEMS, INCORPORATED
	 	 	 
	 	 	 
	/s/ Larry R. Seidel                                        	 	
By: Garry Griffiths                                        
	Larry R. Seidel	 	
                    Garry Griffiths
	 	 	 
	Date: 9/06/02                                                	 	
Date: 7/25/02                                                 

- 14 -exv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

Richard C. Lottie

     This EMPLOYMENT AGREEMENT (the “Agreement”) is made effective August 5,
2002 between American Management Systems, Incorporated, a corporation formed
under the laws of the State of Delaware with its principal place of business at
4000 and 4050 Legato Road, Fairfax, VA 22033 (“AMS”), and Richard C. Lottie,
residing at 3805 Silver Falls Court, Plano, TX 75093 (the “Employee”).

     WHEREAS, AMS desires to engage the services of the Employee as Executive
Vice President, and the Employee is willing to render such services to AMS in
consideration of the terms and conditions agreed to by the parties; and

     WHEREAS, AMS has approved the employment of the Employee on the terms and
conditions set forth in this Agreement;

     NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, AMS agrees
to employ the Employee, and the Employee agrees to perform services for AMS as
an employee, effective as of August 5, 2002 upon the terms and conditions set
forth herein.

	1.	 	Term.
	 
	 	 	The initial term of this Agreement shall end on August 4, 2004, unless it
is terminated earlier as provided herein. Beginning on that date, and on
each anniversary thereafter, unless it is terminated earlier as provided
herein or AMS delivers written notice to the Employee of its intention
not to extend the Agreement at least 90 days before such anniversary
date, the term of this Agreement shall automatically be extended for one
additional year. The restrictive covenants in Sections 10 and 11 hereof
shall survive the termination of this Agreement.
	 
	2.	 	Title and Duties.
	 
	 	 	The Employee shall be employed as Executive Vice President of AMS. The
Employee shall perform such services consistent with his position as
might be assigned to him from time to time and are consistent with the
bylaws of AMS.

 

 

	3.	 	Location.
	 
	 	 	The Employee’s place of employment shall be within a 25-mile radius of
the Dallas office (except that, as business needs require, AMS may change
that office to the offices described above), or at any other location
that may be mutually agreed upon in the future.
	 
	4.	 	Extent of Services.

	 	a.	 	General.
	 
	 	 	 	The Employee agrees not to engage in any business activities during
the term of this Agreement except those that are for the benefit of
AMS, and to devote his entire business time, attention, skill and
effort to the performance of his duties under this Agreement.
Notwithstanding the foregoing, the Employee may engage in
charitable, professional and civic activities that do not impair
the performance of his duties to AMS, as the same may be changed
from time to time, or otherwise adversely affect AMS’s interest,
reputation, business or welfare. Nothing contained herein shall
prevent the Employee from managing his own personal investments and
affairs, including but not limited to investing his assets in the
securities of publicly traded companies; provided, however, that
the Employee’s activities do not constitute a conflict of interest,
violate securities laws, or otherwise interfere with the
performance of his duties and responsibilities as described herein.
The Employee agrees to adhere to AMS’s published policies and
procedures affecting directors, officers, employees, and agents and
shall use his best efforts to promote AMS’s interest, reputation,
business and welfare.
	 
	 	b.	 	Corporate Opportunities.
	 
	 	 	 	The Employee agrees that he will not take personal advantage of any
AMS business opportunities that arise during his employment with
AMS and that might be of benefit to AMS. All material facts
regarding such opportunities must be promptly reported to the Board
for consideration by AMS.

	5.	 	Compensation and Benefits.

	 	a.	 	Base Salary.
	 
	 	 	 	The Employee’s initial annualized base salary shall be $320,000.
The base salary shall be payable in accordance with AMS’s standard
payroll practices. The Employee’s annual base salary shall be
reviewed no less frequently than annually by the AMS Compensation
Committee and/or Board; provided, however, that at no time during
the term of this Agreement shall the Employee’s base salary be
decreased from the base salary then in effect except as part of a
general program of salary adjustment by AMS applicable to all
similarly-situated employees.
	 
	 	b.	 	Incentive Compensation.

	 	(i)	 	The Employee shall be eligible for an annual cash
bonus having a value of

- 2 -

 

	 	 	 	from 0% to 120% of his annual base salary for the relevant
year, depending on AMS’s and the Employee’s performance with
a target percentage of 60% (“Target Annual Bonus”). Such
annual bonuses shall be paid at the usual times for the
payment of annual bonuses by AMS.
	 
	 	(ii)	 	The Employee shall be eligible to participate in
all long term incentive plans in which other executive vice
presidents are eligible to participate.

	 	c.	 	Hiring Grants.

	 	(i)	 	As of August 5, 2002, the Employee shall be
granted the right, in the form of deferred stock units, to
receive 5,000 shares of common stock of AMS that are subject
to vesting and other restrictions. The stock shall be
granted, to the extent possible, under the American Management
Systems Restricted Stock and Stock Bonus Plan (the “Restricted
Stock Plan”), and, in any event, the grant shall have terms
substantially similar to the terms of Discretionary Awards
made under the Restricted Stock Plan. If the Employee’s
employment is terminated without Cause and not on account of
Disability (as defined below), the deferred stock units shall
become fully vested. The shares will vest over three years in
equal increments on the anniversary of the grant date.
	 
	 	(ii)	 	The Employee shall be granted a nonqualified
stock option for 25,000 shares of common stock of AMS at the
closing market price on August 5, 2002. The option shall be
granted, to the extent possible, under American Management
Systems, Incorporated 1996 Amended Stock Option Plan F (“Plan
F”), and in any event shall have terms substantially similar
to the terms of nonqualified stock options granted under Plan
F. The options will vest over four years in increments of
twenty-five percent on the anniversary of the grant date.

	 	d.	 	Other Benefits.
	 
	 	 	 	The Employee shall be entitled to paid compensatory leave and
vacation, sick leave, and holiday pay in accordance with AMS’s
policies in effect from time to time, and to participate in such
life, health, and disability insurance, pension, deferred
compensation and incentive compensation plans, stock options and
awards, performance bonuses and other benefits as AMS extends, as a
matter of policy, to its executive vice presidents.

	6.	 	Termination of Employment.

	 	a.	 	In General.
	 
	 	 	 	Except as specifically provided below or elsewhere in this
Agreement, the Employee’s employment may be terminated by either
party at any time with or without Cause. In any event, the
Employee’s employment shall terminate immediately upon his death.

- 3 -

 

	 	 	 	Except as specifically provided below or elsewhere in this
Agreement, in the event that the Employee’s employment is
terminated, this Agreement shall terminate and the Employee shall
be entitled only to such rights and payment of such benefits as
might be provided by the terms of any employee benefit plan or
program of AMS, or any other agreement between AMS and the
Employee.
	 
	 	 	 	Except as specifically provided below or elsewhere in this
Agreement, constructive termination of the Employee’s employment by
AMS shall be treated the same as actual termination for purposes of
this Agreement. Constructive termination shall mean a termination
of the Employee’s employment at his own initiative following the
occurrence, without the Employee’s prior written consent, of one or
more of the following events:

	 	(i)	 	a significant diminution in the nature or scope
of the Employee’s authority or the duties that the Employee
performs, unless the Employee is given new authority or
assigned new duties (whichever is applicable) that are
substantially comparable to his previous authority and duties;
	 
	 	(ii)	 	a significant reduction in the Employee’s then
current base salary, a significant reduction in his
opportunities for earnings under his incentive compensation
plans, or a significant reduction in his employee benefits as
a whole (in each case except as part of a general reduction
that applies to other similarly-situated employees); or
	 
	 	(iii)	 	the relocation of the Employee’s office from its
location at the time of the change to a location more than 25
miles away without his prior written consent.

	 	 	 	The mere failure of AMS to extend (or notice of its intention not
to extend) the Agreement shall not result in actual or constructive
termination; provided, however, that if AMS fails to extend the
Agreement its obligation to provide the benefits set forth in
Section 6.c. hereof, on the terms and conditions set forth in that
section, and without regard to any other section hereof, shall
survive the termination of the Agreement. Under no circumstances
shall a termination or constructive termination be deemed to occur
for purposes of Section 6.c. hereof, if AMS’s obligation to perform
this Agreement is assigned or transferred to a successor employer
pursuant to Section 17 hereof or if the Employee otherwise becomes
employed without a significant period of unemployment under
substantially similar terms and conditions by a successor to some
or all of the business of AMS.
	 
	 	b.	 	Voluntary Termination.
	 
	 	 	 	The Employee’s voluntary termination of employment shall be
effective upon 30 days’ prior written notice to AMS, unless the
parties mutually agree to advance or delay the effective date.

- 4 -

 

	 	c.	 	Termination Without Cause.
	 
	 	 	 	AMS’s termination of the Employee’s employment (or taking of any
action or actions resulting in constructive termination of
employment) without Cause shall be effective upon 30 days’ prior
written notice to the Employee, unless the parties mutually agree
to advance or delay the effective date.
	 
	 	 	 	If the Employee’s employment is terminated without Cause and not on
account of Disability, the Employee shall be entitled to receive
from AMS the following benefits in addition to any other benefits
to which he might be entitled:

	 	(i)	 	a severance benefit in an amount equal to 100% of
the Employee’s annual base salary in effect immediately
preceding such termination, but only if (1) the Employee
executes a release substantially identical to the release
attached hereto, (2) the period for revoking such release has
expired, and (3) the Employee has complied with the
requirements of Sections 10 and 11 hereof;
	 
	 	(ii)	 	full vesting of any unexercised stock options;
and
	 
	 	(iii)	 	payment of amounts equal to any premiums for
health and dental insurance continuation coverage under any
AMS health plans that is elected by the Employee or his
beneficiaries pursuant to Section 4980B of the Internal
Revenue Code of 1986, as amended (the “Code”), other than the
employee portion of such premiums, at a time or times mutually
agreed to by the parties.

	 	 	 	AMS shall pay 75% of the severance benefit in paragraph (i) within
30 days after all of the applicable conditions are satisfied. AMS
shall pay the other 25% of the severance benefit with interest 12
months after all of the applicable conditions are satisfied,
provided that the Employee complies with the covenants in Sections
10 and 11 hereof throughout that period. If the Employee does not
comply with the requirements of Sections 10 and 11 hereof at any
time during that period, the other 25% of the severance benefit
shall not be paid to the Employee. All severance benefits paid to
the Employee shall be paid subject to all legally required payroll
deductions and withholdings for sums owed by the Employee to AMS.
	 
	 	 	 	For purposes of this Agreement, “Cause” shall mean: (1) the
conviction of the Employee of, or the entry of a plea of guilty or
nolo contendere by the Employee to, any felony or misdemeanor
involving moral turpitude; (2) fraud, misappropriation or
embezzlement by the Employee; (3) the Employee’s willful failure,
gross negligence or gross misconduct in the performance of his
assigned duties for AMS; (4) the Employee’s breach of a fiduciary
duty to AMS; (5) any act or omission of the Employee not at the
express direction of the board or other appropriate authority that
reflects adversely on the integrity and reputation for honesty and
fair dealing of AMS or has a material detrimental effect on AMS’s
financial condition, position or business; or (6) the breach by the
Employee of any material term of this Agreement.

- 5 -

 

	 	 	 	For purposes of this Agreement, “Disability” shall mean disability
as defined in AMS’s existing long term disability policy.

	7.	 	Effect of Change in Control.

	 	a.	 	Additional Benefits.
	 
	 	 	 	If the Employee’s employment is terminated within twelve (12)
months following a Change of Control of AMS, and a severance
benefit is payable pursuant to Section 6.c.(i) hereof, (i) the
amount of the severance benefit shall be increased to 200% of the
sum of the Employee’s base salary and target annual bonus, (ii) the
25% hold-back of the severance benefit shall not apply, and (iii)
the Employee shall be entitled to the Gross-up Payment, if any,
described in subsection c below.
	 
	 	b.	 	Definition of Change of Control.
	 
	 	 	 	A “Change of Control” shall mean the first of the following events
to occur:

	 	(i)	 	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 AMS or a trustee or other
fiduciary holding securities under an employee benefit plan of
AMS or a corporation owned directly or indirectly by the
stockholders of AMS in substantially the same proportions as
their ownership of stock of AMS, becomes the beneficial owner
(within the meaning of Rule 13d-3 under the Act), directly or
indirectly, of securities representing 50% or more of the
combined voting power of AMS’s then-outstanding securities
entitled generally to vote for the election of directors;
	 
	 	(ii)	 	AMS’s stockholders approve an agreement to merge
or consolidate with another corporation unless AMS’s
stockholders immediately before the merger or consolidation
are to own more than two-thirds (66-2/3%) of the combined
voting power of the resulting entity’s voting securities
entitled generally to vote for the election of directors;
	 
	 	(iii)	 	AMS’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 AMS; or
	 
	 	(iv)	 	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 AMS’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 (either by a specific vote or by approval of the
proxy statement of AMS in which such person is named as a
nominee for director, without objection to such nomination).

- 6 -

 

	 	 	 	However, no Change of Control shall be deemed to have occurred by
reason of (1) any event involving a transaction in which the
Employee or a group of persons or entities with whom or with which
the Employee acts in concert, acquires, directly or indirectly, 50%
or more of the combined voting power of AMS’s then-outstanding
voting securities or the business or assets of AMS, (2) 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 law.

	 	c.	 	Effect of Section 280G.
	 
	 	 	 	The benefit provided under this Section 7 or Section 6 hereof, if
applicable, shall be provided without regard to any limitations
imposed by Section 280G or 4999 of the Code.

	 	(i)	 	In the event that the Employee becomes entitled
to the benefits (including the acceleration of certain
benefits) provided under this Section 7 or Section 6 hereof,
if applicable (the “Benefits”), if any of the 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), AMS shall pay to the Employee an additional amount
(the “Gross-up Payment”) such that the net amount retained by
the Employee, 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 subparagraph (i), but before deduction
for any federal, state or local income tax on the Benefits,
shall be equal to the “Total Benefits,” as defined below.
	 
	 	(ii)	 	For purposes of determining whether any of the
Benefits will be subject to the Excise Tax and the amount of
such Excise Tax:

	 	(1)	 	Any other payments or benefits
received or to be received by the Employee in connection
with a change of control of AMS or the Employee’s
termination of employment (whether pursuant to the terms
of this Agreement or any other plan, arrangement or
agreement with AMS, any person whose actions result in a
change of control of AMS, or any person affiliated with
AMS or such person) (which, together with the 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 AMS’s
independent auditors such other payments or benefits (in
whole or in part) will 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

- 7 -

 

	 	 	 	otherwise not subject to the Excise Tax, and such tax
counsel shall provide such opinion in writing to the
Employee such that he and his tax advisors can rely on
it,
	 
	 	(2)	 	The amount of the Total Benefits
which shall be treated as subject to the Excise Tax
shall be equal to the lesser of (I) the total amount of
the Total Benefits and (II) the amount of excess
parachute payments within the meaning of Section
280G(b)(1) of the Code (after applying paragraph (1),
above), and
	 
	 	(3)	 	The value of any non-cash benefits or
any deferred payment or benefit shall be determined by
AMS’s independent auditors in accordance with the
principles of Section 280G(d)(3) and (4) of the Code.

	 	(iii)	 	For purposes of determining the amount of the
Gross-up Payment, the Employee 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
at 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, the Employee shall repay to AMS
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 the Employee 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), AMS 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.

	8.	 	Mitigation and Offset.
	 
	 	 	If the Employee’s employment is terminated during the term of this
Agreement without Cause, the Employee shall be under no duty or
obligation to seek or accept other employment, and no payment or benefits
of any kind due him under this Agreement shall be reduced, suspended or
in any way offset by any subsequent employment.

- 8 -

 

	9.	 	Entitlement to Other Benefits.
	 
	 	 	Except as expressly provided herein, this Agreement shall not be
construed as limiting in any way any rights or benefits the Employee, his
spouse, dependents or beneficiaries may have pursuant to any other
employee benefits plans or programs.
	 
	10.	 	Confidentiality.
	 
	 	 	The Employee acknowledges that all confidential information regarding the
business of AMS and its subsidiaries and affiliates is the exclusive
property of AMS. On or before the date that his employment with AMS
terminates, the Employee shall return to AMS all copies of any material
involving such confidential information to AMS, and the Employee 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. The Employee also shall return to AMS by that date any
other items in his possession, custody or control that are the property
of AMS. The Employee understands that even after the date that his
employment with AMS terminates he will remain bound by the terms of the
American Management Systems, Incorporated Confidentiality and
Intellectual Property Rights Agreement, the AMS Ethical Business Conduct
policy statement, and the restrictive covenants contained in this Section
10 and Section 11 hereof. This Section 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. No breach of
this Section shall be deemed to have occurred unless AMS provides written
notice to the Employee of the breach within 90 days after AMS becomes
aware of it.
	 
	11.	 	Non-Solicitation.
	 
	 	 	Effective on the date that his employment with AMS terminates and for a
period of 12 months thereafter, the Employee shall not directly (a)
employ or solicit for employment, or assist in any way in solicitation
for employment, any person employed by AMS or any of its affiliates then
or at any time within the preceding 12 months; or (b) solicit, or assist
in any way in the solicitation of business from any of AMS’s or its
affiliates’ clients or prospective clients, either for the Employee’s own
benefit or the benefit of anyone other than AMS, unless the business
being solicited is not competitive with the services or products provided
by AMS or its affiliates. Clause (b) shall not apply unless the business
being solicited is in a line of business in which AMS was already engaged
or already had under active consideration while the Employee was employed
by AMS or is a natural extension of such a line business with a client
that was an existing client of AMS during that time.
	 
	12.	 	Employee Representation.
	 
	 	 	The Employee represents and warrants to AMS that he is not now under any
obligation of a contractual or other nature to any person, business or
other entity that is inconsistent or in conflict with this Agreement or
that would prevent him from performing his obligations under this
Agreement.

- 9 -

 

	13.	 	Arbitration.
	 
	 	 	Any dispute or controversy arising under or in connection with this
Agreement shall, if AMS or the Employee 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 the
Employee 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 the Employee’s covenants in Sections 10 and 11 hereof.
	 
	14.	 	Legal Expenses.
	 
	 	 	Except as provided in Section 13 hereof, if any dispute or controversy
arises under or in connection with this agreement, AMS shall promptly pay
all the Employee’s legal fees and expenses relating to the dispute or
controversy, including, by way of example rather than limitation,
reasonable attorneys’ fees incurred by the Employee in seeking to obtain
or enforce any right or benefit under this Agreement, provided, however,
that this obligation of AMS shall not apply unless the Employee prevails
in whole or in part on the dispute or controversy. This obligation shall
apply irrespective of whether the dispute or controversy is resolved by
arbitration, litigation, or a settlement thereof.
	 
	15.	 	Interest.
	 
	 	 	AMS shall pay to the Employee interest at the prime lending rate as
announced from time to time by Citibank, N.A. or its successors or
another substantially similar rate on all or any part of any amount to be
paid to the Employee hereunder that is not paid when due or that is
deferred under an express obligation to pay interest.
	 
	16.	 	Indemnification.

	 	a.	 	AMS agrees that if the Employee is made a party, or, is
threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative, or investigative (a
“Proceeding”), by reason of the fact that he is or was a director,
officer or employee of AMS, or is or was serving at the request of
AMS as a director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or
not the basis of such Proceeding is the Employee’s alleged action in
an official capacity while serving as a director, officer, member,
employee or agent, the Employee shall be indemnified and held
harmless by AMS to the

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	 	 	 	fullest extent permitted or authorized by AMS’s certificate of
incorporation and by-laws. To the extent consistent with the
foregoing, this obligation to indemnify the Employee and hold him
harmless shall continue even if he has ceased to be a director,
officer, member, employee or agent of AMS or other such entity
described above, and shall inure to the benefit of the Employee’s
heirs, executors and administrators. AMS shall advance to the
Employee all reasonable costs and expenses incurred by him in
connection with a Proceeding within 20 days after receipt by AMS of
a written request for such advance. Such request shall include an
undertaking by the Employee to repay the amount of such advance if
it shall ultimately be determined that the Employee is not entitled
to be indemnified against such costs and expenses.
	 
	 	b.	 	Neither the failure of AMS (including its Board, independent
legal counsel or stockholders) to have made a determination before
such Proceeding concerning payment of amounts claimed by the
Employee under subsection a above that indemnification of the
Employee is proper because he has met the applicable standards of
conduct, nor a determination by AMS (including its Board,
independent legal counsel or stockholders) that the Employee has not
met such applicable standards of conduct, shall create a presumption
that the Employee has not met the applicable standards of conduct.

	17.	 	Assignability and Binding Nature.
	 
	 	 	This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, heirs (in the case of the
Employee) and assigns. No rights or obligations may be assigned or
transferred by AMS except that such rights or obligations may be assigned
or transferred pursuant to a merger or consolidation in which AMS is not
the continuing entity, or the sale or liquidation of all or substantially
all of the assets of AMS, provided that the assignee or transferee is the
successor to all or substantially all of the assets of AMS and such
assignee or transferee assumes the liabilities, obligations, and duties
of AMS, as contained in this Agreement, either contractually, or as a
matter of law. AMS further agrees, that in the event of a sale of assets
or liquidation as described in the foregoing sentence, it shall take
whatever action it is legally entitled to take in order to cause the
assignee or transferee to expressly assume the liabilities, obligations,
and duties of AMS under this Agreement. Notwithstanding any such
assignment, AMS shall not be relieved from liability under this
Agreement. No rights or obligations of the Employee under this Agreement
may be assigned or transferred by the Employee other than his right to
receive compensation and benefits, provided such assignment or transfer
is otherwise permitted by law.
	 
	18.	 	Notices.
	 
	 	 	All notices required or permitted hereunder shall be in writing and shall
be deemed effective: (a) upon personal delivery; (b) upon deposit with
the United States Postal Service, by registered or certified mail,
postage prepaid; or (c) in the case of delivery by nationally recognized
overnight delivery service, when received, addressed as follows:

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If to AMS to:American Management Systems, Incorporated

4050 Legato Road

Fairfax, VA 22033

Attention: Garry Griffiths, Chief Human Resources Officer

With a copy (which shall not constitute notice) to:

Shaw Pittman LLP

2300 N Street, N.W.

Washington, DC 20037

Attention: Barbara M. Rossotti, Esq.

If to the Employee, to:

Richard C. Lottie

3805 Silver Falls Court

Plano, TX 75093

or to such other address or addresses as either party shall designate to
the other in writing from time to time by like notice. At AMS’s sole
discretion it may substitute, for any advance notification otherwise
required in this Agreement (including the right to a delayed effective
date provided in Section 6 hereof in lieu of advance notice), continued
payment of regular salary and benefits during the otherwise required
advance notification period.

	 
	19.	 	Amendment.
	 
	 	 	This agreement may be amended or modified only by a written instrument
executed by both AMS and the Employee.
	 
	20.	 	Captions.
	 
	 	 	The captions appearing herein are for convenience of reference only and
in no way define, limit or affect the scope or substance of any section
hereof.
	 
	21.	 	Time.
	 
	 	 	All reference herein to periods of days are to calendar days, unless
expressly provided otherwise. Where the time period specified herein
would end on a weekend or holiday, the time period shall be deemed to end
on the next business day.
	 
	22.	 	Entire Agreement.
	 
	 	 	Except for other agreements specifically referenced herein, this
Agreement constitutes the entire agreement between AMS and the Employee
and supersedes all prior agreements and understandings, whether written
or oral relating to the subject matter hereof.

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	23.	 	Severability.
	 
	 	 	In case any provision hereof shall be held by a court or arbitrator with
jurisdiction over AMS or the Employee to be invalid, illegal or otherwise
unenforceable, such provision shall be restated to reflect as nearly as
possible the original intentions of AMS and the Employee in accordance
with applicable law, and the validity, legality and enforceability of the
remaining provisions shall in not way be affected or impaired thereby.
	 
	24.	 	Waiver.
	 
	 	 	No delays or omission by AMS or the Employee in exercising any right
hereunder shall operate as a waiver of that or any other right. A waiver
or consent given by AMS or the Employee or any one occasion shall be
effective only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.
	 
	25.	 	Governing Law.
	 
	 	 	This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the Commonwealth of Virginia, without regard to its
conflicts of laws principles.
	 
	26.	 	Withholding.
	 
	 	 	AMS may make any appropriate arrangements to deduct from all benefits
provided hereunder any taxes reasonably determined to be required to be
withheld by any government or government agency. The Employee shall bear
all taxes on benefits provided hereunder to the extent that no taxes are
withheld, irrespective of whether withholding is required.
	 
	27.	 	Counterparts.
	 
	 	 	This 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 instruments.

IN WITNESS WHEREOF, AMS and the Employee have executed this Agreement effective
as of August 5, 2002.

	 	 	 
	 	 	 
	EMPLOYEE	 	
AMERICAN MANAGEMENT
	 	 	
SYSTEMS, INCORPORATED
	 	 	 
	 	 	 
	/s/ Richard C. Lottie                                        	 	
By: Garry Griffiths                                        
	            Richard C. Lottie	 	
                    Garry Griffiths
	 	 	 
	Date: 8/12/2002                                                	 	
Date: 8/6/02                                                   

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