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2. The stockholders approved with 31,952,323 affirmative votes, 2,877,571 negative votes, 959,792 abstentions, and zero broker non-votes the amendments to the 1996 Amended Stock Option Plan F (the “Plan”) (i) clarifying the existing prohibition against repricing options without stockholder approval and (ii) changing the limitation on the maximum number of shares of AMS common stock that may be subject to options granted under the Plan to any covered employee from 100,000 shares over the lifetime of the Plan to 500,000 shares during any two consecutive calendar years.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Section 1. The registered office of the corporation shall be at 1209 Orange Street, in the City of Wilmington, County of New Castle, State of Delaware. The registered agent of the corporation at such address is The Corporation Trust Company.

Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require.

Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Fairfax, Commonwealth of Virginia, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2. The annual meeting of stockholders for the election of directors and the transaction of other business shall be held, in each year on the second Friday in May if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 a.m., or at any other date and time that shall be designated from time to time by the board of directors and stated in the notice of the meeting.

Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting, either personally or by mail, not less than ten nor more than sixty days before the date of the meeting. If mailed, such notice shall be deemed to have been given when deposited in the United States mail, postage prepaid directed to the stockholder as it appears on the records of the corporation.

Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the chief executive officer and shall be called by the chief executive officer or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting.

Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat (or in the case of a class or series entitled to vote to the exclusion of any other class or series, a majority of such class or series), present in person or represented by proxy, shall constitute a quorum at all meetings of such stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders (including any class or series thereof), the holders of a majority of stock entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 9. At all meetings of the stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. All other elections and questions shall, unless otherwise provided by the certificate of incorporation, these By-laws, the rules or regulations of any stock exchange applicable to the corporation, as otherwise provided by law or pursuant to any regulation applicable to the corporation, be decided by the affirmative vote of the holders of a majority in voting power of the shares of stock of the corporation which are present in person or by proxy and entitled to vote thereon.

Section 10. Except as otherwise provided by or pursuant to the provisions of the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the secretary of the corporation. Voting at meetings of stockholders need not be by written ballot.

Section 11. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date: (i) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting; and (ii) in the case of any other action, shall not be more than sixty days prior to such other action. If no record date is fixed: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. Article IIB, Section 1 of these By-laws shall govern the record date to determine stockholders entitled to express consent to corporate actions in writing without a meeting.

Section 12. Meetings of stockholders shall be presided over by the chairman of the board, if any, or in his absence by the vice chairman of the board, if any, or in his absence by the chief executive officer, or in his absence by the president, or in his absence by a vice president, or in the absence of the foregoing persons by a chairman designated by the board of directors, or

in the absence of such designation by a chairman chosen at the meeting. The secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 13. The corporation shall in advance of any meeting of stockholders appoint one or more inspectors of election, who may be employees of the corporation, to act at the meeting and any adjournment thereof and to make a written report thereof. The corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each such share, (ii) count all votes and ballots, (iii) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (iv) certify their determination of the number of shares of capital stock of the corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

Section 14. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The board of directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the board of directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the board of directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the board of directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 1. (A) Nominations of persons for election to the board of directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) pursuant to the corporation’s notice of meeting (or any supplement thereto), (b) by or at the direction of the board of directors or (c) by any stockholder of the corporation who was a stockholder of record at the time of giving of notice provided for in this By-law, who is entitled to vote at the meeting and complies with the notice procedures set forth in this By-law.

(B) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (1)(A) of this By-law, the stockholder must have given timely notice thereof in writing to the secretary of the corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the secretary at the principal executive offices of the corporation not later than the close of business on the sixtieth day nor earlier than the close of business on the ninetieth day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty days before or more than sixty days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the ninetieth day prior to such annual meeting and not later than the close of business on the later of the sixtieth day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person that is required to be disclosed in solicitations or proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-11 thereunder (and such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and in the event that such business includes a proposal to amend the By-laws of the corporation, the language of the proposed amendment; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the

meeting to propose such business or nomination, and (iv) a representation whether the proponent intends or is part of a group which intends to solicit proxies from other stockholders in support of such proposal or nomination.

(C) Notwithstanding anything in the second sentence of paragraph (1)(B) of this By-law to the contrary, in the event that the number of directors to be elected to the board of directors of the corporation is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased board of directors at least seventy days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

Section 2. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting. Nominations of persons for election to the board of directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the corporation’s notice of meeting (a) by or at the direction of the board of directors or (b) provided that the board of directors has determined that directors shall be elected at such meeting, by any stockholder of the corporation who is a stockholder of record at the time of giving of notice provided for in this By-law, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this By-law. In the event the corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the board of directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the corporation’s notice of meeting, if the stockholder’s notice required by paragraph (1)(B) of this By-law shall be delivered to the secretary at the principal executive offices of the corporation not earlier than the close of business on the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting, or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder’s notice as described above.

Section 3. (A) Only such persons who are nominated in accordance with the procedures set forth in this By-law shall be eligible to serve as director and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-law. Except as otherwise provided by law, the chairman of the meeting shall have the power and duty to (i) determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this By-law and (ii) if any proposed nomination or business is not in compliance with this By-law, or if the stockholder solicits or is part of a group which solicits proxies in support of such stockholder’s proposal without such stockholder having made the representation required by clause (c)(iv) of paragraph 1(B) of this By-law, to declare that such defective proposal or nomination shall be disregarded.

(B) For purposes of this By-law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(C) Notwithstanding the foregoing provisions of this By-law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law. Nothing in this By-law shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock to elect directors under specified circumstances.

Section 1. The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall be as fixed by the board of directors or as otherwise established under this Section. Any person seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice addressed to the secretary and delivered to the corporation, request that a record date be fixed for such purpose. The board of directors may fix a record date for such purpose which shall be no more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors and shall not precede the date such resolution is adopted. If the board of directors fails within ten days after the corporation receives such notice to fix a record date for such purpose, the record date shall be the day on which the first written consent is delivered to the corporation in the manner described in Section 2 below unless prior action by the board of directors is required under the General Corporation Law of the State of Delaware, in which event the record date shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action.

Section 2. (A) Every written consent purporting to take or authorizing the taking of corporate action and/or related revocations (each such written consent and related revocation is referred to in this Article IIB as a “Consent”) shall bear the date of signature of each stockholder who signs the Consent, and no Consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated Consent delivered in the manner required by this Section 2, Consents signed by a sufficient number of stockholders to take such action are so delivered to the corporation. Prompt notice of the taking of the corporate action without a meeting by less than unanimous Consent shall be given to those stockholders who have not consented in writing, to the extent required by law.

(B) A Consent shall be delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery to the corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.

(C) Consents shall be valid for a maximum of sixty days after the date of the earliest dated Consent delivered to the corporation in the manner provided in Section 228(c) of the General Corporation Law of the State of Delaware. Consents may be revoked by written notice (i) to the corporation, (ii) to the stockholder or stockholders soliciting consents or soliciting revocation in opposition to action by consent (the “Soliciting Stockholder”), or (iii) to a proxy solicitor or other agent designated by the corporation or the Soliciting Stockholders.

(D) Within ten business days after receipt of the earliest dated Consent delivered to the corporation in the manner provided in Section 228(c) of the General Corporation Law of the State of Delaware or the determination by the board of directors of the corporation that the corporation should seek corporate action by written consent, as the case may be, the secretary of the corporation shall engage nationally recognized independent inspectors of elections for the purpose of performing a ministerial review of the validity of the Consents and revocations. The cost of retaining inspectors of election shall be borne by the corporation. For the purpose of permitting the inspectors to perform such review, no action by written consent without a meeting shall be effective until such date as the independent inspectors certify to the corporation that the consents delivered to the corporation in accordance with this Section 2 represent at least the minimum number of votes that would be necessary to take the corporate action. Nothing contained in this paragraph shall in any way be construed to suggest or imply that the board of directors or any stockholder shall not be entitled to contest the validity of any Consent or revocation thereof, whether before or after such certification by the independent inspectors, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

(E) Following appointment of the inspectors, Consents and revocations shall be delivered to the inspectors upon receipt by the corporation, the Soliciting Stockholder or their proxy solicitors or other designated agents. As soon as practicable following the earlier of (i) the receipt by the inspectors, a copy of which shall be delivered to the corporation, of any written demand by the Soliciting Stockholders of the corporation, or (ii) sixty days after the date of the earliest dated Consent delivered to the corporation in the manner provided in Section 228(c) of the General Corporation Law of the State of Delaware, the inspectors shall issue a preliminary report to the corporation and the Soliciting Stockholders stating the number of valid and unrevoked Consents received and whether, based on preliminary count, the requisite number of valid and unrevoked Consents has been obtained to authorize or take the action specified in the Consents.

(F) Unless the corporation and the Soliciting Stockholders shall agree to a shorter or longer period, the corporation and the Soliciting Stockholders shall have 48 hours to review the Consents and revocations and to advise the inspectors and the opposing party in writing as to whether they intend to challenge the preliminary report of the inspectors. If no written notice of an intention to challenge the preliminary report is received within 48 hours after the inspectors’ issuance of the preliminary report, the inspectors shall issue to the corporation and the Soliciting Stockholders their final report containing the information from the inspectors’ determination with respect to whether the requisite number of valid and unrevoked Consents was obtained to authorize and take the action specified in the Consents. If the corporation or the Soliciting Stockholders issue written notice of an intention to challenge the inspectors’ preliminary report within 48 hours after the issuance of that report, a challenge session shall be scheduled by the inspectors as promptly as practicable. Following completion of the challenge session, the inspectors shall as promptly as practicable issue their final report to the Soliciting Stockholders and the corporation, which report shall contain the information included in the preliminary report, plus any change in the vote total as a result of the challenge and a certification of whether the requisite number of valid and unrevoked Consents was obtained to authorize or take the action specified in the Consents.

Section 1. The number of directors which shall constitute the whole board shall be not less than five nor more than fifteen. The number of directors may be altered by resolution adopted by a vote of a majority of the entire board of directors, or by such vote of the holders of any class or series of stock as may be specified in the certificate of incorporation. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3 of this Article or otherwise specified in the certificate of incorporation and except that the first directors of the corporation were elected by the incorporators of the corporation, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders.

Section 2. Any director may resign at any time upon written notice to the corporation.

Section 3. Vacancies and newly created directorships resulting from any increase in the authorized number of directors, except as otherwise provided in the certificate of incorporation may be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, or until their earlier resignation or removal. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors,

summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

Section 4. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate or incorporation or by these By-laws directed or required to be exercised or done by the stockholders.

Section 5. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 6. The first meeting of each newly elected board of directors shall be held immediately after the annual meeting of stockholders and at the same place, and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at that time and place, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.

Section 7. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors.

Section 8. Special meetings of the board of directors may be called by the chairman of the board of directors or the chief executive officer on three (3) days’ notice to each director, either personally or by mail or by telegram, telecopier, telephone or other means of electronic transmission; special meetings shall be called by the chief executive officer or secretary in like manner and on like notice on the written request of a majority of the directors.

Section 9. At all meetings of the board, a majority of the directors then in office or, if greater, one-third of the then-authorized total number of directors, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 10. Unless otherwise restricted by the certificate of incorporation or these By-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

Section 11. The board of directors may by resolution designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution or these By-laws, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors.

Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

Section 13. There shall exist a standing Audit Committee composed of not fewer than three directors of the corporation who are neither officers nor employees of the corporation or any of its subsidiaries and who are free from any relationship which, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a member of the Audit Committee.

Section 14. The Audit Committee shall consist of members possessing the qualifications set forth in the Audit Committee Charter, as revised from time to time as provided therein (the “Audit Committee Charter”).

Section 15. The Audit Committee shall operate in accordance with the provisions of the Audit Committee Charter and these Bylaws.

Section 16. The Audit Committee, to the extent provided in this By-law, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers that may require it.

Section 17. Each individual director of the corporation, as well as the board as a whole, shall continue to exercise due diligence to assure that the financial statements of the corporation fairly and accurately present the results of the operation and financial position of the corporation and that the corporation’s financial operations are conducted in accordance with all applicable laws and regulations, the corporation’s policies and the regular and accepted principles of accounting. The existence and functioning of the Audit Committee shall effect no derogation of this duty.

Section 18. There shall exist a standing Compensation Committee composed of not fewer than three directors of the corporation who are neither officers nor employees of the corporation.

Section 19. The Compensation Committee shall meet at the request of the board of directors, and on such other occasions as the members of the committee may deem appropriate and desirable. The chief executive officer shall attend all meetings of the committee; provided, however, that the chief executive officer shall not participate in any decision concerning compensation which is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 (including decisions regarding eligibility for participation in plans, awards and any modifications thereto. )

Section 20. The Compensation Committee shall (i) adopt resolutions recommending compensation policies and practices to the board of directors, (ii) make decisions regarding compensation plans and compensation for the chief executive officer and all other executive officers of the corporation, and make decisions regarding equity based compensation arrangements for and awards thereof to the controller, and (iii) approve any and all contracts or other transactions between the corporation and any of its directors or executive officers (to the extent that the approval of the board of directors is not required by law.)

Section 21. The Compensation Committee, to the extent provided in this By-law, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers that may require it.

Section 22. There shall exist a standing Nominating Committee composed of not fewer than three independent directors of the corporation. Only independent directors of the corporation will be eligible to serve on the Nominating Committee. For purposes of this Section, an independent director is one who: (1) has not been employed by the corporation or an affiliate in an executive capacity within the last five years; (2) is not a member of a corporation that is, or has been within the last five years, one of the corporation’s paid advisors or consultants; (3) is not employed, nor has been employed within the last five years, by a significant customer or supplier; (4) is not remunerated by the corporation for personal services (consisting of legal, accounting, investment banking and management consulting services), whether or not as an employee for a corporation, division or similar organization that actually provides the personal services, nor an entity from which the corporation derives more than 50 percent of its gross revenues; (5) is not employed by a tax-exempt organization that receives significant contributions from the corporation; (6) is not a relative of any person who is, or has been in the past five years, a member of the corporation’s management; and (7) is not part of an interlocking directorate in which the chief executive officer or other executive officers of the corporation serves on the board of a corporation that employs the director.

Section 23. The Nominating Committee shall meet at the request of the board of directors, and on such other occasions as the members of the committee may deem appropriate and desirable.

Section 24. The Nominating Committee shall consider and make recommendations to the board of directors, to the chairman of the board and to the president with respect to shareholder proposals, the nominations or elections of directors and officers of the corporation, senior management succession plans and the appointments of such other employees of the corporation as shall be referred to the Nominating Committee. The Nominating Committee from time to time shall consider the size, composition and functioning of the board of directors and make recommendations to the board of directors with respect to such matters. Prior to the annual meeting of stockholders each year, and prior to any special meeting of stockholders at which a director is to be elected, the Nominating Committee shall recommend to the board of directors persons proposed to constitute the nominees whose election at such meeting will be recommended by the board of directors. The authority vested in the Nominating Committee by this section shall not derogate from the power of individual members of the board of directors to recommend or place in nomination persons other than those recommended by the Nominating Committee. The Nominating Committee also shall perform such other functions and exercise such other powers as may be delegated to it from time to time by the board of directors.

Section 25. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any directors from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these By-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given in person or by telegram, telecopier, telephone or other means of electronic transmission.

Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting of stockholders, directors, or members of a committee of directors, shall constitute a waiver of notice of such meeting, except when the stockholder, director or committee member attends a meeting for the

express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or the By-laws.

Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a chairman of the board, a president, a secretary and a treasurer. The board of directors may also choose one or more executive vice-presidents, one or more assistant secretaries and assistant treasurers, and other officers with such titles and duties as the board of directors shall designate. The board of directors shall designate one of the officers of the corporation as the chief executive officer, and such officer shall continue to act as chief executive officer until the board of directors designates another person as the chief executive officer. The board of directors also shall specify which officers shall have authority to perform the duties of the chief executive officer in his absence or in the event of his inability to act and, if there is more than one such officer, shall specify the order of priority in which such officers shall act on such authority. The list of such authorized officers and the specified order of priority shall remain in effect until changed by the board of directors. Any number of offices may be held by the same person except where the certificate of incorporation or these By-laws otherwise provide.

Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a chairman of the board, a president, one or more executive vice-presidents, a secretary and a treasurer.

Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board.

Section 4. The salaries of all officers and agents of the corporation shall be fixed by or in the manner prescribed by the board of directors.

Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the directors then in office. Any officer may resign at any time upon written notice to the corporation. Any vacancy occurring in any office of the corporation shall be filled by or in the manner prescribed by the board of directors.

Section 6. The chairman of the board shall preside at all meetings of the stockholders and the board of directors.

Section 7. The chief executive officer of the corporation shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect.

Section 8. The chief executive officer shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required, or permitted by law to be otherwise signed and executed, and except where the signing and execution thereof shall be expressly delegated by the chief executive officer to some other officer or agent of the corporation.

Section 9. In the absence of the chief executive officer or in the event of his inability to act, the officer specified by the board of directors (and in the event there is more than one such officer, in the order of priority specified by the board of directors) shall perform the duties of the chief executive officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the chief executive officer. The president (if he is not the chief executive officer), the executive vice-president(s), and any other officers designated as officers by the board of directors shall generally assist the chairman and chief executive officer and shall perform such other duties and have such other powers as the board of directors or the chief executive officer may from time to time prescribe.

Section 10. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or the chief executive officer, under whose supervision he shall act. He shall have custody of the certificate books and such other books and records as the board of directors may direct. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature.

Section 11. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the secretary or in the event of his inability to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the chief executive officer or the secretary may from time to time prescribe.

Section 12. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors and shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the chief executive officer and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation and shall perform such other duties and have such other powers as the board of directors or the chief executive officer may from time to time prescribe.

Section 13. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors, the chief executive officer or the treasurer may from time to time prescribe.

Section 1. The shares of the corporation shall be represented by certificates, or shall be uncertificated shares. Each owner of stock of the corporation shall be entitled to have a certificate in such form as shall be approved by the board of directors. To the extent that the shares are represented by certificates, such certificates shall be signed by, or in the name of the corporation by, the chairman of the board of directors or the president or an executive vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares of the corporation owned by him.

Section 2. Where a certificate is countersigned (i) by a transfer agent other than the corporation or its employee, or, (ii) by a registrar other than the corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

Section 3. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion, and as a condition

precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 5. The corporation shall be entitled to treat the record holder of any shares of the corporation as the owner thereof for all purposes, including all rights deriving from such shares, and shall not be bound to recognize any equitable or other claim to, or interest in, such shares or rights deriving from such shares, on the part of any other person, including, but without limiting the generality thereof, a purchaser, assignee or transferee of such shares or rights deriving from such shares, unless and until such purchaser, assignee, transferee or other person becomes the record holder of such shares, whether or not the corporation shall have either actual or constructive notice of the interest of such purchaser, assignee, transferee or other person. Any such purchaser, assignee, transferee or other person shall not be entitled to receive notice of the meetings of stockholders; to vote at such meetings; to examine a complete list of the stockholders entitled to vote at meetings; or to own, enjoy, and exercise any other property or rights deriving from such shares against the corporation, until such purchaser, assignee, transferee or other person has become the record holder of such shares.

Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation.

Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the board of directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the board of directors shall think conducive to the interest of the corporation, and the board of directors may modify or abolish any such reserve in the manner in which it was created.

Section 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate.

Section 4. The fiscal year of the corporation begins on the 1st day of January and ends on the 31st day of December in each year.

Section 5. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 1. The corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnitee”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the corporation, or, while a director or officer of the corporation, is or was serving at the written request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Indemnitee. Notwithstanding the preceding sentence, except as otherwise provided in Section 3 of this Article, the corporation shall be required to indemnify an Indemnitee in connection with a proceeding (or part thereof) commenced by such Indemnitee only if the commencement of such proceeding (or part thereof) by the Indemnitee was authorized by the board of directors.

Section 2. The corporation shall pay the expenses (including attorneys’ fees) incurred by an Indemnitee in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined that the Indemnitee is not entitled to be indemnified under this Article VIII or otherwise.

Section 3. If a claim for indemnification or advancement of expenses under this Article VIII is not paid in full within sixty (60) days after a written claim therefor by the Indemnitee has been received by the corporation, the Indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the corporation shall have the burden of proving that the Indemnitee is not entitled to the requested indemnification or advancement of expenses under applicable law.

Section 4. The rights conferred on any Indemnitee by this Article VIII shall not be exclusive of any other rights which such Indemnitee may have or hereafter acquire under any statute, provision of the certificate of incorporation, these By-laws, agreement, vote of stockholders or disinterested directors or otherwise.

Section 5. The corporation’s obligation, if any, to indemnify or to advance expenses to any Indemnitee who was or is serving at this request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such Indemnitee may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

Section 6. Any repeal or modification of the foregoing provisions of this Article VIII shall not adversely affect any right or protection hereunder of any Indemnitee in respect of any act or occurring prior to the time of such repeal or modification.

Section 7. This Article VIII shall not limit the right of the corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than, Indemnitees when and as authorized by appropriate corporate action.

These By-laws may be altered or repealed at any regular meeting of the board of directors, or at any special meeting of the board of directors if notice of such alteration or repeal is contained in the notice of such special meeting, or by majority vote of the stock outstanding at the annual meeting of stockholders or at any special meeting of stockholders if notice of such alteration or repeal is contained in the notice of such special meeting.

AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
STOCK OPTION PLAN FOR EMPLOYEES
(As Amended Effective as of May 10, 2002)¹

The purpose of this Stock Option Plan for Employees of American Management Systems (the “Company”) is to reward valued employees with grants of stock options, thereby giving them a stake in the Company’s success.

Section 2. Definitions

(a) “Affiliate” means (i) any entity that directly or indirectly, is controlled by, or controls or is under common control with, the Company, and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Board.

(b) “Board” means the Board of Directors of the Company.

(d) “Committee” means the Stock Option/Award Committee, a committee consisting of at least two members of the Board.

(e) “Common Stock” means the $0.01 par value common stock of the Company.

(f) “Company” means American Management Systems, Incorporated.

(g) “Employee” means any individual performing services as an employee for the Company or any current Affiliate (including an entity that becomes an Affiliate after the adoption of the Plan).

(h) “Exercise Price” means the price that is required to be paid to exercise an Option and receive the shares that are subject to the Option.

(i) “Fair Market Value” means the closing bid price of the Common Stock quoted over the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) in the national market on the date of grant of the Option or if there is no trade on such date, the closing bid price on the last preceding date upon which such Common Stock was traded. Notwithstanding the foregoing, in no event shall Fair Market Value be less than the par value per share of the Common Stock.

(j) “Option” means a right granted under the Plan to an Employee that entitles the Employee to purchase from the Company a stated number of shares of Common Stock in exchange for the payment of the Exercise Price. Options granted under the Plan do not, and are not intended to, qualify as “incentive stock options” under Section 422 of the Code.

(k) “Option Agreement” means an agreement evidencing an Option between the Company and the Optionee.

(l) “Optionee” means an Employee to whom an Option has been granted that has not been fully exercised.

(m) “Plan” means this Stock Option Plan for Employees.

The Plan shall be implemented and administered by the Board. The Board shall have the authority and discretion to adopt and revise such rules and regulations as it shall deem necessary for the administration of the Plan, and to determine, consistent with the provisions of the Plan, the Employees to be granted Options, the times at which Options shall be granted, the Exercise Price of the shares subject to each Option, the number of shares subject to each Option, the vesting schedule of Options or whether the Options shall be immediately vested, the times when Options shall terminate, whether the Exercise Price of Options shall be paid in cash or stock, and all other terms of Options. The Board also shall have the authority to amend or cancel previously-granted Options; provided, however, that no such amendment or cancellation shall be effective without the consent of the Optionee if it would adversely affect the Optionee, or to the extent permitted by Section 7(f); and provided, further, that no adjustment to decrease the Exercise Price of a previously-granted Option, whether by amending the exercise price of the Option or by canceling the Option and reissuing a replacement or substitute stock option having a lower exercise price, may be made (except to the extent permitted by Section 7(f) hereof).²

The Board may delegate its authority under this Section 3 to the Committee with respect to grants to new Employees and grants of Options with respect to less than 25,000 shares of Common Stock, in which case all references in the Plan to the Board in connection with the administration of the Plan shall be read as references to the Committee. Acts of a majority of the members of the Committee at a meeting at which a quorum is present, or acts approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. The Committee’s actions, including any interpretation or construction of any provisions of the Plan or any Option granted hereunder, shall be final, conclusive and binding unless otherwise determined by the Committee at its next regularly scheduled meeting.

All Employees, other than “officers” of the Company as defined for purposes of Sections 16(a) and 16(b) of the Securities Exchange Act of 1934 and “covered employees” within the meaning of Section 162(m) of the Code, of the Company shall be eligible to be granted Options. Nothing contained in the Plan, or in any Option, shall confer upon any Employee the right to continued employment, or shall interfere in any way with the right of the Company or a Affiliate to terminate the employment of such Employee at any time.

Options shall be granted to such Employees as the Board may determine from time to time.

Shares subject to Options may be authorized and unissued shares or shares previously acquired or to be acquired by the Company and held in treasury. The number of shares that may be delivered pursuant to Options granted under the Plan is 1,000,000 shares, subject to adjustment in accordance with Section 7(f). To the extent that any shares of Common Stock that are subject to an Option are (i) not delivered because the Option is forfeited, cancelled or surrendered without consideration, or settled in cash, or (ii) withheld pursuant to Section 7(c) or 9 to pay the Exercise Price or satisfy the Employee’s tax obligations, such shares shall not be deemed to have been delivered for this purpose. The maximum number of shares which may be subject to Options granted to any single Employee during any two (2) consecutive calendar years shall be 500,000 shares, subject to adjustment in accordance with Section 7(f).³

(a) Option Agreements. Each Option shall be evidenced by an Option Agreement. Option Agreements (which need not be identical) shall designate the number of shares and the Exercise Price of the Options to which they pertain, shall set forth the expiration date of the Option, shall set forth the vesting schedule of the

Options or state that the Options are vested immediately, and shall include all other terms and conditions of the Options that are not included in the Plan. Option Agreements shall be in writing, dated as of the date the Option is granted, and shall be executed on behalf of the Company by such officers as the Board shall authorize. Option Agreements generally shall be in such form and contain such additional provisions as the Board shall prescribe, but in no event shall they contain provisions inconsistent with the provisions of the Plan.

(b) Vesting and Exercise of Options. Options shall vest either immediately or periodically pursuant to a schedule selected by the Board at the same time the Option is granted, provided that the maximum vesting period shall be ten (10) years. Optionees may exercise at any time or from time to time all of any portion of an Option, but only to the extent that the Option is vested at that time.

(c) Exercise Price. The price at which all Options may be exercised shall be no less than the Fair Market Value of the Common Stock on the date of grant. Payment of the Exercise Price may be (i) in cash, (ii) by delivery to the Company of (x) irrevocable instructions to deliver to a broker the stock certificates representing the shares for which the Option is being exercised, and (y) irrevocable instructions to the broker to sell such shares and promptly deliver to the Company the portion of the proceeds equal to the Exercise Price, or in the sole discretion of the Board, (iii) by delivery to the Company (either directly or by attestation) of shares of Common Stock already held by the Participant, or, (iv) partly in cash and partly by exchange of such Common Stock, or (v) in any other form of valid consideration permitted by the Committee in its discretion, provided that for purposes of clauses (iii) and (iv) the value of such Common Stock shall be the Fair Market Value on the date of exercise, and further provided that such Common Stock shall have been held by the Optionee for a period of at least six (6) months prior to the date of exercise. The Board may permit deferred payment of all or any part of the Exercise Price of the shares purchased pursuant to the Plan, provided the par value of the shares must be paid in cash.

(d) Suspension or Termination of Options. All Options shall expire, and all rights granted under Option Agreements shall become null and void, on the date specified in the Option Agreement, which date shall be no later than ten (10) years after the Options are granted.

(e) Non-Transferability of Options. Options are not transferable by the Optionee otherwise than by will or the laws of descent and distribution, or pursuant to a domestic relations order. Except as permitted by the preceding sentence, no Option nor any right granted under an Option Agreement shall be transferred, assigned, pledged, hypothecated or disposed of in any other way (whether by operation of law or otherwise), or be subject to execution, attachment or similar process, and each Option shall be exercisable during the Optionee’s lifetime only by the Optionee. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of such Options or of such other rights contrary to the provisions hereof, or to subject such Options or such other rights to execution, attachment or similar process, such Options and such other rights shall immediately terminate and become null and void.

(f) Adjustment Provisions. Except as otherwise provided in this subsection (f), in the event of changes in the Common Stock by reason of any stock split, combination of shares, stock dividend, reclassification, merger, consolidation, reorganization, recapitalization or similar adjustment, or by reason of the dissolution or liquidation of the Company, appropriate adjustments may be made in (i) the aggregate number of or class of shares available under the Plan, and (ii) the number, class and Exercise Price of shares remaining subject to all outstanding Options. Whether any adjustment or modification is to be made as a result of the occurrence of any of the events specified in this section, and the extent thereof, shall be determined by the Board, whose determination shall be binding and conclusive. Existence of the Plan or of Option Agreements pursuant to the Plan shall in no way impair the right of the Company or its stockholders to make or effect any adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger, consolidation, dissolution or liquidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock of the Company, or any grant of Options on its stock not pursuant to the Plan.

Optionees shall not have any of the rights and privileges of shareholders of the Company in respect of any of the shares subject to any Option unless and until a certificate, if any, representing such shares shall have been issued and delivered.

To the extent required by applicable federal, state, local or foreign law, an Optionee shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of an Option exercise. The Company shall not be required to issue shares until such obligations are satisfied. The Board may permit these obligations to be satisfied by having the Company withhold a portion of the shares of Common Stock that otherwise would be issued upon exercise of the Option, or to the extent permitted, by permitting the Optionee to tender shares owned by the Optionee.

The provisions of the Plan shall be binding upon, and inure to the benefit of, all successors of any Optionee, including, without limitation, his estate and the executors, administrators or trustees thereof, his heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Optionee.

The Plan shall remain in effect until terminated by the Board. The Board shall have complete power and authority at any time to terminate the Plan or to make such modification or amendment thereof as it deems advisable and may from time to time suspend, discontinue or abandon the Plan, provided that no such action by the Board shall adversely affect any right or obligation with respect to any grant theretofore made.

No member of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it. In addition to such other rights of indemnification as they may have as directors or otherwise, the members of the Board shall be indemnified by the Company against the reasonable expenses, including attorneys’ fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, Option Agreements or any Option, and against all amounts paid by them in settlement thereof (provided such settlement is approved by legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such member is liable for negligence or misconduct in the performance of his duties; provided that within sixty (60) days after institution of any such action, suit or proceeding a member shall in writing offer the Company the opportunity, at its own expense, to defend the same.

Unless the surviving company assumes the Options or substitutes other options having substantially equivalent value, if the Company shall (i) merge or consolidate with another corporation under circumstances where the Company is not the surviving corporation, (ii) sell all, or substantially all of its assets, or (iii) liquidate or dissolve, then each Option shall terminate on the date and immediately prior to the time such merger, consolidation, sale, liquidation or dissolution becomes effective or is consummated, provided that the Optionee shall have the right immediately prior to the effectiveness or consummation of such merger, consolidation, sale, liquidation or dissolution, to exercise any or all of the vested portion of the Option, unless such Option has otherwise expired or been terminated pursuant to its terms or the terms hereof. In the event of such merger, consolidation, sale, liquidation or dissolution, any portion of an outstanding Option which would have vested within one year after the date on which such merger, consolidation, sale, liquidation or dissolution becomes effective or is consummated shall vest immediately prior to the effectiveness or consummation of such merger, consolidation, sale, liquidation or dissolution and shall be part of the vested portion of the Option which the Optionee may exercise.

The plan was adopted by the Board on July 27, 2001, and was effective as of January 1, 2001. The plan was amended by the Board on February 22, 2002, and May 10, 2002.

AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
1996 AMENDED STOCK OPTION PLAN F
(As Amended Effective As Of May 10, 2002)¹

There are three purposes of the 1996 Stock Option Plan F (the “Plan”). The first is to offer to those employees who contribute materially to the successful operation of AMERICAN MANAGEMENT SYSTEMS, INCORPORATED (the “Corporation”) additional incentive and encouragement to remain in the employ of the Corporation by increasing their personal participation in the Corporation through stock ownership. The second purpose is to provide an alternative means of compensating key employees whose performances contribute significantly to the success of the Corporation. The third is to attract and retain directors who have not at any time been officers or employees of the Corporation (“Outside Directors”) and to compensate such Outside Directors for service to the Corporation. The Plan provides a means whereby optionees may purchase shares of the $0.01 par value common stock of the Corporation (the “Common Stock”) pursuant to options. The options may be either one of two types, (1) “incentive stock options” which will qualify as such under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or under any applicable successor statute, or (2) “nonqualified stock options,” that is, options which are not intended to qualify as incentive stock options under Section 422 of the Code.

Except as otherwise provided in this Section II, the Plan shall be implemented and administered by the Board of Directors of the Corporation (the “Board”) or a Stock Option/Award Committee appointed by the Board and composed of three or more directors of the Corporation.

The Stock Option/Award Committee may be delegated the authority and discretion to adopt and revise such rules and regulations as it shall deem necessary for the administration of the Plan, and to determine, consistent with the provisions of the Plan, the employees to be granted options, whether such options shall be nonqualified stock options or incentive stock options, the times at which options shall be granted, the exercise price of the shares subject to each option (subject to paragraph D of Section VI), the number of shares subject to each option, the vesting schedule of options or whether the options shall be immediately vested, the times when options shall terminate, and whether the exercise price of options shall be paid in cash or stock. Acts of a majority of the members of the Stock Option/Award Committee at a meeting at which a quorum is present, or acts approved in writing by a majority of the members of the Stock Option/Award Committee, shall be the valid acts of the Stock Option/Award Committee. The Stock Option/Award Committee’s actions, including any interpretation or construction of any provisions of the Plan or any option granted hereunder, shall be final, conclusive and binding unless otherwise determined by the Board at its next regularly scheduled meeting. No adjustment to decrease the exercise price of an outstanding stock option granted under the Plan, whether by amending the exercise price of the outstanding stock option or by canceling the outstanding stock option and reissuing a replacement or substitute stock option having a lower exercise price, may be made without shareholder approval (except as provided in paragraph G of Section VI hereof).²

Notwithstanding any other provision of this Section or the Plan or any documentation governing incentive compensation plans pursuant to which officers may elect to receive options under this Plan, a committee composed of at least two Non-Employee Directors, within the meaning of Rule 16b-3(b)(3) of the Securities and Exchange Commission who also are “outside directors” within the meaning of Section 162(m) of the Code (the “Compensation Committee”), shall have the authority (a) to make awards to directors of the Corporation who are not Outside Directors, to all persons who are “officers” of the Corporation as defined for purposes of Sections 16(a) and 16(b) of the Securities Exchange Act of 1934, as amended (the “Act”), and to “covered employees,” within the meaning of Section 162(m) of the Code and (b) to perform all other functions of the Board or Stock Option/Award Committee, as the case may be, with respect to outstanding awards to any of such directors, officers, and covered employees including without limitation amendments to this Plan or such outstanding awards which affect such persons.No member of the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it.

All key employees (including officers and directors) of the Corporation, or any corporation in which the Corporation owns stock possessing more than 50 percent of the voting power (a “Subsidiary”), who meet minimum salary and other requirements established by the Board, shall be eligible to receive options under the Plan. All Outside Directors also shall be eligible to receive options under the Plan. An employee who has been granted an option may be granted an additional option or options or rights under the Plan if the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, shall so determine. The granting of an option under the Plan shall not affect any outstanding stock option previously granted to an employee under the Plan or any other plan of the Corporation.

Nothing contained in the Plan, or in any option granted pursuant to the Plan, shall (i) confer upon any employee the right to continued employment, or shall interfere in any way with the right of the Corporation or a Subsidiary to terminate the employment of such employee at any time or (ii) confer upon any Outside Director the right to continued membership on the Board, or shall interfere in any way with the right of the Corporation to terminate the membership on the Board of such Outside Director.

In no event, however, shall an incentive stock option be granted to any person who then owns (as that term is defined in Section 424 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation or of any of its Subsidiaries, unless the exercise price as determined under paragraph D of Section VI hereof is equal to at least 110% of the fair market value of the stock subject to the incentive stock option as of the date of grant and unless the term during which such incentive stock option may be exercised does not exceed five years from the date of the grant thereof. Options will not be treated as incentive stock options to the extent that the aggregate fair market value (determined as of the date the option is granted) of the Common Stock with respect to which options are exercisable for the first time by an employee during any calendar year (under all incentive stock option plans of the Corporation and its Subsidiaries) exceeds $100,000.

Options shall be granted to employees either (a) on the basis of awards earned under the Corporation’s incentive compensation programs for groups of key employees, as in effect from time to time, or (b) as the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, may determine from time to time. If options are granted based on (a) hereof, then performance bonuses and options based thereon shall be earned based on the employee’s success in meeting predetermined performance standards during one or more years (the “Performance Period”). Options shall be granted under (a) hereof, if at all, at the time that the Corporation determines in its judgment that the employee has met or will meet the employee’s predetermined performance standards for the Performance Period.

Options shall be granted to Outside Directors as the Compensation Committee may determine from time to time.

A. Shares of Stock Subject to the Plan. The number of shares authorized to be issued pursuant to options granted under the Plan is 5,800,000 shares, subject to adjustment in accordance with the provisions of paragraph G of Section VI hereof. Shares subject to options granted under the Plan may be authorized and unissued shares or shares previously acquired or to be acquired by the Corporation and held in treasury. Any shares subject to an option that are not issued by reason of expiration, forfeiture or settlement in cash or by reason of tendering or withholding shares to pay all or a portion of the exercise price or to satisfy all or a portion of the related tax withholding obligations and any shares that are purchased by the Corporation with the amount of cash option proceeds received upon the exercise of options may again be subject to an option granted under the Plan.³

B. Maximum Number of Options. The maximum number of shares which may be subject to options granted under the Plan to any “covered employee” for purposes of Section 162(m) of the Code during any two (2) consecutive calendar years shall be 500,000 shares, subject to adjustment in accordance with paragraph G of Section VI hereof.⁴

A. Option Agreement. Each option granted pursuant to the Plan shall be evidenced by an agreement (“Option Agreement”) between the Corporation and the optionee receiving the option. Option Agreements (which need not be identical) shall state whether the option is an incentive stock option or a nonqualified stock option, shall designate the number of shares and the exercise price of the options to which they pertain, shall set forth the vesting schedule of the options or state that the options are vested immediately. The Option Agreements shall be in writing, dated as of the date the option is granted, and shall be executed on behalf of the Corporation by such officers as the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, shall authorize. Option Agreements generally shall be in such form and contain such additional provisions as the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, shall prescribe, but in no event shall they contain provisions inconsistent with the provisions of the Plan.

B. Exercise of Options. Options are exercisable only to the extent they are vested. Options granted to employees shall vest either immediately or periodically pursuant to a schedule selected by the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, at the same time the option is granted, except that the maximum vesting period shall be ten (10) years for nonqualified stock options and for incentive stock options.⁵ The Option Agreement shall either state that the options are fully vested upon grant and immediately exercisable in full or shall set forth the vesting schedule selected by the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be.

Options granted to Outside Directors shall vest either immediately or periodically pursuant to a schedule selected by the Compensation Committee at the same time the option is granted, provided that upon termination of an Outside Director as a member of the Board of Directors by reason of death or disability, all options held by such Outside Director shall vest fully as of the date of termination.

Optionees may exercise at any time or from time to time all of any portion of a vested option.

C. Repurchase Amendment. Options granted to employees or Outside Directors may be amended to advance the date on which the option shall vest. If an option is so amended, the amendment also may provide that the shares which would not have been vested under the vesting schedule set forth in the Option Agreement shall be subject to repurchase by the Corporation for a specified period of time at the original exercise price if the employment of the optionee is terminated for any reason prior to expiration of the repurchase period. The amendment shall be evidenced by a written agreement (the “Repurchase Amendment”) between the Corporation and the optionee, shall be executed on behalf of the Corporation by such officers as the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, shall authorize, and shall be in such form and contain such provisions as the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, shall prescribe.

1. Incentive Stock Options. The price at which incentive stock options granted pursuant to the Plan may be exercised shall be determined by the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, which price shall be at least equal to the fair market value of the underlying Common Stock at the date at the options are granted. In the case of incentive stock options granted to a person who owns, immediately after the grant of such incentive stock option, stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation or of any of its Subsidiaries (as more fully set forth in Section III hereof), the purchase price of the Common Stock covered by such incentive stock option shall not be less than 110% of the fair market value of such stock on the date of grant.

2. Nonqualified Stock Options. The price at which all nonqualified stock options granted pursuant to the Plan may be exercised shall be the fair market value of the Common Stock on the date of grant.⁶

3. Fair Market Value. For purposes of the Plan the term “fair market value” shall be defined as the closing bid price of the Common Stock quoted over the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) in the national market on the date of grant of the option or if there is no trade on such date, the closing bid price on the last preceding date upon which such Common Stock was traded. In the event that the Common Stock is not traded over NASDAQ, the term fair market value shall be defined as the closing bid price of the Common Stock published in the National Daily Stock Quotation Summary on the date of grant of the option, of if there are no quotations published on such date, on the most recent date upon which such Common Stock was quoted. In the event that the Common Stock is listed upon an established stock exchange or exchanges, such fair market value shall be deemed to be the highest closing price of the Common Stock on such stock exchange or exchanges on the date the option is granted, or if no sale of the Common Stock shall have been made on any exchange on that date, then the next preceding day on which there was a sale of such stock.

4. Payment. Payment of the exercise price may be (i) in cash, (ii) by delivery to the Corporation of (x) irrevocable instructions to deliver to a broker the stock certificates representing the shares for which the option is being exercised, and (y) irrevocable instructions to the broker to sell such shares and promptly deliver to the Corporation the portion of the proceeds equal to the exercise price, or in the sole discretion of the Board or Committee, (iii) by exchange of Common Stock of the Corporation, or, (iv) partly in cash and partly by exchange of such Common Stock, provided that for purposes of (iii) and (iv) the value of such Common Stock shall be the fair market value on the date of exercise, and further provided that such Common Stock shall have been held by the optionee for a period of at least six (6) months prior to the date of exercise.

The Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, may permit deferred payment of all or any part of the purchase price of the shares purchased pursuant to the Plan, provided the par value of the shares must be paid in cash.

E. Suspension or Termination of Options. Subject to earlier termination as provided below, all stock options shall expire, and all rights granted under Option Agreements shall become null and void, on the date specified in the Option Agreement, which date shall be no later than ten (10) years after the stock options are granted.

Upon termination of an employee’s employment with the Corporation or a Subsidiary for any reason, all options held by the employee that are not vested and exercisable on the date of termination shall expire, and all rights granted under the Option Agreement shall become null and void. To the extent that stock options held by the employee are vested and exercisable on the date of termination, shares subject to the stock options may be purchased during the “exercise period,” after which the stock options shall expire, and all rights granted under the Option Agreement shall become null and void. The “exercise period” for shares subject to a nonqualified stock option held by an employee, his heirs, legatees or legal representatives, as the case may be, ends on the earlier of (i) the date on which the stock option expires by its terms, or (ii) (A) when termination is due to death, disability, or resignation following completion of a period of ten (10) or more years of continuous service, one (1) year after the date of the employee’s termination of employment, or (B) when termination is due to any other reason, thirty (30) days after the date of termination. The “exercise period” for shares subject to an incentive stock option held by an employee, his heirs, legatees or legal representatives, as the case may be, ends on the earlier of (i) the date on which the incentive stock option expires by its terms, or (ii) (A) when termination is due to death or disability one (1) year after the date of the employee’s termination of employment, or (B) when termination is due to any other reason, thirty (30) days after the date of termination.

Upon termination of an Outside Director as a member of the Board due to (i) resignation following completion of a period of ten (10) or more years of continuous service as an Outside Director, (ii) death or (iii) disability, all options held by the Outside Director that are not vested and exercisable on the date of termination shall continue to vest during the “exercise period” (defined below), as if the Outside Director had remained a member of the Board during that period. Upon termination of an Outside Director as a member of the Board for any other reason, all options held by the Outside Director that are not vested and exercisable on the date of termination shall expire, and all rights granted under the Option Agreement shall become null and void. To the extent that stock options held by the Outside Director are vested and exercisable on the date of termination, or become vested and exercisable during the “exercise period” as provided above, shares subject to the stock options may be purchased during that period, after which the stock options shall expire, and all rights granted under the Option Agreement shall become null and void. The “exercise period” for shares subject to a stock option held by an Outside Director, his heirs, legatees or legal representatives, as the case may be, ends on the earlier of (i) the date on which the stock option expires by its terms, or (ii) (A) when termination is due to death, disability, or resignation following completion of a period of ten (10) or more years of continuous service as an Outside Director, one (1) year after the date of termination of the Outside Director’s service as a member of the Board, or (B) when termination is due to any other reason, thirty (30) days after the date of termination.⁷

An Option Agreement may provide for an exercise period following termination of employment or termination as a member of the Board of up to six (6) months in lieu of the thirty (30)-day period specified above.⁸

If the Director of Human Resources of the Corporation or his or her designee reasonably believes an optionee other than an Outside Director has committed an act of misconduct as described in this paragraph, the Director of Human Resources may suspend the optionee’s rights to exercise any option pending a determination by the Board. If the Board determines an optionee other than an Outside Director has committed an act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Corporation, breach of fiduciary duty or deliberate disregard of Corporation rules resulting in loss, damage or injury to the Corporation, or if an optionee makes an unauthorized disclosure of any trade secret or confidential information, engages in any conduct constituting unfair competition, induces any customer to breach a contract with an optionee or induces any principal for whom the Corporation acts as agent to terminate such agency relationship, neither the optionee nor his or her estate shall be entitled to exercise any option whatsoever. In making such determination, the Board shall act fairly and shall give the optionee an opportunity to appear and present evidence on his or her behalf at a hearing before a committee of the Board. For any optionee who is an “officer” for purposes of Section 16 of the Act, the determination shall be made by the Board, the Stock Option/Award Committee or the Compensation Committee, whichever is responsible for administration of the Plan with respect to the optionee.

F. Non-Transferability of Options. Options pursuant to the Plan are not transferable by the optionee otherwise than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Code, Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. Except as permitted by the preceding sentence, no option nor any right granted under an Option Agreement shall be transferred, assigned, pledged, hypothecated or disposed of in any other way (whether by operation of law or otherwise), or be subject to execution, attachment or similar process, and each option shall be exercisable during the optionee’s lifetime only by the optionee. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of such options or of such other rights contrary to the provisions hereof, or to subject such options or such other rights to execution, attachment or similar process, such options and such other rights shall immediately terminate and become null and void.

G. Adjustment Provisions. Except as otherwise provided in this paragraph G, in the event of changes in the Common Stock by reason of any stock split, combination of shares, stock dividend, reclassification, merger, consolidation, reorganization, recapitalization or similar adjustment, or by reason of the dissolution or liquidation of the Corporation, appropriate adjustments may be made in (i) the aggregate number of or class of shares available under the Plan, and (ii) the number, class and exercise price of shares remaining subject to all outstanding options. Whether any adjustment or modification is to be made as a result of the occurrence of any of the events specified in this section, and the extent thereof, shall be determined by the Board, whose determination shall be binding and conclusive. Notwithstanding the previous sentence, in the event of a stock split, stock dividend or other event that is functionally equivalent to a stock split or stock dividend, (i) the number of shares subject to then-outstanding options will be adjusted so that upon exercise of the option, the holder of each option will be entitled to receive the number of shares or other securities which the holder would have been entitled to receive after the event had the option been exercised immediately before the earlier of the date of the consummation of the event or the record date of the event (the “event date”), (ii) the price of each share subject to then-outstanding options will be adjusted proportionately so that the aggregate purchase price for all then-outstanding options will be the same immediately after the event date as before the event date, (iii) an appropriate and proportionate adjustment will be made as of the event date in the maximum number of shares that may be issued pursuant to options granted under the Plan, (iv) any adjustment with respect to then-outstanding incentive stock options will be made in a transaction that does not constitute a modification under Section 424(h)(3) of the Code, and (v) any option to purchase fractional shares resulting from an adjustment will be eliminated. Existence of the Plan or of Option Agreements pursuant to the Plan shall in no way impair the right of the Corporation or its stockholders to make or effect any adjustments, recapitalizations, reorganizations or other changes in the Corporation’s capital structure or its business, or any merger, consolidation, dissolution or liquidation of the Corporation, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock of the Corporation, or any grant of options on its stock not pursuant to the Plan.

Optionees shall not have any of the rights and privileges of shareholders of the Corporation in respect of any of the shares subject to any option granted pursuant to the Plan unless and until a certificate, if any, representing such shares shall have been issued and delivered.

To the extent required by applicable federal, state, local or foreign law, an optionee shall make arrangements satisfactory to the Corporation for the satisfaction of any withholding tax obligations that arise by reason of an option exercise or the disposition of shares acquired upon exercise of an incentive stock option. The Corporation shall not be required to issue shares until such obligations are satisfied. The Board, the Stock Option/Award Committee, or the Compensation Committee, as the case may be, may permit these obligations to be satisfied by having the Corporation withhold a portion of the shares of Common Stock that otherwise would be issued upon exercise of the option, or to the extent permitted, by permitting the optionee to tender shares owned by the optionee.

Upon the execution of an Option Agreement, each optionee receiving options pursuant to the Plan shall be given a Prospectus, as filed by the Corporation under the Securities Act of 1933, including any exhibits thereto, describing the Plan. Each Option Agreement shall contain an acknowledgment by the optionee that the requirements of this section have been met.

The provisions of the Plan shall be binding upon, and inure to the benefit of, all successors of any optionee, including, without limitation, his estate and the executors, administrators or trustees thereof, his heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such optionee.

The Plan shall remain in effect until January 1, 2006, unless sooner terminated as hereinafter provided.⁹ The Board shall have complete power and authority at any time to terminate the Plan or to make such modification or amendment thereof as it deems advisable and may from time to time suspend, discontinue or abandon the Plan, provided that no such action by the Board shall adversely affect any right or obligation with respect to any grant theretofore made, and, further provided that without approval by vote of the shareholders, the Board shall not adopt any amendment that would (i) materially modify the requirements as to the exercise price of stock options, (ii) increase the number of shares which may be issued under the Plan (except as provided in paragraph G of Section VI hereof), (iii) materially modify the requirements as to eligibility for participation in the Plan, or (iv) modify the material terms of the Plan as to “covered employees” within the meaning of Section 162(m) of the Code.

In addition to such other rights of indemnification as they may have as directors or as members of the Board, the Stock Option/Award Committee or the Compensation Committee, as the case may be, the members of the Board, the Stock Option/Award Committee or the Compensation Committee shall be indemnified by the Corporation against the reasonable expenses, including attorneys’ fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, Option Agreements or any option granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such member is liable for negligence or misconduct in the performance of his duties; provided that within sixty (60) days after institution of any such action, suit or proceeding a member shall in writing offer the Corporation the opportunity, at its own expense, to defend the same.

Unless the options issued pursuant to this Plan are assumed in a transaction to which Section 424(a) of the Code applies, if the Corporation shall (i) merge or consolidate with another corporation under circumstances where the Corporation is not the surviving corporation, (ii) sell all, or substantially all of its assets, or (iii) liquidate or dissolve, then each option shall terminate on the date and immediately prior to the time such merger, consolidation, sale, liquidation or dissolution becomes effective or is consummated, provided that the holder of the option shall have the right immediately prior to the effectiveness or consummation of such merger, consolidation, sale, liquidation or dissolution, to exercise any or all of the vested portion of the option, unless such option has otherwise expired or been terminated pursuant to its terms or the terms hereof. In the event of such merger, consolidation, sale, liquidation or dissolution, any portion of an outstanding option which would have vested within one year after the date on which such merger, consolidation, sale, liquidation or dissolution becomes effective or is consummated shall vest immediately prior to the effectiveness or consummation of such merger, consolidation, sale, liquidation or dissolution and shall be part of the vested portion of the option which the holder of the option may exercise.

The plan was adopted by the Board on April 3, 1996, and was approved by the shareholders on May 10, 1996. The Plan was further amended by the Board on February 26, 1999, February 25, 2000, and May 11, 2001. The Plan was further amended by the Board on February 22, 2002, April 28, 2002, and May 10, 2002, subject in certain respects to shareholder approval of the amendments at the annual meeting of shareholders on June 7, 2002.¹⁰

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 Paul A. Turner, residing at 10696 Henderson Road, Fairfax Station, VA 22039 (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.

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

-13- EX-10.5 7 w62724exv10w5.htm EMPLOYMENT AGREEMENT DATED JULY 15, 2002 exv10w5

This EMPLOYMENT AGREEMENT (the “Agreement”) is made effective July 15, 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 Walter Howell, residing at 6601 Horseshoe Trail, Clifton, VA 22024 (the “Employee”).

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 15, 2002 upon the terms and conditions set forth herein.

IN WITNESS WHEREOF, AMS and the Employee have executed this Agreement effective as of July 15, 2002.

-14- EX-10.6 8 w62724exv10w6.htm EMPLOYMENT AGREEMENT DATED MAY 15, 2002 exv10w6

This EMPLOYMENT AGREEMENT (the “Agreement”) is made effective May 15, 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 Garry Griffiths, residing at 10312 Shesue Street, Great Falls, VA 22066 (the “Employee”).

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 May 15, 2002 upon the terms and conditions set forth herein.


(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.

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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 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

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		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.

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.

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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 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

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		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: Alfred T. Mockett, Chairman and Chief Executive 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:

		Garry Griffiths 10312 Shesue Street Great Falls, VA 22066

		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.

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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.

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.

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IN WITNESS WHEREOF, AMS and the Employee have executed this Agreement effective as of May 15, 2002.


EMPLOYEE		AMERICAN MANAGEMENT
		SYSTEMS, INCORPORATED

/s/ GARRY GRIFFITHS	By:	/s/ ALFRED T. MOCKETT

Garry Griffiths		Alfred T. Mockett

Date: 6/17/02	Date:	6/17/02

- 14 - EX-10.7 9 w62724exv10w7.htm LOAN AGREEMENT exv10w7

EXHIBIT 10.7

LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”), is made effective as of June 14, 2002 (the “Effective Date”) by and between Garry Griffiths (the “Borrower”), and AMERICAN MANAGEMENT SYSTEMS, INCORPORATED, a Delaware corporation (the “Lender”).

WHEREAS, the Lender wishes to lend to the Borrower, and the Borrower wishes to borrow from the Lender, the amount of one hundred fifty thousand dollars ($150,000) to repay the Borrower’s previous employer for certain moving expense reimbursements under and according to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant, warrant and represent as follows:

ARTICLE I
DEFINITIONS

For the purposes of this Agreement, the following terms not defined above shall have the meanings set forth below:

“Business Day” shall mean any day other than a Saturday, Sunday, or public or bank holiday or the equivalent for banks generally under the laws of the Commonwealth of Virginia.

“Employment Termination Date” shall mean the date that the Borrower ceases to be an employee of the Lender for any reason.

“Loan” shall mean the loan from Lender to Borrower as provided for and evidenced by this Agreement.

“Obligation(s)” shall mean the obligation of the Borrower: (a) to pay the principal on the Loan and any interest on the principal in accordance with the terms of Section 2.02 and to satisfy all of his other liabilities to the Lender arising under this Agreement, whether now existing or hereafter incurred, matured or unmatured, direct or contingent, including any extensions, modifications, renewals thereof and substitutions therefor; and (b) to reimburse the Lender, on demand, for all of the Lender’s expenses and costs, including the reasonable fees and expenses of its counsel, in connection with any proceeding brought or threatened to enforce payment of any of the Obligations.

ARTICLE II

AMOUNTS AND TERMS OF THE LOAN

SECTION 2.01. The Loan. The Lender agrees, on the terms hereinafter set forth, to make a fully recourse, unsecured loan to the Borrower in the amount of one hundred fifty thousand dollars ($150,000) as of the Effective Date.

SECTION 2.02. Payment Schedule. Borrower agrees to pay the Lender the aggregate principal amount of the Loan, together with all accrued interest and all other charges provided for herein, on the third anniversary date following the Effective Date. Notwithstanding the foregoing, on and after the Employment Termination Date the Lender may demand repayment of the entire outstanding principal balance of the Loan, together with accrued interest and all other charges provided for herein, upon providing thirty (30) days’ prior written notice of such demand to the Borrower. All payments by the Borrower hereunder shall be applied first to any charges hereunder (including under Section 3.04), then to any interest due (if applicable), then to amounts due under Section 3.05, and thereafter to any outstanding principal balance.

SECTION 2.02. Interest. Before the Employment Termination Date, no interest shall accrue on the unpaid principal balance of the Loan. After the Employment Termination Date, interest shall accrue and be payable on the unpaid principal balance of the Loan at a rate that is one percent (1%) above the annual rate of interest publicly announced by Citibank, N.A. or its successor as its “prime rate”, or, if such a rate ceases to be publicly announced, another substantially similar rate. If the rate of interest provided herein would exceed the maximum legal rate of interest under applicable law for the Loan, then the rate of interest on the unpaid principal balance of the Loan shall be automatically reduced, effective on and as of the date hereof, to the highest rate of interest that would not exceed such maximum legal rate and any amounts paid in excess of such maximum shall be deemed to be voluntary prepayments of the principal balance of the Loan (or refunded to Borrower to the extent the principal balance of the Loan has been repaid in full).

SECTION 2.05. Prepayments. The Borrower may prepay the Loan at any time in whole or in part.

SECTION 2.06. Payment on Non-Business Days. Whenever any payment to be made hereunder shall be due on a day other than a Business Day, such payment may be made on the next succeeding Business Day.

SECTION 2.07. Reduction of Principal and Interest. So long as the Employment Termination Date shall not have occurred, on each anniversary of the Effective Date, the Lender shall reduce the amount of principal then owing by $50,000.

ARTICLE III

MISCELLANEOUS

SECTION 3.01. Amendments, No Waiver, Remedies, Etc. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in the specific instances and for the specific purpose for which given. No failure on the part of the Lender to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in this Agreement are cumulative and not exclusive of any remedies provided by existing law, in equity or otherwise.

SECTION 3.02. Notices. All notices and other communications provided for hereunder shall be in writing (including telegraphic communication) and shall be effective when delivered or when mailed, postage prepaid, by United States certified or registered mail, or nationally recognized overnight delivery service, return receipt requested, addressed as follows:

If to the Borrower to:

Garry Griffiths

10312 Shesue Street

Great Falls, VA 22066

and if to the Lender, to:

American Management Systems, Incorporated

4050 Legato Road

Fairfax, Virginia 22033-4003

Attention: Alfred T. Mockett

or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. Notice is effective as of the date it is sent.

SECTION 3.03. Borrower’s Waiver Regarding Notice. The Borrower waives presentment, demand and presentation for payment, protest and notice of protest, and, except as otherwise specifically provided herein, any other notices of whatever kind or nature, bringing of suit and diligence in taking any action to collect any sums owing hereunder. From time to time, without in any way affecting the obligation of the Borrower to pay the outstanding principal balance of this Agreement and any interest accrued thereon and fully to observe and perform the covenants and obligations of the Borrower under this Agreement, without giving notice to, or obtaining the consent of, the Borrower, and without any liability whatsoever on the part of the Lender, the Lender may, at its option, extend the time for payment of interest hereon and/or principal of this Agreement, reduce the payments hereunder, release anyone liable on this Agreement or accept a renewal of this Agreement, join in any extension or subordination, or exercise any right or election hereunder. No one or more of such actions shall constitute a novation or operate to release any party liable for or under this Agreement, either as the Borrower or otherwise.

SECTION 3.04. Expenses of Collection. If this Agreement is referred to an attorney for collection, whether or not suit has been filed or any other action instituted or taken to enforce or collect under this Agreement, the Borrower shall pay all of the Lender’s costs, fees (including reasonable attorneys’ and paralegals’ fees) and expenses in connection with such referral.

SECTION 3.05. Withholding. The Borrower may require the Lender to pay the Borrower, at such intervals requested by the Lender in its discretion, any taxes reasonably determined to be required to be withheld by any government or government agency on account of this Agreement or any provision hereof. The Lender also may make any appropriate arrangements to deduct such taxes from any amounts otherwise payable by the Lender to the Borrower. The Borrower shall be responsible for all such taxes to the extent that no taxes are withheld, irrespective of whether withholding is required.

SECTION 3.06. Right of Set-off. The Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set-off and apply any indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the Obligations of the Borrower now or hereafter existing under this Agreement, irrespective of whether or not the Lender shall have made any demand under this Agreement and although such Obligations may be unmatured. The rights of the Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Lender may have.

SECTION 3.07. Binding Effect; Governing Law. This Agreement shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign his rights hereunder or any interest herein without the prior written consent of the Lender. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia.

SECTION 3.08. Waiver of Trial by Jury; Consent to Jurisdiction. In order to reduce the costs of resolving any disputes between them, the Lender and the Borrower hereby irrevocably waive all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or any other document or agreement given or made in connection with the transactions contemplated hereby. The parties acknowledge that this Section 3.08 has been the subject of specific negotiation, and each party represents that it or he is voluntarily and knowingly relinquishing forever the rights hereby waived. The Lender and the Borrower hereby consent to the jurisdiction of the courts of the Commonwealth of Virginia, and each party hereby waives any objection it or he may have based upon jurisdiction, venue or forum non convenes.

SECTION 3.09. Limitations of Applicable Law. In the event the operation of any provision of this Agreement results in an effective rate of interest transcending the limit of the usury or any other law applicable to the loan evidenced hereby, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by any party to this Agreement, be applied to the unpaid principal balance of this Agreement immediately upon receipt of such monies by the Lender, with the same force and effect as though the Borrower had specifically designated such extra sums to be so applied to the unpaid principal balance and the Lender had agreed to accept such extra payment(s) as a prepayment.

SECTION 3.10. Debtor-Creditor Relationship. The Lender shall in no event be construed for purposes of this Loan to be a partner, joint venturer or associate of the Borrower, it being the sole intention of the parties to establish a relationship of debtor and creditor.

SECTION 3.11. Time of the Essence. It is expressly agreed that time is of the essence in the performance of the obligations set forth in this Agreement.

[Remainder of page left intentionally blank]

IN WITNESS WHEREOF, the Borrower and the Lender have caused this Loan Agreement to be executed under seal as of the date below written.

DATE: 6/17/02

BORROWER:

/s/ Garry Griffiths
Garry Griffiths

LENDER:

AMERICAN MANAGEMENT SYSTEMS,
INCORPORATED

/s/ Alfred T. Mockett
Alfred T. Mockett
Chairman and Chief Executive Officer

5 EX-10.8 10 w62724exv10w8.htm EMPLOYMENT AGREEMENT exv10w8

Exhibit 10.8

EMPLOYMENT AGREEMENT
David R. Fontaine

This EMPLOYMENT AGREEMENT (the “Agreement”) is made effective July 25, 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 David R. Fontaine, residing at 2917 Bellevue Terrace, N.W., Washington, D.C. 20016 (the “Employee”).

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 25, 2002 upon the terms and conditions set forth herein.


1.		Term.

		The initial term of this Agreement shall end on July 24, 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 $325,000. 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 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.

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(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 July 25, 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 40,000 shares of common stock of AMS at the closing market price on July 25, 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.

		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

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		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.

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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

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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

(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

- 6 -

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 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,

- 7 -


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

- 8 -


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 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

- 9 -


		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.

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.

- 10 -


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 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

- 11 -


		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:

		David R. Fontaine 2917 Bellevue Terrace, N.W. Washington, D.C. 20016

		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.

- 12 -


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.

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.

- 13 -

IN WITNESS WHEREOF, AMS and the Employee have executed this Agreement effective as of July 25, 2002.


EMPLOYEE:		AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
/s/ David R. Fontaine	By:	/s/Garry Griffiths

David R. Fontaine		Garry Griffiths

Date: 7/25/02	Date:	7/25/02

- 14 - EX-10.9 11 w62724exv10w9.htm AMENDED EMPLOYMENT AGREEMENT exv10w9

Exhibit 10.9

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
WITH WILLIAM M. PURDY

This AMENDMENT (“the Amendment”) is made effective July 30, 2002, by and 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 William M. Purdy, residing at 2804 North Harrison Street, Arlington, VA 22207 (the “Employee”).

WHEREAS, the Employee is employed by AMS as President and Chief Operating Officer pursuant to an employment agreement dated February 5, 2001, as amended effective December 1, 2001 (the “Employment Agreement”);

WHEREAS, the parties desire to amend the Employment Agreement to provide the Employee with additional retirement income in the manner agreed to by the Compensation Committee of the Board of Directors of AMS on July 26, 2002; and

WHEREAS, Section 17 of the Employment Agreement provides that the agreement may be amended or modified by a written instrument executed by both AMS and the Employee;

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

1. Section 5 of the Employment Agreement shall be and hereby is revised by adding at the end thereof a new subsection to read as follows:

f. Retirement Annuity

AMS shall purchase on behalf of the Employee a commercial deferred annuity with a premium of $1,250,000 less applicable withholding. Notwithstanding anything to the contrary in the annuity, the Employee may not exercise any right that he might have under the annuity to begin receiving benefits at any time before the date that the Employee terminates employment with AMS. The Employee shall pay to AMS an amount equal to the full amount of any benefit that he receives in violation of this restriction.

2. This Amendment shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Virginia, without regard to its conflicts of laws principles.


WILLIAM M. PURDY		AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
/s/ William M. Purdy	By:	/s/ Garry Griffiths

		Garry Griffiths
Date: 7/30/02	Date:	7/30/02

EX-99.1 12 w62724exv99w1.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER exv99w1

EXHIBIT 99.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Alfred T. Mockett, Chairman and Chief Executive Officer of American Management Systems, Incorporated (the “Corporation”), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (the “Report”). The undersigned hereby certifies that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.


Date: 8/13/02		/s/ Alfred T. Mockett Name: Alfred T. Mockett Title: Chairman and Chief Executive Officer

EX-99.2 13 w62724exv99w2.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER exv99w2

EXHIBIT 99.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, John S. Brittain, Jr., Executive Vice President, Chief Financial Officer and Treasurer of American Management Systems, Incorporated (the “Corporation”), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (the “Report”). The undersigned hereby certifies that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.


Date: 8/13/02		/s/ John S. Brittain, Jr. Name: John S. Brittain, Jr. Title: Executive Vice President, Chief Financial Officer and Treasurer

-----END PRIVACY-ENHANCED MESSAGE-----


X		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
		EXCHANGE ACT OF 1934

		For the Quarterly Period Ended June 30, 2002

		OR

		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
		EXCHANGE ACT OF 1934

		For the Transition Period From: To:


State or other Jurisdiction of	I.R.S. Employer
Incorporation or Organization: Delaware	Identification No.:	54-0856778


		Page

Part I	Financial Information

	Item 1. Consolidated Unaudited Condensed Financial Statements and Notes	1

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	20

Part II	Other Information

	Item 1. Legal Proceedings	21

	Item 2. Changes in Securities	22

	Item 3. Defaults Upon Senior Securities	22

	Item 4. Submission of Matters to a Vote of Security Holders	22

	Item 5. Other Information	22

	Item 6. Exhibits and Reports on Form 8-K	22


		For the Three Months					For the Six Months
		Ended June 30,					Ended June 30,
		2002		2001			2002		2001

REVENUES		$	251.7	$	319.0		$	503.1	$	641.9

EXPENSES:
	Client Project		133.9		179.1			269.8		355.2
	Selling, General and Administrative		75.6		94.6			152.6		194.3
	Research and Product Support		11.8		9.3			22.1		18.2
	Depreciation and Amortization		11.5		11.7			21.0		23.8

			232.8		294.7			465.5		591.5

	Restructuring Charge		16.1		8.7			16.1		22.5
	Special Charge		—		7.4			—		7.4

INCOME FROM OPERATIONS			2.8		8.2			21.5		20.5

OTHER (INCOME) EXPENSE, NET:
	Interest Expense		0.3		1.7			1.1		2.1
	Other Expense (Income)		0.6		(2.5	)		0.3		(1.3	)
	Loss on Equity Investments		—		1.2			—		2.6

			0.9		0.4			1.4		3.4
INCOME BEFORE INCOME TAXES			1.9		7.8			20.1		17.1

INCOME TAXES			0.8		3.2			8.2		7.0

NET INCOME		$	1.1	$	4.6		$	11.9	$	10.1

WEIGHTED AVERAGE SHARES OUTSTANDING			41.9		41.6			41.8		41.6

BASIC EARNINGS PER SHARE		$	0.03	$	0.11		$	0.28	$	0.24

WEIGHTED AVERAGE SHARES AND EQUIVALENTS			42.6		42.0			42.5		42.0

DILUTED EARNINGS PER SHARE		$	0.03	$	0.11		$	0.28	$	0.24


		June 30, 2002
ASSETS		(Unaudited)		December 31, 2001

CURRENT ASSETS:
	Cash and Cash Equivalents	$	69.8	$	53.3
	Accounts Receivable, Net		219.5		246.4
	Prepaid Expenses and Other Current Assets		29.7		31.4

	Total Current Assets		319.0		331.1

NONCURRENT ASSETS:
	Property and Equipment (Net of Accumulated
	Depreciation and Amortization of $47.5 and $46.7)		27.6		31.0
	Purchased and Developed Computer Software (Net
	of Accumulated Amortization of $117.5 and $101.9)		112.5		119.6
	Goodwill, Net		24.3		24.3
	Cash Value of Life Insurance		34.3		36.4
	Other Assets		62.9		57.8

	Total Noncurrent Assets		261.6		269.1

TOTAL ASSETS		$	580.6	$	600.2

				(continued)


Registrant’s Telephone No., Including Area Code:	(703) 267-8000


				June 30, 2002
LIABILITIES AND STOCKHOLDERS’ EQUITY				(Unaudited)			December 31, 2001

CURRENT LIABILITIES:
	Accounts Payable			$	11.2		$	12.1
	Accrued Compensation and Related Items				43.9			50.5
	Deferred Revenues				20.7			32.9
	Accrued Liabilities				16.5			21.8
	Accrued Restructuring Charge				15.5			15.7
	Income Taxes Payable				0.5			14.2
	Deferred Income Taxes				3.5			2.0

			Total Current Liabilities		111.8			149.2

NONCURRENT LIABILITIES:
	Deferred Compensation				33.8			38.2
	Deferred Income Taxes				25.5			27.5
	Accrued Restructuring Charge				11.2			8.8

			Total Noncurrent Liabilities		70.5			74.5

TOTAL LIABILITIES					182.3			223.7

COMMITMENTS & CONTINGENCIES — See Note 4

STOCKHOLDERS’ EQUITY:
		Preferred Stock ($0.10 Par Value; 4,000,000 Shares
			Authorized, None Issued or Outstanding)		—			—
		Common Stock ($0.01 Par Value; 200,000,000 Shares
			Authorized; 51,057,214 Issued and 42,160,497 Outstanding at June 30, 2002 and 51,057,214 Issued and 41,697,554 Outstanding at December 31, 2001)		0.5			0.5
		Capital in Excess of Par Value			83.4			90.8
		Unearned Compensation			(3.3	)		(4.5	)
		Retained Earnings			368.8			356.9
		Accumulated Other Comprehensive Loss			(18.0	)		(22.3	)
		Treasury Stock, at Cost (8,896,717 shares at June 30, 2002
			and 9,359,660 shares at December 31, 2001)		(33.1	)		(44.9	)

			Total Stockholders’ Equity		398.3			376.5

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				$	580.6		$	600.2


			For the Six Months
			Ended June 30,

			2002			2001

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Income		$	11.9		$	10.1
	Adjustments to Reconcile Net Income to Net Cash Provided By
	Operating Activities:
		Depreciation		3.8			4.3
		Amortization		17.2			19.5
		Stock Compensation Expense		1.9			1.3
		Loss on Equity Investments		—			2.6
		Deferred Income Taxes		0.3			(0.4	)
		Decrease in Cash Surrender Value of Life Insurance		0.2			—
		Provision for Doubtful Accounts		—			5.1
		Loss on Disposal of Assets		0.1			0.5
		Restructuring and Special Charge Asset Write-Offs		—			4.2
	Changes in Assets and Liabilities:
		Decrease (Increase) in Accounts Receivable		33.3			(6.8	)
		Decrease (Increase) in Prepaid Expenses and Other Current Assets		2.5			(9.3	)
		Increase in Other Assets		(1.8	)		(0.4	)
		Decrease in Accrued Compensation and Related Items		(12.0	)		(21.7	)
		(Decrease) Increase in Accounts Payable and Other Accrued Liabilities		(6.6	)		7.2
		Increase in Accrued Restructuring Charge		2.2			7.5
		Decrease in Deferred Revenue		(12.4	)		(17.6	)
		Decrease in Income Taxes Payable		(13.8	)		(3.5	)

	Net Cash Provided by Operating Activities			26.8			2.6

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of Property and Equipment			(0.3	)		(6.1	)
	Purchase and Development of Computer Software			(10.0	)		(17.6	)
	Other Assets			(5.3	)		(9.0	)

	Net Cash Used in Investing Activities			(15.6	)		(32.7	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from Borrowings			—			41.0
	Payments on Borrowings			—			(48.5	)
	Proceeds from Common Stock Options Exercised and Employee Stock Purchase Plan			5.3			1.9
	Payments to Acquire Treasury Stock			(1.5	)		—

	Net Cash Provided by (Used in) Financing Activities			3.8			(5.6	)

	Effect of Exchange Rate Changes on Cash			1.5			(2.2	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				16.5			(37.9	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD				53.3			43.2

CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	69.8		$	5.3

NON-CASH FINANCING ACTIVITIES:
	Treasury Stock Utilized for Stock Options Exercised and Employee Stock Purchase Plan		$	2.8		$	2.1


		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2002		2001		2002		2001

Basic EPS
	Net Income (Numerator)	$	1.1	$	4.6	$	11.9	$	10.1
	Weighted Average Shares Outstanding (Denominator)		41.9		41.6		41.8		41.6

	Basic EPS	$	0.03	$	0.11	$	0.28	$	0.24

Diluted EPS
	Net Income (Numerator)	$	1.1	$	4.6	$	11.9	$	10.1
	Weighted Average Shares and Equivalents:
	Weighted Average Shares Outstanding		41.9		41.6		41.8		41.6
	Effect of Other Dilutive Securities:
	Options		0.3		0.3		0.3		0.3
	Nonvested Restricted Stock		0.4		0.1		0.4		0.1

	Total Weighted Average Shares and Equivalents (Denominator)		42.6		42.0		42.5		42.0

	Diluted EPS	$	0.03	$	0.11	$	0.28	$	0.24


			Severance						Software
			& Benefits			Facilities			& Other			Total

Restructuring Liability as of December 31, 2001			$	6.3		$	17.8		$	0.4		$	24.5
Restructuring Charge
	First Quarter			—			—			—			—
	Second Quarter			11.6			—			—			11.6
	Second Quarter Change in Estimate			—			4.5			—			4.5

		Total Restructuring Charge		11.6			4.5			—			16.1
Non–cash amortization and related items				—			(0.2	)		—			(0.2	)
Cash Payments				(9.5	)		(4.0	)		(0.2	)		(13.7	)

	Restructuring Liability as of June 30, 2002		$	8.4		$	18.1		$	0.2		$	26.7

	•		A significant or prolonged economic downturn in the U.S. or internationally could have a material adverse effect on our operating results.

	•		Disruptions in commercial activities occasioned by actual or threatened terrorist activity or armed conflict could have a significant negative effect on our results of operations.

	•		Our inability to complete large projects as expected due to unanticipated delays, re-negotiations, cancellation by the customer, and changing customer requirements and project scope could result in a decline in revenues or profits, a diminution of our professional reputation or legal liability.

	•		Our inability to successfully recruit, retain and assimilate entry-level and experienced employees could adversely affect our operating results and our ability to effectively compete and grow our business.

	•		Our pricing, revenues and margins could be negatively affected if current or prospective clients decide to undertake fewer information-technology systems projects or to consolidate with others in our target markets.

	•		We may be unable to realize revenues from benefits-funded contracts in the amounts or at the times expected if our customers are unable to achieve the amount of benefits anticipated due to factors such as economic downturns, tax base erosion or state cutbacks that result in fewer state resources being available to generate profits.

	•		Client Project expenses include direct expenses to provide services to our clients such as compensation costs, travel and out-of-pocket expenses, and costs for subcontractors.

	•		Selling, General and Administrative (“SG&A”) expenses include expenses not directly related to the delivery of client services such as compensation for support personnel, costs for information systems, incentive compensation, selling and marketing expenses, and recruiting and training expenses.

	•		Research and Product Support expenses include research and development expenses incurred as part of the software development cycle that are not capitalized as well as support/maintenance of existing software.

	•		Depreciation and Amortization expenses include the amortization of internally developed and purchased software and depreciation of furniture, equipment and leasehold improvements. Prior to January 1, 2002 the amortization of goodwill was also included. Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” (“SFAS

			142”) which was adopted January 1, 2002, requires the discontinuation of goodwill amortization.

	•		Restructuring Charge includes expenses associated with implementing our formal restructuring plan.

	•		Special Charge includes significant expenses associated with the write-off of certain software assets no longer expected to provide future value and reserves in connection with certain client engagements.

	•		revenue recognition;
	•		net realizable value of software;
	•		income taxes; and
	•		restructuring.


	1. The stockholders approved the election of the following persons as directors of the Corporation:


Name	For	Withheld

Daniel J. Altobello	34,182,045	607,641
James J. Forese	34,797,026	992,660
Dorothy Leonard	34,794,024	995,662
Frederic V. Malek	35,178,359	611,327
Alfred T. Mockett	35,245,057	544,629
William M. Purdy	35,154,708	634,978


(a)		Exhibits

		The Exhibits set forth in the Exhibit Index are filed as part of this Quarterly Report on Form 10-Q.

(b)		Reports on Form 8-K

		None.


	/s/Alfred T. Mockett Alfred T. Mockett Chairman and Chief Executive Officer

	/s/John S. Brittain, Jr. John S. Brittain, Jr. Executive Vice President, Chief Financial Officer and Treasurer


Exhibit
Number		Description

3.		Articles of Incorporation and By-laws

		3.1 By-laws of the Corporation, as amended and restated on June 7, 2002 (filed herewith).

10.		Material Contracts

		10.1 1996 Amended Stock Option Plan F, as amended and restated effective April 28, 2002 (filed herewith).

		10.2 American Management Systems, Incorporated Stock Option Plan for Employees as amended effective May 10, 2002 (filed herewith).

		10.3 Consulting Agreement, dated as of April 30, 2002, between the Corporation and Frank Nicolai (incorporated herein by reference to Exhibit 10.4 of the Corporation’s March 31, 2002 Quarterly Report on Form 10-Q).

		10.4 Employment Agreement, dated as of July 1, 2002, between the Corporation and Paul A. Turner (filed herewith).

		10.5 Employment Agreement, dated as of July 15, 2002, between the Corporation and Walter Howell (filed herewith).

		10.6 Employment Agreement, dated as of May 15, 2002, between the Corporation and Garry Griffiths (filed herewith).

		10.7 Loan Agreement dated as of June 14, 2002, between the Corporation and Garry Griffiths (filed herewith).

		10.8 Employment Agreement, dated as of July 25, 2002, between the Corporation and David Fontaine (filed herewith).

		10.9 Second Amendment to Employment Agreement, dated as of July 30, 2002, between the Corporation and William M. Purdy (filed herewith).

99.		Additional Exhibits

		99.1 Certification of Chief Executive Officer (filed herewith).

		99.2 Certification of Chief Financial Officer (filed herewith).


		portion of such premiums, at a time or times mutually agreed to by the parties.


		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).


		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:


		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.


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.


		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.
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.
16.		Indemnification.


		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.


EMPLOYEE		AMERICAN MANAGEMENT SYSTEMS, INCORPORATED

/s/ PAUL A. TURNER Paul A. Turner		By: /s/ GARRY GRIFFITHS Garry Griffiths

Date: June 17 02		Date: 6/17/02


(i)		As of July 15, 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 20,000 shares of common stock of AMS at the closing market price on July 15, 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.


EMPLOYEE:		AMERICAN MANAGEMENT SYSTEMS, INCORPORATED

/s/ WALTER HOWELL Walter Howell		By: /s/ GARRY GRIFFITHS Garry Griffiths

Date: 7/16/02		Date: 16/7/02


(i)		As of May 15, 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 increments of thirty-three percent on the anniversary of the Employee’s start date.

(ii)		The Employee shall be granted a nonqualified stock option for 40,000 shares of common stock of AMS at a strike price equal to the closing market price on May 15, 2002. The option shall be granted under American Management Systems, Incorporated 1996 Amended Stock Option Plan F (“Plan F”). The options will vest over four years in twenty-five percent increments on the anniversary of the Employee’s start date.

(iii)		The Employee will receive a sign-on bonus of $45,000 within three weeks of May 15, 2002.

	American Management Systems, Incorporated
	4050 Legato Road
	Fairfax, Virginia 22033-4003
	Attention: Alfred T. Mockett