Exhibit 10.1
FORM OF
SEVERANCE PROTECTION
AGREEMENT
SEVERANCE PROTECTION AGREEMENT dated
, 2008, by and between SAIC, Inc.,
a Delaware corporation (the “Company”), and
(the “Executive”).
PURPOSE
The Board of Directors of the
Company (the “Board”) recognizes that the possibility
of a Change in Control (as hereinafter defined) of the Company
exists and that the threat or occurrence of a Change in Control may
result in the distraction of its key management personnel because
of the uncertainties inherent in such a situation.
The Board has determined that it is
essential and in the best interests of the Company and its
stockholders to retain the services of the Executive in the event
of the threat or occurrence of a Change in Control and to ensure
the Executive’s continued dedication and efforts in such
event without undue concern for the Executive’s personal
financial and employment security.
In order to induce the Executive to
remain in the employ of the Company, particularly in the event of
the threat or occurrence of a Change in Control, the Company
desires to enter into this Agreement to provide the Executive with
certain benefits in the event the Executive’s employment is
terminated as a result of, or in connection with, a Change in
Control.
NOW, THEREFORE, in consideration of
the respective agreements of the parties contained herein, it is
agreed as follows:
SECTION 1.
Definitions.
For purposes of this Agreement, the
following terms have the meanings set forth below:
“Accrued
Compensation” means an amount which includes all amounts
earned or accrued by the Executive through and including the
Termination Date but not paid to the Executive on or prior to such
date, including (a) all base salary, (b) reimbursement
for all reasonable and necessary expenses incurred by the Executive
on behalf of the Company during the period ending on the
Termination Date, (c) all vacation pay and (d) all
bonuses and incentive compensation (other than the Pro Rata
Bonus).
“Base Salary
Amount” means
the greater of the Executive’s annual base salary (a) at
the rate in effect on the Termination Date and (b) at the
highest rate in effect at any time during the 180-day period prior
to a Change in Control, and will include all amounts of the
Executive’s base salary that are deferred under any qualified
or non-qualified employee benefit plan of the Company or any other
agreement or arrangement.
“Beneficial
Owner” has the
meaning as used in Rule 13d-3 promulgated under the Securities
Exchange Act. The terms “Beneficially Owned” and
“Beneficial Ownership” each have a correlative
meaning.
“Board” means the Board of Directors of the
Company.
“Bonus
Amount” means
the greater of (a) the annual bonus paid or payable to the
Executive pursuant to any annual bonus or incentive plan maintained
by the Company in respect of the fiscal year ending immediately
prior to the fiscal year in which the Termination Date occurs,
(b) the average of the annual bonus paid or payable to the
Executive pursuant to any annual bonus or incentive plan maintained
by the Company in respect of each of the three fiscal years ending
immediately prior to the fiscal year in which the Termination Date
occurs (or, if higher, ending in respect of each of the three
fiscal years ending immediately prior to the year in which the
Change in Control occurs) or (c) in the event that the
Executive was not employed by the Company for the entire fiscal
year ending immediately prior to the fiscal year in which the
Termination Date occurs, the annual target bonus established and
payable to the Executive pursuant to any annual bonus or incentive
plan maintained by the Company in respect of the fiscal year ending
during the fiscal year in which the Termination Date occurs. Bonus
Amount includes only the short-term incentive portion of the annual
bonus and does not include restricted stock awards, options or
other long-term incentive compensation awarded to the
Executive.
“Cause” for the termination of the Executive’s
employment with the Company will be deemed to exist if (a) the
Executive has been convicted for committing an act of fraud,
embezzlement, theft or other act constituting a felony (other than
traffic related offenses or as a result of vicarious liability),
(b) the Executive willfully engages in illegal conduct or
gross misconduct that is significantly injurious to the Company;
however, no act or failure to act, on the Executive’s part
shall be considered “willful” unless done or omitted to
be done, by the Executive not in good faith and without reasonable
belief that his or her action or omission was in the best interest
of the Company or (c) failure to perform his or her duties in
a reasonably satisfactory manner after the receipt of a notice from
the Company detailing such failure if the failure is incapable of
cure, and if the failure is capable of cure, upon the failure to
cure such failure within 30 days of such notice or upon its
recurrence.
“Change in
Control” of the
Company means, and shall be deemed to have occurred upon, any of
the following events:
(a) The acquisition by any Person of
beneficial ownership (as defined in Rule 13d-3 of the General Rules
and Regulations under the Securities Exchange Act) of twenty-five
percent (25%) or more of the outstanding voting power;
provided, however, that the following acquisitions shall not
constitute a Change in Control for purposes of this subparagraph
(a): (A) any acquisition directly from the Company;
(B) any acquisition by the Company or any of its Subsidiaries;
(C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its
Subsidiaries; or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subparagraph (c) below;
or
(b) Individuals who, as of the date
of this Agreement, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual who
becomes a director of the Company subsequent to the date of this
Agreement and whose election, or whose nomination for election by
the Company’s stockholders, to the Board was either
(i) approved by a vote of at least a majority of the directors
then comprising the Incumbent Board or (ii) recommended by a
nominating committee comprised entirely of directors who are then
Incumbent Board members shall be considered as though
such
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individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act),
other actual or threatened solicitation of proxies or consents or
an actual or threatened tender offer; or
(c) Consummation of a
reorganization, merger, or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a “Business Combination”), in each case unless
following such Business Combination, (i) all or substantially
all of the Persons who were the Beneficial Owners, respectively, of
the outstanding shares and outstanding voting securities
immediately prior to such Business Combination own, directly or
indirectly, more than fifty percent (50%) of the combined
voting power of the then outstanding voting securities entitled to
vote generally in the election of directors of the Company, as the
case may be, of the entity resulting from the Business Combination
(including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
outstanding voting securities (provided, however, that for purposes
of this clause (i) any shares of common stock or voting
securities of such resulting entity received by such Beneficial
Owners in such Business Combination other than as the result of
such Beneficial Owners’ ownership of outstanding shares or
outstanding voting securities immediately prior to such Business
Combination shall not be considered to be owned by such Beneficial
Owners for the purposes of calculating their percentage of
ownership of the outstanding common stock and voting power of the
resulting entity); (ii) no Person (excluding any entity
resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such entity resulting
from the Business Combination) beneficially owns, directly or
indirectly, twenty-five percent (25%) or more of the combined
voting power of the then outstanding voting securities of such
entity resulting from the Business Combination unless such Person
owned twenty-five percent (25%) or more of the outstanding
shares or outstanding voting securities immediately prior to the
Business Combination; and (iii) at least a majority of the
members of the Board of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or the action of the Board,
providing for such Business Combination; or
(d) Approval by the Company’s
stockholders of a complete liquidation or dissolution of the
Company.
For purposes of clause (c), any
Person who acquires outstanding voting securities of the entity
resulting from the Business Combination by virtue of ownership,
prior to such Business Combination, of outstanding voting
securities of both the Company and the entity or entities with
which the Company is combined shall be treated as two Persons after
the Business Combination, who shall be treated as owning
outstanding voting securities of the entity resulting from the
Business Combination by virtue of ownership, prior to such Business
Combination of, respectively, outstanding voting securities of the
Company, and of the entity or entities with which the Company is
combined.
“Code” means the Internal Revenue Code of 1986, as
amended.
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“Company”
means SAIC, Inc., a Delaware
corporation, provided that in recognition of the fact that the
Executive may be employed by Science Applications International
Corporation, a Delaware corporation and wholly-owned subsidiary of
the Company (“SAIC”), or by another direct or indirect
Subsidiary of SAIC, Inc., the term “Company” when
referring to the employment relationship and the compensation or
benefits related thereto shall include the employer of Executive as
the context requires.
“Continuation
Period” has the
meaning set forth in Section 3.1(b)(iii).
“Disability”
means the status of disability
determined conclusively by the Company based upon certification of
disability by the Social Security Administration or upon such other
proof as the Company may reasonably require, effective upon receipt
of such certification or other proof by the Company.
“Full
Release” means
a written release, timely executed so that it is fully effective as
of the date of payment pursuant to Section 3.1(b)(ii), in a
form satisfactory to the Company (and similar to the Agreement set
forth in Exhibit A ) pursuant to which the Executive
fully and completely releases the Company from all claims that the
Executive may have against the Company (other than any claims that
may or have arisen under this Agreement).
“Good
Reason” means
the occurrence of any of the events or conditions described in
clauses (a) through (g) hereof, without the
Executive’s prior written consent:
(a)(i) any material adverse change
in the Executive’s authority, duties or responsibilities
(including reporting responsibilities) from the Executive’s
authority, duties or responsibilities as in effect at any time
within 180 days preceding the date of the Change in Control or at
any time thereafter, or (ii) in the case of an Executive who
is an executive officer of the Company a significant portion of
whose responsibilities relate to the Company’s status as a
public company, the failure of such Executive to continue to serve
as an executive officer of a public company, in each case except in
connection with the termination of the Executive’s employment
for Disability, Cause, as a result of the Executive’s death
or by the Executive other than for Good Reason;
(b) a material reduction in
Executive’s base salary or any failure to pay the Executive
any cash compensation to which the Executive is entitled within 15
days after the date when due;
(c) the imposition of a requirement
that the Executive be based (i) at any place outside a 50-mile
radius from the Executive’s principal place of employment
immediately prior to the Change in Control or (ii) at any
location other than the Company’s corporate headquarters or,
if applicable, the headquarters of the business unit by which he or
she was employed immediately prior to the Change in Control,
except, in each case, for reasonably required travel on Company
business which is not materially greater in frequency or duration
than prior to the Change in Control;
(d) any material breach by the
Company of any provision of this Agreement;
(e) any purported termination of the
Executive’s employment for Cause by the Company which does
not comply with the terms of this Agreement; or
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(f) the failure of the Company to
obtain, as contemplated in Section 7, an agreement, reasonably
satisfactory to the Executive, from any Successor to assume and
agree to perform this Agreement.
Notwithstanding anything to the
contrary in this Agreement, no termination will be deemed to be for
Good Reason hereunder unless (i) the Executive provides
written notice to the Company identifying the applicable event or
condition within 90 days of the occurrence of the event or the
initial existence of the condition, and (ii) the Company fails
to remedy the event or condition within a period of 30 days
following such notice.
“Notice of
Termination” means a written notice from the Company or the
Executive of the termination of the Executive’s employment
which indicates the specific termination provision in this
Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so
indicated.
“Person” has the meaning as defined in
Section 3(a)(9) of the Securities Exchange Act and used in
Section 13(d) or 14(d) of the Securities Exchange Act, and
will include any “group” as such term is used in such
sections.
“Pro Rata
Bonus” means an
amount equal to the Bonus Amount multiplied by a fraction, the
numerator of which is the number of days elapsed in the then fiscal
year through and including the Termination Date and the denominator
of which is 365.
“Securities Exchange
Act ” means the
Securities Exchange Act of 1934, as amended.
“Subsidiary”
means any corporation with respect
to which another specified corporation has the power under ordinary
circumstances to vote or direct the voting of sufficient securities
to elect a majority of the directors.
“Successor”
means a corporation or other entity
acquiring all or substantially all the assets and business of the
Company, whether by operation of law, by assignment or
otherwise.
“Termination
Date” means
(a) in the case of the Executive’s death, the
Executive’s date of death, (b) in the case of the
termination of the Executive’s employment with the Company by
the Executive for Good Reason, five days after the date the Notice
of Termination is received by the Company, and (c) in all
other cases, the date specified in the Notice of Termination;
provided that if the Executive’s employment is terminated by
the Company for Cause or due to Disability, the date specified in
the Notice of Termination will be at least 30 days after the date
the Notice of Termination is given to the Executive.
Notwithstanding anything to the contrary herein, an
Executive’s employment shall not be considered to have
terminated unless the executive has experienced a “separation
from service,” as defined in Code Section 409A and the
regulations thereunder.
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SECTION 2. Term of Agreement
.
The term of this Agreement (the
“Term”) will commence at 11:59 p.m. on
December 31, 2008, and will continue in effect until
December 31, 2009; provided that on December 31, 2009 and
each anniversary of such date thereafter, the Term shall
automatically be extended for one additional year unless, not later
than October 1 of such year, the Company or the Executive
shall have given notice not to extend the Term; and further
provided that in the event a Change in Control occurs during the
Term, the Term will be extended to the date 24 months after the
date of the occurrence of such Change in Control.
Notwithstanding the foregoing and
subject to Section 3.2, the Term shall be deemed to have
immediately expired without any further action and this Agreement
will immediately terminate and be of no further effect if any of
the following events occurs prior to a Change in
Control:
(a) the Executive’s employment
with the Company is terminated (whether by the Company or the
Executive) for any reason;
(b) the Executive’s employment
is not terminated but there is a change in his or her status,
position or responsibilities (including reporting responsibilities)
from that which applied to Executive on the date of this Agreement;
or
(c) the Executive reaches the
mandatory retirement age applicable to the Company’s
executive officers under any stated policy of the Company, as may
be adopted and revised from time to time by the Board.
SECTION 3. Termination of
Employment .
3.1 If, during the Term, the
Executive’s employment with the Company is terminated within
24 months following a Change in Control, the Executive will be
entitled to the following compensation and benefits:
(a) If the Executive’s
employment with the Company is terminated (i) by the Company
for Cause or Disability, (ii) by reason of the
Executive’s death or (iii) by the Executive other than
for Good Reason, the Company will pay to the Executive the Accrued
Compensation and, if such termination is by the Company for
Disability or by reason of the Executive’s death, a Pro Rata
Bonus.
(b) If the Executive’s
employment with the Company is terminated (whether by the Company
or the Executive) for any reason other than as specified in
Section 3.1(a), the Executive will be entitled to the
following:
(i) the Company will pay the
Executive all Accrued Compensation and a Pro Rata Bonus;
(ii) subject to the
Executive providing the Company with a Full Release, the Company
will pay the Executive as severance pay, and in lieu of any further
compensation for periods subsequent to the Termination Date, in a
single payment an amount in cash equal to two and one-half
(2 1 / 2 ) times the sum of
(A) the Base Salary Amount and (B) the Bonus
Amount;
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(iii) subject to the Executive
providing the Company with a Full Release and complying with his or
her obligations under Section 6, the Company will, for a
period of 30 months (the “Continuation Period”), at its
expense provide to the Executive and the Executive’s
dependents and beneficiaries the same or equivalent life insurance,
disability, medical, dental, hospitalization, financial counseling
and tax consulting benefits (the “Continuation Period
Benefits”) provided to other similarly situated executives
who continue in the employ of the Company during the Continuation
Period (“similarly situated executives”). The
obligations of the Company to provide the Executive and the
Executive’s dependents and beneficiaries with the
Continuation Period Benefits shall not restrict or limit the
Company’s right to terminate or modify the benefits made
available by the Company to its similarly situated executives or
other employees and following any such termination or modification,
the Continuation Period Benefits that Executive (and the
Executive’s dependents and beneficiaries) shall be entitled
to receive shall be so terminated or modified. The Company’s
obligation hereunder with respect to the foregoing benefits will be
limited to the extent that the Executive obtains any such benefits
pursuant to a subsequent employer’s benefit plans, in which
case the Company may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the
coverages and benefits of the combined benefit plans are no less
favorable to the Executive than the coverages and benefits required
to be provided hereunder. This Section 3.1(b)(iii) will not be
interpreted so as to limit any benefits to which the Executive or
the Executive’s dependents or beneficiaries may be entitled
under any of the Company’s employee benefit plans,
