BOLT BERANEK AND NEWMAN INC.
EXHIBIT 10.1
DEFERRED COMPENSATION PLAN
1. IN GENERAL. Bolt Beranek and Newman Inc. (the "Company") has
established this Deferred Compensation Plan (the "Plan") to further its
business interests by providing eligible employees an opportunity to defer
a portion of their compensation of an unfunded, nonqualified basis as
hereinafter provided. The Plan shall be effective April 1, 1995.
2. DEFINED TERMS. As used in the Plan, the following terms have the
meanings associated with them below:
"Account": A memorandum account maintained by the Administrator to
reflect the Employer's unfunded deferred compensation obligation to a
participant hereunder, including where the context requires any sub-
account. The fact that the Company may cause a portion of its general
assets, including assets held in any so-called "rabbi trust" or similar
account, to be invested so as to yield results intended to approximate
notional returns under the Plan shall not affect the unfunded nature of
the Plan nor the rights of Participants hereunder.
"Administrator": The Deferred Compensation Committee, whose members
are appointed by the Board and serve at the Board's pleasure, or such
other committee, person or persons as the Board may designate. The
term "Administrator" shall also include delegates of any of the
foregoing.
"Board": The Board of Directors of the Company.
"Code": The federal Internal Revenue Code, as amended.
"Earnings Measure": An interest rate, stock index, bond index, mutual
fund or other objective external measure of investment performance
specified by the Administrator for purposes of measuring and crediting
notional earnings under Section 4 (b) below.
"Eligible Employee": An individual employed by an Employer who is
(i) determined by the Administrator to qualify as a "highly
compensated or management" employee for purposes of Sections 201 (a)
(2), 301 (a) (3) and 401 (a) (1) OF ERISA, and (ii) designated by
the Administrator as eligible to participate in the Plan, provided
that such delegation has not been revoked by the Administrator.
"Eligible Pay": Except as otherwise determined by the Administrator,
Eligible Pay shall include base salary plus incentive bonuses. The
Administrator in its discretion may include other remuneration in, or
exclude categories of remuneration from, the definition of "Eligible
Pay," either in general or in particular cases.
"Employer": The Company and its Subsidiaries, or any of them.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Fiscal Year": The Company's fiscal year, which ends June 30.
"Participant": An Eligible Employee who participates in the Plan.
"Subsidiary": A corporation in which the Company holds, directly or
indirectly, stock possessing 50% or more of the total voting power,
and any other corporation or unincorporated trade or business that the
Board designates as a Subsidiary for purposes of the Plan.
3. DEFERRAL ELECTION.
(a) IN GENERAL. Each Eligible Employee may elect to defer
hereunder a specified portion or percentage of his or her base salary
and other Eligible Pay for any Fiscal Year. Each such deferral shall
be made by the Participant's delivery to the Administrator of a
deferral election on or before the date specified by the
Administrator, but in any case (except as provided in (b) below) prior
to the first day of the Fiscal Year to which the deferral election
relates.
(b) FIRST YEAR OF PARTICIPATION. Notwithstanding (a) above, an
individual who first becomes eligible to participate in the Plan
during the course of a Fiscal Year (including any individual who
becomes eligible to participate upon initial establishment of the
Plan) may elect to defer a specified portion or percentage of his or
her Eligible Pay for the remainder of the year by delivering to the
Administrator a deferral election within 30 days of being notified of
eligibility, such election to take effect as of the first day of the
month next following receipt by the Administrator of such form or
forms (the "initial effective date"). An election under this
paragraph shall be effective as to base salary for the period
commencing on the initial effective date and ending on the last day of
the year, plus any incentive bonuses for the year.
(c) LIMITS. Except as otherwise determined by the
Administrator, an Eligible Employee may elect to defer (i) only that
portion of his or her base salary for any Fiscal Year which exceeds
the then limitation under Section 401 (a) (17) of the Code (as
determined by the Administrator), plus (ii) all or any portion of his
or her other Eligible Pay, if any. In applying (i) above to an Eligible
Employee eligible to participate in the Plan for a full Fiscal Year,
the limitation amount under Section 401 (a) (17) of the Code shall be
treated as allocable on a prorated basis to each pay period within the
Fiscal Year, with the base salary (if any) in excess of such prorated
amount for each such pay period treated as eligible for deferral
hereunder. In the case of any Eligible Employee eligible to
participate for less than a full Fiscal Year, the Administrator shall
apply the limitation of (i) above in such reasonable manner as it
determines in its discretion (including any complete or partial waiver
of such limitation), with a view toward maximizing opportunities for
deferral without reducing a participant's compensation eligible to be
taken into account under the Bolt Beranek and Newman Inc. Retirement
Trust. The Administrator may impose a minimum deferral amount for
anyone electing to participate in the Plan.
(d) FORM OF ELECTION; IRREVOCABILITY. Each deferral election
shall be made in writing on a form prescribed by the Administrator.
The Administrator may condition the effectiveness of any election upon
the delivery by the Participant of such other form or forms as the
Administrator may prescribe. A deferral election applicable to
Eligible Pay to be earned in a particular Fiscal Year shall be
irrevocable once that year has begun (or, in the case of an initial
year of participation described in (b) above, once the 30-day election
period has expired).
4. ACCOUNTS; CREDITS. For each Participant, the Administrator shall
maintain an Account reflecting deferrals and notional earnings as
hereinafter provided.
(a) DEFERRAL CREDITS. Each amount deferred by a Participant
under Section 3 above shall be credited to the Participant's Account
as of the date it would have been paid absent the deferral. In
addition, for each Fiscal Year during the continuation of this Plan
the Administrator shall credit such additional amounts, if any, to
Participant Accounts (including an Account maintained hereunder for
any Eligible Employee who is not otherwise participating in the Plan)
as the Board in its complete discretion may determine, each such
amount to be credited as of such date or dates as the Administrator
may determine. Amounts, if any, credited pursuant to the immediately
preceding sentence may differ among Participants or groups of
Participants (including Eligible Employees not otherwise participating
in the Plan), and nothing herein shall be construed as obligating the
Board to determine or provide for any such credits for any Fiscal
Year.
(b) NOTIONAL EARNINGS. Not less frequently than annually, the
Administrator shall adjust each Participant's Account to reflect
notional earnings. Notional earnings shall be based on such Earnings
Measure or Measures as the Administrator shall specify. The
Administrator may, but need not, permit Participants to (i) select the
Earnings Measures that will apply to their Accounts from among those
specified by the Administrator, and (ii) change such Measures
prospectively at any time. The Administrator shall have the absolute
discretion at any time to alter or amend the Earnings Measures used in
valuing and adjusting Accounts; provided, that the Administrator may
not, without the written consent of the affected Participant, alter
any Earnings Measure retroactively to the extent that the effect of
such alteration would be to reduce the balance of the Participant's
Account below what it was immediately prior to such alteration.
Nothing herein shall be construed as obligating the Administrator or
any Employer to set aside assets or establish a trust or other fund
for purposes of the Plan.
(c) FICA/MEDICARE TAXES, ETC.. To the extent any amount
deferred or credited hereunder to the Account of a Participant is
treated as "wages" for FICA/Medicare or FUTA tax purposes on a current
basis rather then when distributed, all as determined by the
Administrator, then the Administrator shall require that the
Participant either (i) timely pay such taxes in cash by separate check
to the Employer, or (ii) make other arrangements satisfactory to the
Employer (e.g., additional withholding from other wage payments) for
the payment of such taxes. To the extent a Participant fails to pay
or provide for such taxes as required, the Administrator may suspend
the Participant's participation in the Plan or reduce amounts credited
or to be credited hereunder.
5. PAYMENT OF DEFERRED AMOUNTS. The Participant's Employer shall
make distributions of Account balances as provided in this Section. All
distributions shall be in cash.
(a) TIME OF DISTRIBUTION. At the time of a Participant's
deferral election under Section 3 above, the Participant may elect to
receive all or any portion of the amount then being deferred, adjusted
for notional earnings as described at Section 4(b) above, in a single
lump sum at or as soon as practicable following a fixed date specified
in such election (not earlier than the third anniversary of the
effective date of the election) (a "fixed-term deferral"); provided,
that if the Participant's employment terminates prior to the date so
specified, any amounts subject to the "fixed-term deferral" then
remaining to the Participant's Account shall be distributed (or
commence to be distributed) upon such termination of employment. Any
amounts deferred under the Plan that are not subject to a "fixed-term
deferral" shall be distributed upon termination of the Participant's
employment whenever occurring. The Administrator may impose
additional limitations on fixed-terms deferrals and shall establish
such sub-Accounts as are necessary to administer the provisions of
this Section.
Notwithstanding the foregoing, the Administrator may defer
payment of a fixed-term deferral beyond its scheduled payment date if
in the judgment of the Administrator such deferral is necessary to
avoid disallowance of a deduction under Section 162 (m) of the Code.
Amounts, if any, deferred pursuant to the preceding sentence shall be
paid or commence to be paid not later than the date Section 162 (m)
would no longer limit the deductibility of such payment, as reasonably
determined by the Administrator.
(b) FORM OF DISTRIBUTIONS. All fixed-term deferrals
distributed prior to termination of employment shall be distributed in
a single lump sum. The remainder of a Participant's Account shall be
distributed, as the Participant elects (a "form of payment election"),
either in a single lump sum following termination of employment or in
installments that commence following termination of employment and
continue over a period not to exceed ten years, subject to the
following:
(i) A Participant may at any time change his or her form of
payment election, but only one form of payment election shall be
in effect at any time and it shall control the manner in which the
entirety of the Participant's Account, other than portions thereof
subject to a fixed-term election, will be paid.
(ii) No change in a form of payment election shall be
effective unless made more than two years prior to termination of
employment.
(iii) If a Participant's employment terminates other than
by reason of (A) retirement at or after age 65, (B) retirement
with the consent of the Company at or after age 55 but before age
65, (C) disability (as determined by the Administrator), or (D)
death, then notwithstanding any form of payment election then in
effect, the entirety of the Participant's remaining Account shall
be distributed in three annual installments or on such
accelerated basis as the Administrator, in its sole discretion,
may direct if the Administrator determines that an accelerated
distribution would be in the best interests of the Company.
In the absence of any effective form of payment election, a
Participant's Account shall be distributed in a single lump sum.
(c) SMALL ACCOUNTS; DISTRIBUTIONS AT DEATH. If the
Participant's Account at termination of employment is $50,000 or less,
or if the Participant should die at any time prior to complete
distribution of his or her Account, then notwithstanding (a) and (b)
above the Account or remaining Account shall be distributed promptly
in a single lump sum payment.
(d) INSTALLMENT PAYMENTS. Except as hereinafter provided, the
amount of any installment payment under (b) above shall be determined
by dividing the Participant's Account or remaining Account by the
number of installments remaining to be paid. If a Participant so
elects (subject to such limitations as the Administrator may
prescribe), however, the fractions applied in determining each
installment payment may be varied (for example, by providing that 50%
of an Account is distributed in the first installment year, with the
balance distributed over the remainder of the installment period).
Any such election shall be made at the time of deferral under
Section 3, with any changes subject to the rules of (b) above. The
declining balance of the Account shall continue to be credited with
notional earnings determined under Section 4(b) above until
distributed in full; provided, that if the Account becomes payable
otherwise than on account of (i) retirement at or after age 65, (ii)
retirement with the consent of the Company at or after age 55 but
before age 65, (iii) disability (as determined by the Administrator),
or (iv) death, the Administrator may determine notional earnings
during any installment payout period described in (b)(iii) above on
the basis of such interest-rate or other measure or measures as the
Administrator may determine (which measure or measures may, but need
not, be the same as the Earnings Measure or Measures previously
applicable to the Participant's Account).
(e) DESIGNATION OF BENEFICIARY(IES). Each Participant shall
designate in writing, on such form and subject to such conditions as
the Administrator shall prescribe (including, in the Administrator's
discretion, spousal consent in the case of married Participants), a
beneficiary or beneficiaries to receive any amounts remaining to be
paid hereunder at the Participant's death; but if no such beneficiary
designation is in effect at the time of the Participant's death, or if
the Participant's beneficiary(ies) do(es) not survive the Participant,
the Administrator shall cause any such remaining benefits to be paid
to the executor or administrator of the Participant's estate.
(f) HARDSHIP. If a Participant suffers an unforeseeable
financial emergency (caused by an event beyond the Participant's
control) prior to the payment in full of his or her Account, the
Participant may apply in writing for an extraordinary distribution
under this paragraph. If the Administrator in its discretion
determines that an unforeseeable financial emergency has occurred, the
Participant's Employer will pay the Participant an amount equal to the
least of the following amounts: (i) the then balance of the
Participant's Account; (ii) the amount determined by the Administrator
to be necessary to meet the emergency (including applicable taxes);
and (iii) the maximum amount which, in the Administrator's
determination, may be distributed without causing any remuneration
payable to the Participant to fail to be deductible by reason of
Section 162(m) of the Code.
(g) TAXES. All distributions under the Plan shall be subject to
reduction for applicable tax withholding.
6. ASSIGNMENT. Each Employer's obligations under the Plan shall be
binding upon its successors and assigns. The rights of Participants and
beneficiaries under the Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of such Participants and beneficiaries. Any
attempt by any person other than Participants or their beneficiaries to
bring a claim under the Plan shall be null and void.
7. PLAN TO BE UNFUNDED, ETC. The Plan is intended to be a "pension
plan" (within the meaning of Section 3(2) of ERISA) that is unfunded for
ERISA and tax purposes and that qualifies for the exemptions described in
ERISA Sections 201(a)(2), 301(a)(3) and 401(a)(1). The Administrator shall
be the "plan administrator" of the Plan and shall have discretion to
construe its terms and determine each Eligible Employee's or Participant's
eligibility for deferrals or distributions hereunder. If any person claims
any benefit hereunder, the Administrator shall make and communicate its
decision with respect to the claim within 90 days from the date the claim
was received. Where special circumstances require additional time for
processing the claim, the ninety-day response period may be extended by the
Administrator to 180 days. If the Administrator does not render a written
determination prior to the expiration of such 90-day (or 180-day) period,
the claim will be deemed denied. If a claim hereunder is denied, the
claimant may, within 60 days of such denial, appeal the denial by written
request for review delivered to the Board or its designate, which request
may include a request to review pertinent documents and to submit issues
and comments in writing. The board or its designate shall render a
decision on the appeal within 60 days (or, if special circumstances require
an extension of the time for processing, 120 days) after receipt of the
request for review; but if no written decision is rendered within such
period(s), the appeal will be deemed denied.
Nothing in this Section or in Section 4(b) shall be construed as
prohibiting the Employer from establishing and maintaining a "rabbi trust"
or similar trust or account in connection with the Plan, so long as the
maintenance and funding of such a trust or account does not jeopardize the
unfunded status of the Plan under ERISA or effective tax deferral under the
Code.
8. NO CONTRACT OF EMPLOYMENT. By participating in the Plan, each
Participant expressly acknowledges and agrees that (i) nothing in the Plan
or in its operation, including deferrals hereunder, limits the right of the
Company or any other Employer to terminate the employment of the
Participant at any time, with or without cause, and that (ii) neither he or
she, nor his or her beneficiaries, will claim lost compensation or tax
benefits associated with discontinuance of participation in the Plan as
damages or as a measure of damages in connection with any termination of
employment.
9. PAYMENT OF LEGAL FEES, ETC. The Company shall promptly reimburse
any Participant or former Participant for reasonable expenditures
(including reasonable attorney's fees) incurred by the individual to
enforce his or her rights under the Plan, but only if (a) the individual
has first made written demand to the Administrator for a benefit, stating
the basis for his or her claim, and the claim has been denied or deemed
denied under the provisions of Section 7 above; and (b) there has been a
"change in control" of the Company. For purposes of this Section, a
"change in control" of the Company will be deemed to have occurred if (i)
any individual, company or other entity (including a "group" within the
meaning of section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act) of securities of the Company representing more than 30% of the
combined voting power of the Company's then outstanding securities, (ii)
there is a change of control of the Company of a kind which would be
required to be reported under Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Act (or a similar item in a similar schedule or
form), whether or not the Company is then subject to such reporting
requirement, (iii) the Company is a party to a merger, consolidation, sale
of assets, or other reorganization, or a proxy contest, as a consequence of
which members of the Board in office immediately prior to such transaction
or event constitute less than a majority of the Board thereafter, or (iv)
individuals who, at April 1, 1995, constitute the Board cease for any
reason to constitute a majority thereof; provided, however, that any
director who is not in office at April 1, 1995 but whose election by the
Board or whose nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at April 1, 1995 or whose election or
nomination for election was previously so approved shall be deemed to have
been in office at April 1, 1995 for purposes of this definition.
Notwithstanding the foregoing, a "change in control" of the Company will
not be deemed to have occurred solely because of the acquisition of
securities of the Company (or any reporting requirement under the Act
relating thereto) by an employee benefit plan maintained by the Company for
its employees.
10. AMENDMENT AND TERMINATION. The Board may terminate the Plan at
any time and may amend the Plan at any time and from time to time, with or
without retroactive effect, including without limitation amendments that
change the form or timing of distributions; provided, that no such action
shall, without the consent of the affected Participant, reduce the balance
of any Participant's Account below what it was immediately prior to the
taking of such action. If it determines such action to be necessary to
preserve or reinstate the Plan's status as a "top hat" plan under Sections
201(a)(2), 301(a)(3) or 401(a)(1) of ERISA, or to ensure effective tax
deferral under the Plan, the Administrator may at any time exclude any
individual from Participation in the Plan or may make such other changes in
the deferral or distribution rules hereunder as are reasonably determined
by the Administrator to be necessary to accomplish such result or results.
Upon termination of the Plan in general or as to any Participant or group
of Participants (including exclusion of any Participant as described in the
preceding sentence), the Administrator may, but need not, provide for
immediate distribution of Accounts to the affected Participant or
Participants.
11. ADMINISTRATION OF THE PLAN. The Administrator shall have full
power to interpret and administer the Plan and determine the eligibility of
any person for benefits hereunder and the amount of any such benefit, in
its discretion. Without limiting the foregoing, the Administrator shall
have full discretionary power and authority, not inconsistent with the
express provisions of the Plan, to select those individuals who may
participate in the Plan; to determine their remuneration eligible for
deferral under the Plan; to determine their eligibility to commence receipt
of benefits (including, without limitation, any determination as to the
proper treatment of leaves of absence and other periods when an individual
is not actively rendering service to the Employer); to adopt, alter, and
repeal such rules, guidelines and procedures for administration of the Plan
and for its own acts and proceedings as it shall deem advisable; to
prescribe the form of any election under the Plan; and otherwise to
supervise the administration of the Plan. Any discretionary action by the
Administrator under the Plan that affects the rights or benefits under the
Plan of an individual who is a member of the Administrator (other than an
action of general applicability to all Participants) must be approved by
the Compensation and Stock Option Committee of the Board.
BOLT BERANEK AND NEWMAN INC.
By Stephen P. Heinrich
-----------------------------
Stephen P. Heinrich
Date: March 20, 1995