Exhibit 10.2
VSE CORPORATION
DEFERRED SUPPLEMENTAL
COMPENSATION PLAN
This Plan was adopted by the
VSE Corporation Board of Directors
effective as of January 1, 1994,
and is presented as amended by the Board
through March 9, 2004
VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
PART ONE
EMPLOYER CONTRIBUTIONS
1. Purpose. The purpose of the VSE Corporation Deferred Supplemental
Compensation Plan (the Plan) and related Trust Agreement (the Trust) is to
enable VSE Corporation (the Company) to provide incentive and reward for its
management team based on individual and overall corporate performance. This Plan
supplements the Company's Executive Service Performance Bonus Plan.
2. Participation.
(a) Participation in the Plan is comprised of corporate officers, a
select group of management who make significant contributions to the progress of
the Company. New participants may be entitled to prorated contribution during
the initial year of participation. A participant must be employed by the Company
as of December 31 of the year to be eligible for a contribution for the year.
The Company may elect to extend participation to corporate directors and/or
officers and directors of the Company's wholly owned subsidiaries with approval
of the Company's Board of Directors (the Board).
(b) Each participant is required to file with the Corporate Secretary a
beneficiary designation form. Participants may change beneficiary designations
at any time by filing a replacement form with the Corporate Secretary. In the
absence of a valid beneficiary designation form, Plan benefits are paid to the
estate of the deceased participant.
3. Funding. With the approval of the Board, the Company may enter into a Trust
to receive and invest contributions and any Trust earnings on behalf of
participants. Any Company contribution to the Plan shall be irrevocable and
shall be used to pay benefits under the Plan, subject to the claims of the
general creditors of the Company.
4. Contribution. Subject to the terms and conditions of this Plan and related
Trust, each year the Board in its discretion may elect to make an annual
contribution of up to 12 percent of consolidated net income for the year. The
Board in its discretion may adjust the annual contribution level for changes in
accounting principles, capitalization, or similar changes or events.
5. Allocation of Contributions. Each officer's allocation from the annual
contribution shall bear the same percentage to the annual contribution as that
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
officer's annual salary bears to total annual officer salaries. If additional
participants are added to the Plan in accordance with Section 2(a) herein, the
Board shall determine the supplemental contribution applicable to such
participants. Earnings or losses on the Trust Fund shall be credited to
participants' respective accounts on a pro rata basis.
6. Vesting. Vesting of a participant's account under this Part One, including
any Trust earnings, occurs as follows:
Years of Service Percent Vested
---------------- --------------
0 to 5 0%
6 20%
7 40%
8 60%
9 80%
10 100%
For purposes of vesting, all years of service with the Company and its
subsidiaries are included. Participants attaining age 65 are 100% vested upon
completion of five years of service.
Should a participant cease to be employed by the Company for any reason before
vesting, the nonvested portion of the participant's account is forfeited and
canceled. The Company is under no obligation to pay nonvested benefits.
Vested amounts are subject to the claims of general creditors of the Company and
the terms of the Agreement to Refrain from Competition as described in Section 8
herein.
7. Distribution.
(a) Plan benefits are payable following termination of employment,
retirement, disability as defined by Social Security guidelines or the Company's
long-term disability policy, or death. Participants terminating employment due
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
to embezzlement or serious violation of Company policy in the sole determination
of the Board shall forfeit all rights under Part One of this Plan and the
Company is under no obligation to make benefit payments to the participant.
(b) Vested Plan benefits under this Part One will be paid in the form of
a lump sum two years after execution and satisfaction of the Agreement to
Refrain from Competition described in this Plan unless a different method of
distribution which provides for a longer period of deferral is elected in
writing by the participant prior to execution of the Agreement to Refrain
from Competition. During the initial two-year waiting period following execution
of the Agreement to Refrain from Competition, the participant is not entitled to
contributions or allocations of subsequent Trust earnings and losses. During any
deferral period elected by the participant in excess of such two-year waiting
period, the participant will not be entitled to any further contributions or
Trust earnings and losses but the Company may elect to credit interest (in the
Company's sole discretion) on the undistributed account balance beginning on
and after the January 1 immediately following the expiration of such two-year
waiting period. The election filed by the participant may specify that the
payment of the participant's entitlement will be made in the form of (i) a lump
sum at any time after the expiration of the initial two-year waiting period but
in no event more than ten (10) years following such expiration or (ii) install-
ment payments at a rate no more frequently than annually over a time period not
to exceed ten (10) years following expiration of the initial two-year waiting
period. Such election may provide for an acceleration in the event of death or
disability. Any such election made by a participant shall be irrevocable. The
final distribution amount shall be equal to the participant's account balance
as of the end of the calendar year in which the participant terminated
employment or the end of the calendar year immediately preceding the date the
participant terminated employment, whichever is lesser, subject to adjustments
to reflect interest credited in the event a further election is filed. In the
event of the participant's death, disability, or termination of employment at
age 65 or older, vested Plan benefits may be payable to the participant (or
designated beneficiary of a deceased participant) prior to the expiration of a
two-year waiting period but subject to the terms of any prior election filed by
the participant.
(c) Benefits are fully vested and immediately payable in the event of a
change of control of the Company.
(d) Effective for distributions determined as of January 1, 2001, or
later, final distribution amounts shall be equal to the participant's account
balance as of the end of the calendar month in which the participant terminated
employment or the end of the calendar month immediately preceding the date the
participant terminated employment, whichever is less, subject to adjustments to
reflect interest credited in the event a further election is filed.
(e) Effective for distributions determined as of January 1, 2001, or
later, within 30 days of termination of employment, the Company will provide
each vested participant, in person or by written notice delivered by receipted
method to the participant's last known address as shown in Company's records,
with a letter indicating the vested benefits payable to the participant and
providing the participant with a copy of the required Agreement to Refrain from
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
Competition. If, within 90 days of providing notice, the participant declines
to sign and return the Agreement to Refrain from Competition to the Company, or
if the written communication to the participant is not returned to the Company
or is returned to the Company without forwarding address, then the Company will
treat such participant non-response as a declination to apply for benefits or to
comply with the requirement to execute and satisfy the required Agreement to
Refrain from Competition. Accordingly, such vested benefits will be forfeited
and canceled and neither the Plan nor the Company shall have any further
obligation to the participant with respect to the payment of benefits under the
Plan.
8. Agreement to Refrain from Competition.
(a) In consideration of being granted benefits under Part One of this
Plan and as a condition precedent to receiving benefits under it, each
participant is required to execute an Agreement to Refrain from Competition with
the Company and its subsidiaries not to engage in any business or practice or
become employed in any position in competition with the Company or its
subsidiaries which is otherwise in conflict with or contrary to the interests of
the Company within a radius of 50 miles of any Company office for a period of
two years (please see detailed note below). Participants terminating employment
with the Company prior to age 65 for reasons other than death or disability are
not entitled to payment of Plan benefits prior to satisfaction of the two-year
Agreement to Refrain from Competition.
_____________________________
* The required "Agreement to Refrain from Competition" (Form ADMIN-89)
between the Employee and the Company reads in part as follows: "During the
period of the Employee's employment and for a two (2)-year period commencing
with the effective date of the termination of Employee's employment with the
Company for any reason and under any circumstances, Employee shall not, without
the prior written consent of the Company, alone or with others, whether as an
owner, stockholder, partner, lender, investor, employee, consultant, contractor,
subcontractor or in any other capacity, directly or indirectly: (a) engage, with
in a fifty (50)-mile radius of any office of the Company, in any business
activity that is competitive with the business of the Company or otherwise in
conflict with or contrary to the interests of the Company, including without
limitation the business of performing engineering and management services for
the United States Government, and services within the telecommunications
technologies industries, all as such businesses and services are more
particularly described in the then most recent "VSE Corporation Annual Report";
(b) solicit any person or entity who then is or was at any time during
Employee's employment a customer of the Company (including without limitation
any person or entity who was at any time during Employee's employment solicited
to be a customer of the Company where Employee was directly or indirectly
involved in such solicitation) to cease doing business or to curtail business
with the Company; or (c) solicit any person who then is or was in the preceding
six (6) months an employee or independent contractor of the Company to end his
or her relationship with the Company or to work for any other person or entity
as an employee or independent contractor."
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
(b) In the event of any breach of the Agreement to Refrain from
Competition by the participant (regardless of age), the Company may cancel the
participant's benefits under Part One of this Plan and all rights of the
participant under this Plan terminate.
(c) Nothing in this Plan shall in any way limit or restrict any other
remedies available to the Company and subsidiaries for breach of the Agreement
to Refrain from Competition.
9. Limitation of Rights. Nothing in this Plan shall be construed to:
(a) Limit the right of the Company to terminate participant's employment
at any time, or serve as evidence of any agreement or understanding that the
Company will employ the participant in any particular position or at any
particular rate of compensation; or
(b) Give the participant any secured interest to any asset of the Company
as collateral for the right to receive payment hereunder. All rights of the
participants created under the Plan and related Trust are unsecured contractual
rights against the Company.
10. Nonalienation of Benefits. No rights or benefits under this Plan are
subject to transfer, sale, assignment pledge, or other encumbrance of any kind,
nor are rights or benefits subject to the debts, contracts, liabilities or torts
of the participant or beneficiary. If a participant or beneficiary becomes
bankrupt or attempts to transfer, sell, assign, pledge or otherwise encumber any
right or benefit under this Plan, that participant's rights or benefits in the
sole discretion of the Company may be terminated.
11. Amendment or Termination. The Board may waive requirements, amend or
terminate all or part of this Plan at any time. No amendment, termination, or
waiver shall affect the right to any benefits already accrued to the credit of
any participant or beneficiary at the time of amendment, termination, or waiver.
Upon termination of the Plan, no additional benefits shall accrue to the credit
of any participant or beneficiary.
12. ERISA Exemption. This Plan is intended to be exempt from the provisions of
ERISA and is an "unfunded" plan maintained "for the purpose of providing
deferred compensation of a select group of management or highly compensated
employees."
13. Authority. This Plan is governed by the laws of the Commonwealth of
Virginia. This Plan may be subject to approval by the Administrative Contracting
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
Officer pursuant to Federal Acquisition Regulations, Department of Labor, and/or
other Government entities.
14. Effective Date. This Plan is effective January 1, 1994.
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
PART TWO
SALARY REDUCTION CONTRIBUTIONS
15. Purpose. Section 1 is hereby incorporated by reference.
16. Participation.
(a) Participation in the Plan is comprised of corporate officers and
directors, a select group of management who make significant contributions to
the progress of the Company. The Company may elect to extend participation to
corporate officers of the Company's wholly owned subsidiaries with approval of
the Company's Board.
(b) Each participant is required to file with the Corporate Secretary a
beneficiary designation form, as detailed in Section 2(b) of the Plan.
17. Funding. The Trust established pursuant to Section 3 shall be used to
receive and invest salary reduction contributions as described in Section 18 and
any Trust earnings on behalf of participants. Contributions to the Plan shall be
irrevocable and shall be used to pay benefits under the Plan, subject to the
claims of the general creditors of the Company.
18. Salary Reduction Contributions. Subject to the terms and conditions of this
Plan and related Trust, an eligible participant may elect to enter into a salary
reduction agreement whereby the participant accepts a voluntary reduction of
amounts otherwise due and the Company agrees to contribute a like amount into
the Trust as a salary reduction contribution). Amounts eligible for the salary
reduction agreement may include compensation, Board of Director fees, and other
taxable income payable by the Company to the participant. Participants may elect
to modify prospectively their respective salary reduction agreements at any time
with respect to taxable income not yet earned.
19. Allocation of Contributions. Each salary reduction contribution shall be
credited to the participant's respective account and shall be accounted for
separately from the Company contribution described in Section 4 of the Plan.
Earnings and losses on the Trust Fund related to the salary reduction
contributions shall be credited to participants' respective accounts on a pro
rata basis.
20. Vesting. All salary reduction contributions, pursuant to this Part Two
including any Trust earnings or losses on such contributions are 100% vested at
all times.
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
21. Distribution.
(a) Plan benefits related to salary reduction contributions are payable
following termination of employment or directorship, retirement, disability as
defined by Social Security guidelines or the Company's long-term disability
policy, or death.
(b) Plan benefits related to salary reduction contributions are paid in
a lump sum within ninety (90) days following the date of the participant's
termination of employment unless an alternative method of benefit payment is
elected in writing by the participant no less than 12 months prior to the date
of such termination of employment. The elected alternative method of benefit
payment may provide for the payment of a lump sum no more than ten (10) years
from the date of such termination of employment or for the payment of
installment amounts no more frequently than quarterly over a period of time not
to exceed ten (10) years from the date of the participant's termination of
employment. Each payment will be subject to applicable tax withholding based
upon a tax election form completed by the participant which is generally a Form
W-4 (Employee's Withholding Allowance Certificate). In the absence of a
completed tax election form, the Company shall make payment on the best
information available. The final distribution amount is equal to the
participant's account balance as reported in the most recent participant report
plus, if applicable, any salary reduction contributions made by the participant
since the last report.
(c) Benefits are immediately payable in the event of a change of control
of the Company.
(d) The Company may provide for distribution of some or all of the
accounts established in connection with the Plan if it is determined or appears
that such distribution is or may be required to enable the Plan to continue to
qualify for exemption from the requirements of Parts 2 - 4 of Title II of ERISA
or as otherwise required by applicable law.
22. Agreement to Refrain from Competition Inapplicable. Plan benefits related
to salary reduction contributions in this Part Two are not subject to execution
and satisfaction of an Agreement to Refrain from Competition. It is expressly
understood that the Agreement to Refrain from Competition described in Section
8 continues to apply to all other Plan benefits related to Company contributions
pursuant to Part One of this Plan.
23. Limitation of Rights. Section 9 is hereby incorporated by reference.
24. Nonalienation of Benefits. Section 10 is hereby incorporated by reference.
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VSE CORPORATION DEFERRED SUPPLEMENTAL COMPENSATION PLAN
Effective January 1, 1994, and as amended through March 9, 2004
________________________________________________________________________________
25. Amendment or Termination. Section 11 is hereby incorporated by reference.
26. ERISA Exemption. Section 12 is hereby incorporated by reference.
27. Authority. Section 13 is hereby incorporated by reference.
28. Effective Date. Part Two of this Plan related to salary reduction
contributions is effective January 1, 1997.
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VSE CORPORATION
DEFERRED SUPPLEMENTAL COMPENSATION PLAN
SALARY REDUCTION AGREEMENT
The undersigned hereby agrees to a voluntary reduction of compensation or other
taxable amounts otherwise due from VSE Corporation. It is understood that a like
amount shall be contributed to a Trust Fund established to receive and invest
contributions and any Trust earnings pursuant to the VSE Corporation Deferred
Supplemental Compensation Plan (DSC Plan) and credited to my respective account
balance.
I understand that all contributions are subject to the terms and conditions of
the DSC Plan and related Trust Agreement. This Agreement shall continue in full
force and effect until superseded by me in writing. Any previous Salary
Reduction Agreements related to the DSC Plan are hereby superseded. I hereby
authorize the Company to make the appropriate reductions.
Salary Reduction:
For flat amount of pay: $_______ per pay period
For percentage of pay: ______% per paycheck/Board dues
For other: Describe below:
________________________________________________________________________
________________________________________________________________________
Date: _____________________ ___________________________
Name (Printed)
___________________________
Signature
Please return this Form to VSE's Director of Human Resources, c/o VSE
Corporation, 2550 Huntington Avenue, Alexandria, Virginia 22303-1499.
VSE CORPORATION
Deferred Supplementation Compensation Plan
Beneficiary Designation Form
This Beneficiary Designation Form is effective for all vested benefits in a
participant's account under the VSE Corporation Deferred Supplemental
Compensation Plan and the predecessor VSE Corporation Deferred Compensation
(DCU) Plan. This Form supersedes and replaces all previous beneficiary
designation forms provided by the participant with respect to benefits in these
Plans.
Participant Name: __________________________________________
Primary Beneficiary
Name: __________________________________________
Address: __________________________________________
__________________________________________
Secondary Beneficiary
Name: __________________________________________
Address: __________________________________________
__________________________________________
Note: Death benefits are payable to the Primary Beneficiary. If the Primary
Beneficiary has predeceased the participant, then benefits will be paid to the
Secondary Beneficiary. If the participant prefers another method of
distribution, please identify below:
______________________________________________________________________________
_________________________ ______________________________
(Date) Participant Signature
Please return completed Beneficiary Designation Form to VSE's Director of Human
Resources for retention. Participants may update their beneficiary designations
at any time by submitting a new form.