EXHIBIT 10.4
AMERICAN MANAGEMENT SYSTEMS, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective September 1, 1996
(As Revised September 1, 1997)
TABLE OF CONTENTS
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ARTICLE I-- PURPOSE; EFFECTIVE DATE..........................................1
1.1 Purpose...............................................................1
1.2 Effective Date........................................................1
ARTICLE II-- DEFINITIONS.....................................................1
2.1 Account...............................................................1
2.2 Actuarial Equivalent..................................................1
2.3 Base Rate.............................................................1
2.4 Beneficiary...........................................................2
2.5 Board.................................................................2
2.6 Cause.................................................................2
2.7 Change in Control.....................................................3
2.8 Committee.............................................................3
2.9 Company...............................................................3
2.10 Compensation.........................................................3
2.11 Deferral Commitment..................................................4
2.12 Deferral Period......................................................4
2.13 Determination Date...................................................4
2.14 Disability...........................................................4
2.15 Discretionary Contribution...........................................4
2.16 Earnings.............................................................4
2.17 Employer.............................................................4
2.18 Entrance Fee.........................................................4
2.19 Entrance Fee Base....................................................5
2.20 Financial Hardship...................................................5
2.21 Financial Plan.......................................................5
2.22 401(k) Plan..........................................................5
2.23 Full-Time Participants...............................................5
2.24 Incentive Compensation...............................................5
2.25 Participant..........................................................6
2.26 Participation Agreement..............................................6
2.27 Plan.................................................................6
2.28 Premium Rate.........................................................6
2.29 Retirement...........................................................6
ARTICLE III-- PARTICIPATION AND DEFERRAL COMMITMENTS.........................6
3.1 Eligibility and Participation.........................................6
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3.2 Form of Deferral......................................................7
3.3 Limitations on Deferral Commitments...................................7
3.4 Commitment Limited by Termination.....................................7
3.5 Modification of Deferral Commitment...................................8
ARTICLE IV-- DEFERRED COMPENSATION ACCOUNT...................................8
4.1 Account...............................................................8
4.2 Timing of Credits; Withholding........................................8
4.3 SEP Makeup Contribution...............................................8
4.4 Discretionary Contributions...........................................8
4.5 Determination of Account..............................................8
4.6 Vesting of Account....................................................9
4.7 Statement of Account..................................................9
ARTICLE V-- PLAN BENEFITS....................................................9
5.1 Distributions Prior to Termination of Employment......................9
5.2 Termination of Employment............................................10
5.3 Termination for Cause................................................10
5.4 Retirement Benefit...................................................10
5.5 Disability Benefit...................................................11
5.6 Accelerated Distribution.............................................11
5.7 Withholding for Taxes................................................11
5.8 Valuation and Settlement.............................................11
5.9 Payment to Guardian..................................................11
5.10 Company Discretionary Distribution..................................12
ARTICLE VI-- BENEFICIARY DESIGNATION........................................12
6.1 Beneficiary Designation..............................................12
6.2 Changing Beneficiary.................................................12
6.3 Community Property...................................................12
6.4 No Beneficiary Designation...........................................13
ARTICLE VII-- ADMINISTRATION................................................13
7.1 Committee; Duties....................................................13
7.2 Agents...............................................................14
7.3 Binding Effect of Decisions..........................................14
7.4 Indemnity of Committee...............................................14
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ARTICLE VIII-- CLAIMS PROCEDURE.............................................14
8.1 Claim................................................................14
8.2 Review of Claim......................................................14
8.3 Notice of Denial of Claim............................................15
8.4 Reconsideration of Denied Claim......................................15
8.5 Employer to Supply Information.......................................16
ARTICLE IX-- AMENDMENT AND TERMINATION OF PLAN..............................16
9.1 Amendment............................................................16
9.2 Employer's Right to Terminate........................................16
ARTICLE X-- MISCELLANEOUS...................................................17
10.1 Unfunded Plan.......................................................17
10.2 Company and Employer Obligations....................................17
10.3 Unsecured General Creditor..........................................17
10.4 Trust Fund..........................................................17
10.5 Nonassignability....................................................18
10.6 Not a Contract of Employment........................................18
10.7 Protective Provisions...............................................18
10.8 Governing Law.......................................................18
10.9 Validity............................................................18
10.10 Notice.............................................................18
10.11 Successors.........................................................19
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AMERICAN MANAGEMENT SYSTEMS, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I -- PURPOSE; EFFECTIVE DATE
1.1 PURPOSE
The purpose of this Executive Deferred Compensation Plan is to provide
current tax planning opportunities as well as supplemental funds for
retirement or death for selected employees of the Employer. It is intended
that the Plan will aid in attracting and retaining employees of exceptional.
ability by providing them with these benefits.
1.2 EFFECTIVE DATE
The Plan is effective as of September 1, 1996 (as revised September 1,
1997).
ARTICLE II -- DEFINITIONS
For the purposes of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 ACCOUNT
"Account" means the device used by the Employer to measure and
determine the amount to be paid to a Participant under the Plan.
2.2 ACTUARIAL EQUIVALENT
"Actuarial Equivalent" means equivalence in value between two or more
forms and/or times of payment based on a determination by an actuary chosen
by the Committee, using sound actuarial assumptions at the time of such
determination.
2.3 BASE RATE
"Base Rate" means the effective annual Yield of the average of the
Moody's Average Corporate Bond Yield Index for the previous calendar month as
published by Moody's Investor Services, Inc. (or any successor publisher
thereto). or, if such index is no longer published, a substantially similar
index selected by the Board.
PAGE 1 - EXECUTIVE DEFERRED COMPENSATION PLAN
2.4 BENEFICIARY
"Beneficiary" means the person, persons or entity entitled under
Article VI to receive any Plan benefits payable after a Participant's death.
2.5 BOARD
"Board" means the Board of Directors of the Company.
2.6 CAUSE
"Cause" shall mean termination upon.
(a) Your conviction or plea of guilty or nolo contenders to any
felony or misdemeanor, except misdemeanors relating to traffic offenses;
(b) The reasonable determination by the Company that you have engaged
in an act of personal dishonesty in any way relating to or affecting the
performance of your duties for the Company;
(c) Your breach of fiduciary duty to the Company, its subsidiaries or
affiliates;
(d) Your willful continued failure to perform the duties assigned to
you by the Company (other than failure to perform due to physical or
mental disability);
(e) Gross negligence in the performance of your duties, or
(f) A breach of Company policy or of any written agreement between
you and the Company.
For purposes of this Section 2.6, no act, or failure to act. on your
part shall be considered "willful" unless done, or omitted to be done, by you
in bad faith and without reasonable belief that your action or emission was
in, or not opposed to, the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution duly
adopted by the Committee or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by you in
good faith and in the best interests of the Company. It is also expressly
understood that your attention to matters not directly related to the
business of the Company shall not provide a basis for termination for Cause
so long as the Company has approved your engagement in such activities.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you
a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Committee at a meeting
of the Committee called and held for this purpose (after reasonable notice to
you and an opportunity for you, together with your counsel, to be heard
before the Committee). finding that, in the good faith opinion of the
Committee you were guilty of the conduct set forth above in any of (a)
through (f) of this Section 2.6 and specifying the particulars thereof in
detail.
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2.7 CHANGE IN CONTROL
A "Change in Control" means a Change in Control of a nature that would
be required to be reported (assuming such event has not been "previously
reported") in response to Item 1(a) of he current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any successor
thereto; provided that, without limitation, such a Change in Control shall be
deemed to have occurred at such time as:
(a) Any person is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of thirty percent
(30%) or more of the combined voting power of the Company's Voting
Securities;
(b) During any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the
Company, together with any new directors whose election, or nomination for
election by the shareholders, was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were either
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
(c) The sale by the Company of more than fifty percent (50%) of the
book value of its assets to a single purchaser or to a group of affiliated
purchasers; or
(d) The merger or consolidation of the Company in a transaction in
which the shareholders of the Company receive less than fifty percent
(50%) of the outstanding voting shares of the continuing corporation.
Notwithstanding anything in the foregoing to the contrary, no Change in
Control shall be deemed to have occurred by virtue of arty transaction
which results in a Participant, or group of Participants, acquiring,
directly or indirectly. twenty-five percent (25%) or more of the combined
voting power of the Company's Voting Securities.
2.8 COMMITTEE
"Committee" means the Administrative Committee appointed to administer
the Plan pursuant to Article VII hereof.
2.9 COMPANY
"Company" means American Management Systems, Inc., a Delaware
corporation.
2.10 COMPENSATION
"Compensation" means only base salary and Incentive Compensation
payable to a Participant during the calendar year, before reduction for
amounts deferred under this Plan or any other salary reduction program.
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2.11 DEFERRAL COMMITMENT
"Deferral Commitment" means a commitment made by a Participant to defer
Compensation pursuant to Article III.
2.12 DEFERRAL PERIOD
"Deferral Period" means each calendar year. The initial Deferral
Period, however, shall be from September 1, 1996, through December 31, 1996.
2.13 DETERMINATION DATE
"Determination Date" means the last day of each calendar month.
2.14 DISABILITY
"Disability" means a physical or mental condition that, in the opinion
of the Committee, shall prevent the Participant from satisfactorily
performing his usual duties for the Employer for a two (2) year period or
longer. The Committee shall determine the existence of the Disability and
may rely on advice from a medical examiner medical reports, and/or other
evidence satisfactory to the Committee.
2.15 DISCRETIONARY CONTRIBUTION
"Discretionary Contribution" means the Employer contribution credited
to a Participant's Account under Section 4.4.
2.16 EARNINGS
"Earnings" means the rate of growth credited to an account on each
Determination Date in a calendar year, the rate shall be the Base Rate unless
the Employer meets or exceeds its Financial Plan in a calendar year, in which
case the rate shall be the Premium Rate for all Participants who are not
Retired or not Disabled.
2.17 EMPLOYER
"Employer" means the Company and any U.S. subsidiary or affiliate of
the Company designated by the Board.
2.18 ENTRANCE FEE
"Entrance Fee" means an amount equal to four percent (4%) of any
deferral which is part of the Participant's First Deferral Commitment. In
subsequent Deferral Periods the Entrance Fee shall equal four percent (4%) of
the amount by which the deferral exceeds the Participant's Entrance Fee Base
less prior deferrals made during the current Deferral Period. The Executive
Committee of the Board of Directors may waive the four percent (4%) fee at
its discretion if such waiver is deemed to be in the best Financial interest
of the Company.
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2.19 ENTRANCE FEE BASE
"Entrance Fee Base" means for a Deferral Period an amount equal to the
Participant's first Deferral Commitment times the number of Deferral Periods
the Participant has participated in the Plan (including the current Deferral
Period), plus the portion of any subsequent Deferral Commitments subject to
the Entrance Fee times the number of Deferral Periods including. and
subsequent to, the payment of any such additional Entrance Fee, less total
deferrals made prior to the current Deferral Period.
2.20 FINANCIAL HARDSHIP
"Financial Hardship" means severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant
or of a dependent (as defined in Section 152(a) of the Internal Revenue Code)
of the Participant, loss of the Participant's property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The circumstances
that will constitute an unforeseeable emergency will depend upon the facts of
each case, but in any Case, payment may not be made to the extent that such
hardship is or may be relieved:
(a) Through reimbursement or compensation by insurance or otherwise;
(b) By liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship; or
(c) By cessation of deferrals under the Plan.
2.21 FINANCIAL PLAN
"Financial Plan" means the plan approved by the Board of Directors in
the beginning of each year and used for purposes of setting AMS-wide profit
sharing goals.
2.22 401(k) PLAN
"401(k) Plan" means the American Management Systems, Inc. 401(k) plan,
as amended from time to time.
2.23 FULL-TIME PARTICIPANTS
Participants who worked a minimum of 1,248 hours in the Financial Plan
year on direct and/or indirect projects.
2.24 INCENTIVE COMPENSATION
"Incentive Compensation" means the cash portion of the amounts payable
to a participant as incentive awards under the Company's incentive
compensation plans.
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2.25 PARTICIPANT
"Participant" means any eligible individual who has elected to defer
Compensation under this Plan.
2.26 PARTICIPATION AGREEMENT
"Participation Agreement" means the agreement submitted by a
Participant to the Committee prior to the beginning of a Deferral Period,
with respect to a Deferral Commitment made for such Deferral Period.
2.27 PLAN
"Plan" means this Executive Deferred Compensation Plan as amended from
time to time.
2.28 PREMIUM RATE
"Premium Rate" means the Base Rate plus three percent (3%) (300 basis
points) for full-time. Participants and the Base Rate plus one and one-half
percent (1.5%) (150 basis points) for all other Participants. Retired
Participants shall not be eligible for the Premium Rate after the date of
retirement. Terminated employees are not eligible for the premium rate for
the year in which they terminate.
2.29 RETIREMENT
"Retirement" means a termination of employment which. in the opinion of
the Committee, based on the Participant's facts and circumstances, is a
termination for retirement and not to pursue employment or self-employment.
ARTICLE III -- PARTICIPATION AND DEFERRAL COMMITMENTS
3.1 ELIGIBILITY AND PARTICIPATION
(a) ELIGIBILITY. Eligibility to participate in the Plan shall be
limited to U.S. employees of Employer who are a Senior Consultant or
above. The Executive Committee of the Board of Directors, in its
Discretion may deem otherwise eligible employees to be ineligible to
Participate if such participation is deemed by the Executive Committee not
in the best financial interests of the Company.
(b) PARTICIPATION. An eligible individual may elect to participate in
the Plan with respect to any Deferral Period by submitting a Participation
Agreement to the Committee by the. thirtieth (30th) day of September
immediately preceding the beginning of the Deferral Period.
PAGE 6 - EXECUTIVE DEFERRED COMPENSATION PLAN
3.2 FORM OF DEFERRAL
A Participant may elect Deferral Commitments in the Participation
Agreement as follows:
(a) SALARY DEFERRAL COMMITMENT. A salary Deferral Commitment shall be
related to the base salary payable by Employer to a Participant during the
Deferral Period. The amount to be deferred shall be stated as a percentage
amount.
(b) INCENTIVE DEFERRAL COMMITMENT. An incentive Deferral Commitment
shall be related to the Incentive Compensation payable by Employer to a
Participant during tire Deferral Period. The amount to be deferred shall
be stated either as a percentage or a dollar amount.
(c) BONUS DEFERRAL COMMITMENT. Subject to the, discretion of the
Executive Committee of the Board of Directors, a Participant may defer
bonuses payable by the employer during the deferral period. The amount to
be deferred shall be stated either as a percentage or as a dollar amount.
No deferral shall be permitted that is in violation of law. e.g., wage
garnishments, tax levies, or child support orders.
3.3 LIMITATIONS ON DEFERRAL COMMITMENTS
The following limitations shall apply to Deferral Commitments:
(a) MINIMUM. The minimum Salary Deferral Commitment amount shall be one
thousand dollars ($1,000) for each month in the Deferral Period. There
shall be no minimum deferral amount on an incentive Deferral Commitment.
The minimum Deferral Commitment for a Participant who enters participation
after the beginning of a Deferral Period shall be based on the number of
months remaining in the Deferral Period.
(b) MAXIMUM. The maximum deferral amount shall be fifty percent (50%)
of base salary in a salary Deferral Commitment and ninety percent (90%) of
Incentive Compensation in an incentive Deferral Commitment.
(c) CHANGES IN MINIMUM OR MAXIMUM. The Committee may change the minimum
or maximum deferral amounts from time to time by giving written notice to
all Participants. No such chance may affect a Deferral Commitment made
prior to the Committee's action.
3.4 COMMITMENT LIMITED BY TERMINATION
If a Participant terminates employment with Employer prior to the end
of the Deferral Period, the Deferral Period shall end at the date of
termination. The minimum deferral for the Deferral Period shall be based on
the number of months to the date of termination.
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3.5 MODIFICATION OF DEFERRAL COMMITMENT
Except as provided in Section 5.1(b) below, Deferral Commitments shall
be irrevocable.
ARTICLE IV -- DEFERRED COMPENSATION ACCOUNT
4.1 ACCOUNT
The amounts deferred by a Participant under the Plan any Employer
contributions and Earnings shall be credited to the Participant's Account.
Separate subaccounts may be maintained to reflect different forms of
distribution and levels of vesting and forms of payment. The Account shall
be a bookkeeping device utilized for the sole purpose of determining the
benefits payable under the Plan and shall not constitute a separate fund of
assets.
4.2 TIMING OF CREDITS; WITHHOLDING
A Participant's deferred Compensation shall be credited to the
Participant's Account at the time it would have been payable to the
Participant. Any withholding of taxes or other amounts with respect to
deferred Compensation or earnings that is required by state, federal or local
law shall be withheld from the Participant's nondeferred Compensation to the
maximum extent possible and any remaining amount shall reduce the amount
credited to the Participant's Account.
4.3 SEP MAKEUP CONTRIBUTION
If as a result of participation in this plan, a Participant's SEP
contribution is reduced. the Company shall credit an amount equal to the
foregone SEP contribution into the Participant's account on the date the SEP
contribution is made.
4.4 DISCRETIONARY CONTRIBUTIONS
Employer may make Discretionary Contributions to a Participant's
Account. Discretionary Contributions shall be credited at such times and in
such amounts as the Board in its sole discretion shall determine.
4.5 DETERMINATION OF ACCOUNT
Each Participant's Account as of each Determination Date shall consist
of the balance of the Account as of the immediately preceding Determination
Date, adjusted as follows:
(a) NEW DEFERRALS. The Account shall be increased by any deferred
Compensation credited since such Determination Date.
(b) ENTRANCE FEE. The Account shall be reduced by the Entrance Fee, if
any, on deferred Compensation credited since such Determination Date.
PAGE 8 - EXECUTIVE DEFERRED COMPENSATION PLAN
(c) EMPLOYER CONTRIBUTIONS. The Account shall be increased by any
discretionary Employer contributions and SEP makeup contribution credited
since such Determination Date.
(d) DISTRIBUTIONS. The Account shall be reduced by any benefits
distributed from the Account to the Participant since such Determination
Date.
(e) EARNINGS. The Account shall be increased by the Earnings on the
average daily balance in the Account since such Determination Date.
4.6 VESTING OF ACCOUNT
Each Participant shall be vested in the amounts credited to such
Participant's Account and Earnings thereon as follows.
(a) AMOUNTS DEFERRED. A Participant shall be one hundred percent (100%)
vested at all times in the amount of Compensation elected to be deferred
under this Plan and Earnings thereon.
(b) DISCRETIONARY CONTRIBUTIONS. A Participant's Discretionary
Contributions and Earnings thereon shall become vested as determined by
the Board.
(c) SEP MAKEUP CONTRIBUTIONS. A Participant shall be one hundred
percent (100%) vested at all times in any SEP makeup contribution and
earnings thereon.
4.7 STATEMENT OF ACCOUNT
The Committee shall give to each Participant a Statement showing the
balance in the Participant's Account on a semi-annual basis and at such times
as may be determined by the Committee.
ARTICLE V -- PLAN BENEFITS
5.1 DISTRIBUTIONS PRIOR TO TERMINATION OF EMPLOYMENT
A Participant's Account may be distributed to the Participant prior to
termination of employment as follows:
(a) IN-SERVICE WITHDRAWALS. A Participant may elect in a Participation
Agreement to withdraw all or any portion of the amount deferred by that
Participation Agreement as of a date specified in the election. Such date
shall not be sooner than five (5) years after the date the Deferral Period
commences. The amount withdrawn shall not exceed the amount of'
Compensation deferred plus Earnings on the deferral. Such election shall
be made at the time the Deferral Commitment is made and can only be
amended if such amendment is made at least two (2) calendar years before
the calendar year in which the distribution was scheduled.
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(b) HARDSHIP WITHDRAWALS. Upon a finding that a Participant has
suffered a Financial Hardship, the Committee may, in its sole discretion,
(a) waive or modify the deferral commitment and/or (b) make distributions
from the Participant's Account. The amount of such a withdrawal shall be
limited to the amount reasonably necessary to meet the Participant's needs
resulting from the Financial Hardship. If payment is made due to Financial
Hardship under this Plan or the 401(k) Plan, the Participant's deferrals
under this Plan shall cease the remainder of the current calendar year and
for the following calendar year. Any resumption of the Participant's
deferrals under the Plan after this period shall be made only at the
election of the Participant in accordance with Article III herein.
(c) FORM OF PAYMENT AND TIME. Any distribution pursuant to Section
5.1(a) or 5.1(b) shall be payable in a lump sum. The distribution shall be
paid in the case of a partial withdrawal, as provided in the Participation
Agreement, and in case of a Financial Hardship, within thirty (30) days
after the determination of a Financial Hardship.
5.2 TERMINATION OF EMPLOYMENT
Upon a Participant's termination of employment with Employer for any
reason, other than Retirement or Disability, the Employer shall pay the
Participant, in the case of death the Participant's Beneficiary, a lump-sum
benefit equal to the balance (after recalculation if terminated for Cause) in
the Participant's Account. Such payment will be paid within sixty (60) days
of the termination.
5.3 TERMINATION FOR CAUSE
If a Participant is terminated for Cause, the Participant's account
shall be recalculated using only the Base Rate regardless of whether the
Employer has met or exceeded its Financial Plan in the current year or past
years. Any interest which exceeded the Base Rate and had been accrued to the
Participant's Account shall be forfeited. The recalculated Account balance
shall be paid in a lump sum.
5.4 RETIREMENT BENEFIT
Retirement benefits shall be paid in the form elected by the
Participant at the time of the deferral commitment.
(a) Form of benefit payments shall be one (1) of the following:
(i) Lump sum,
(ii) Annual installments with a maximum of ten (10); or
(iii) A portion in a lump sum and a portion in annual
installments.
(b) Benefits shall commence the last day of February in the calendar
year following the date of retirement.
PAGE 10 - EXECUTIVE DEFERRED COMPENSATION PLAN
(c) SMALL ACCOUNT(S). Notwithstanding Section 5.4(a), if a
Participant's Account is under fifty thousand dollars ($50,000) on the
valuation date, the benefit shall be paid by a lump sum.
(d) CHANGE IN FORM AND COMMENCEMENT OF PAYMENT. A Participant may elect
to file a modified election as to form and timing of payment. To be
effective such modified election must be filed two (2) calendar years
prior to the calendar year in which distributions would have occurred if
the modification had not been made.
5.5 DISABILITY BENEFIT
At the time of the deferral commitment, the Participant must elect,
upon disability, to receive their benefit either in a lump sum or upon
Retirement as elected under Section 5.4 above.
5.6 ACCELERATED DISTRIBUTION
Notwithstanding any other provision of the Plan a Participant shall be
entitled to receive, upon written request to the Committee, a lump-sum
distribution equal to ninety percent (90%) of the vested Account balance as
of the Determination Date immediately preceding the date on which the
Committee receives the written request. The remaining balance shall be
forfeited by the Participant. The amount payable under this section shall be
paid in a lump sum within sixty-five (65) days following the receipt of the
notice by the Committee from the Participant. Any Participant who elects to
receive a benefit under this section shall not be eligible to participate in
or defer into this Plan in the future.
5.7 WITHHOLDING FOR TAXES
To the extent required by the law in effect at the time payments are
made, the Employer shall withhold from the payments made hereunder any Taxes
required to be withheld by the federal or any state or local government,
including any amounts which the Employer determines is reasonably necessary
to pay any generation-skipping transfer tax which is or may become due. A
beneficiary, however, may elect not to have withholding of federal income tax
pursuant to Section 3405(a)(2), of the Internal Revenue Code, or any
successor provision thereto.
5.8 VALUATION AND SETTLEMENT
The amount of a lump-sum payment and the initial amount of installments
shall be based on the value of the Participant's Account on the valuation
date. The valuation date shall be the date on which a lump sum is paid or
the date on which installments commence.
5.9 PAYMENT TO GUARDIAN
The Committee may direct payment to the duly appointed guardian,
conservator. or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal
representative. the Committee may, in it sole and absolute discretion make
payment to a person having the care and custody of a minor, incompetent or
person
PAGE 11 - EXECUTIVE DEFERRED COMPENSATION PLAN
incapable of handling the disposition of property upon proof satisfactory to the
Committee of incompetency, minority, or incapacity. Such distribution shall
completely discharge the Committee from all liability with respect to such
benefit.
5.10 COMPANY DISCRETIONARY DISTRIBUTION
The Executive Committee of the Board of Directors may elect to
distribute a Participant's account balance to the Participant if the
Executive Committee deems it to be in the best financial interests of the
Company.
ARTICLE VI -- BENEFICIARY DESIGNATION
6.1 BENEFICIARY DESIGNATION
Subject to Section 6.3, each Participant shall have the right, at any
time, to designate one (1) or more persons or an entity as Beneficiary (both
primary as well as secondary) to whom benefits under this Plan shall be paid
in the event of Participant's death prior to complete distribution of the
Participant's Account. Each Beneficiary designation shall be in a written
form prescribed by the Committee and shall be effective only when filed with
the Committee during the Participant's lifetime.
6.2 CHANGING BENEFICIARY
Subject to Section 6.3, any Beneficiary designation may be changed by a
Participant without the consent of the previously named Beneficiary by the
filing of a new designation with the Committee. The filing of a new
designation shall cancel all designations previously filed.
6.3 COMMUNITY PROPERTY
If the Participant resides in a community property state, the following
rules shall apply:
(a) Designation by a married Participant of a Beneficiary other than
the Participant's spouse shall not be effective unless the spouse executes
a written consent that acknowledges the effect of the designation, or it
is established the consent cannot be obtained because the spouse cannot be
located.
(b) A married participant's Beneficiary designation may be changed by a
Participant with the consent of the Participant's spouse as provided for
in Section 6.3(a) by the filing of a new designation with the Committee.
(c) If the Participant's marital status changes after the Participant
has designated a Beneficiary, the following shall apply:
(i) If the Participant is married at the time of death but was
unmarried when the designation was made, the designation shall be void
unless the spouse has consented to it in the manner prescribed in
Section 6.3(a)
PAGE 12 - EXECUTIVE DEFERRED COMPENSATION PLAN
(ii) If the Participant is unmarried at the time of death but was
married when the designation was made:
a) The designation shall be void if the spouse was named as
Beneficiary unless Participant had submitted a change of beneficiary
listing the former spouse as the beneficiary.
b) The designation shall remain valid if a nonspouse Beneficiary
was named.
(iii) If the Participant was married when the designation was made
and is married to a different spouse at death, the designation shall be
void unless the new spouse has consented to it in the manner prescribed
above.
6.4 NO BENEFICIARY DESIGNATION
If any Participant fails to designate a Beneficiary in the manner
provided above, if the designation is void, or if the Beneficiary designated
by a deceased Participant dies before the Participant or before complete
distribution of the Participant's benefits, the Participant's Beneficiary
shall be the person in the first of the following classes in which there is a
survivor:
(a) The Participant's spouse;
(b) The Participant's children in equal shares, except that if any of
the children predeceases the Participant but leaves issue surviving. then
such issue shall take by right of representation the share the parent
would have taken if living;
(c) The Participant's estate.
ARTICLE VII -- ADMINISTRATION
7.1 COMMITTEE; DUTIES
This Plan shall be administered by the Administrative Committee. The
Committee shall be appointed by the Executive Committee of the Board of
Directors. The Committee shall have the authority to make, amend, interpret
and enforce all appropriate rules and regulations for the administration of
the Plan and decide or resolve any and all questions, including
interpretations of the Plan, as may arise in such administration. A majority
vote of the Committee members shall control any decision. Members of the
Committee may be Participants under this Plan.
7.2 AGENTS
The Committee may, from time to time, employ agents and delegate to
them such administrative duties as it sees fit, and may from time to time
consult with counsel who may be counsel to the Company.
PAGE 13 - EXECUTIVE DEFERRED COMPENSATION PLAN
7.3 BINDING EFFECT OF DECISIONS
The decision or action of the Committee with respect to any question
arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated hereunder
shall be final, conclusive and binding upon all persons having any interest
in the Plan.
7.4 INDEMNITY OF COMMITTEE
The Company shall indemnify and hold harmless the members of the
Committee against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to this Plan on
account of such person's service on the Committee, except in the cast of
gross negligence or willful misconduct.
ARTICLE VIII -- CLAIMS PROCEDURE
8.1 CLAIM
The Committee shall establish rules and procedures to be followed by
Participants and Beneficiaries in (a) filing claims for benefits, and (b) for
furnishing and verifying proofs necessary to establish the right to benefits
in accordance with the Plan, consistent with the remainder of this Article.
Such rules and procedures shall require that claims and proofs be made in
writing and directed to the Committee.
8.2 REVIEW OF CLAIM
The Committee shall review all claims for benefits. Upon receipt by
the Committee of such a claim, it shall determine all facts which are
necessary to establish the right of the claimant to benefits under the
provisions of the Plan and the amount thereof as herein provided within
ninety (90) days of receipt of such claim. If prior to the expiration of the
initial ninety (90) day period, the Committee determines additional time is
needed to come to a determination on the claim, the Committee shall provide
written notice to the Participant, Beneficiary or other claimant of the need
for the extension, not to exceed a total of one hundred eighty (180) days
from the date the application was received.
8.3 NOTICE OF DENIAL OF CLAIM
In the event that any Participant, Beneficiary or other claimant claims
to be entailed to a benefit under the Plan, and the Committee determine that
such claim should be denied in whole or in part, the Committee shall, in
writing, notify such claimant that the claim has been denied, in whole or in
part, setting forth the specific reasons for such denial. Such notification
shall be written in a manner reasonably expected to be understood by such
claimant and shall refer to the specific sections of the Plan relied on,
shall describe any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
PAGE 14 - EXECUTIVE DEFERRED COMPENSATION PLAN
information is necessary, and where appropriate, shall include an explanation
of how the claimant can obtain reconsideration of such denial.
8.4 RECONSIDERATION OF DENIED CLAIM
(a) Within sixty (60) days after receipt of the notice of the denial of
a claim, such claimant or duly authorized representative may request, by
mailing or delivery of such written notice to the Committee, a
reconsideration by the Committee of the decision denying the claim. If the
claimant or duty authorized representative fails to request such a
reconsideration within such sixty (60) day period. it shall be
conclusively determined for all purposes of this Plan that the denial of
such claim by the Committee is correct. If such claimant or duly
authorized representative requests a reconsideration within such sixty
(60) day period, the claimant or duly authorized representative shall have
thirty (30) days after filing a request for reconsideration to submit
additional written material in support of the claim, review pertinent
documents, and submit issues and comments in writing.
(b) After such reconsideration request, the Committee shall determine
within sixty (60) days of receipt of the claimant's request for
reconsideration whether such denial of the claim was correct and shall
notify such claimant in writing of its determination. The written notice
of decision shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant,
as well as specific reference to the pertinent Plan provisions on which
the decision is based. In the event of special circumstances determined by
the Committee, the time for the Committee to make a decision may be
extended by an additional sixty (60) days upon written notice to the
claimant prior to the commencement of the extension. If such determination
is favorable to the claimant, it shall be binding and conclusive. If such
determination is adverse to such claimant, it shall be binding and
conclusive unless the claimant or his duly authorized representative
notifies the Committee within ninety (90) days after the mailing or
delivery to the claimant by the Committee of its determination that
claimant intends to institute legal proceedings challenging the
determination of the Committee and actually institutes such legal
proceedings within one hundred eighty (180) days after such mailing or
delivery.
8.5 EMPLOYER TO SUPPLY INFORMATION
To enable the Committee to perform its functions, the Employer shall
supply full and timely information to the Committee of all matters relating
to the retirement, death or other cause for termination of employment of all
Participants, and such other pertinent facts as the Committee may require.
PAGE 15 - EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE IX -- AMENDMENT AND TERMINATION OF PLAN
9.1 AMENDMENT
The Board may at any time amend the Plan by written instrument, notice
of which is given to all Participants and to Beneficiaries receiving
installment payments, subject to the following;
(a) PRESERVATION OF ACCOUNT BALANCE. No amendment shall reduce the
amount accrued in any Account to the date such notice of the amendment is
given.
(b) CHANGES IN EARNINGS RATE. No amendment shall reduce the rate of
earnings to be credited after the date of the amendment to the amount
already accrued in any Account and any Deferred Compensation credited to
the Account under Deferral Commitments already in effect on that date.
9.2 EMPLOYER'S RIGHT TO TERMINATE
The Board may at any time partially or completely terminate the Plan
if, in its judgment, the tax, accounting or other effects of the continuance
of the Plan, or potential payments thereunder would not be in the best
interests of Employer.
(a) PARTIAL TERMINATION. The Board may partially terminate the Plan by
instructing the Committee not to accept any additional Deferral
Commitments. If such a partial termination occurs, the Plan shall continue
to operate and be effective with regard to Deferral Commitments entered
into prior to the effective date of such partial termination.
(b) COMPLETE TERMINATION. The Board may completely terminate the Plan
by instructing the Committee not to accept any additional Deferral
Commitments, and by terminating all ongoing Deferral Commitments. If such
a complete termination occurs, the Plan shall cease to operate and
Employer shall pay out each Account. Payment shall be made in equal
monthly installments over the following period, based on the Account
balance:
ACCOUNT BALANCE PAYOUT PERIOD
----------------------------------------------------------
Less than $50,000 Lump Sum
$50,000 but less than $100,000 3 Years
More than $100,000 5 Years
----------------------------------------------------------
Payments shall commence within sixty-five (65) days after the Board
Terminates the Plan and earnings shall continue to be credited on the unpaid
Account balance at the rate specified in Section 4.5(e).
PAGE 16 - EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE X -- MISCELLANEOUS
10.1 UNFUNDED PLAN
This plan is an unfunded plan maintained primarily to provide deferred
compensate benefits for a select group of management or highly-compensated
employees' within the meaning of Sections 201, 301 and 401 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and therefore
is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
10.2 COMPANY AND EMPLOYER OBLIGATIONS
The obligation to make benefit payments to any Participant under the
Plan shall be a joint and several liability of the Company and the Employer
that employed the Participant.
10.3 UNSECURED GENERAL CREDITOR
Participants and Beneficiaries shall be unsecured general creditors,
with no secured or preferential right to any assets of Employer or any other
party for payment of benefits under this Plan. Any life insurance policies
annuity contracts or other property purchased by Employer in connection with
this Plan shall remain its general, unpledged and Unrestricted assets.
Employees obligation under the Plan shall be an unfunded and unsecured
promise to pay money in the future.
10.4 TRUST FUND
At its discretion, the Company may establish one or more trusts with
such trustees as the Board may approve, for the purpose of providing for the
payment of benefits owed under the Plan. Although such a trust shall be
irrevocable, its assets shall be held for payment of all the Company's
general creditors in the event of insolvency or bankruptcy. To the extent
any benefits provided under the Plan are paid from any such trust, Employer
shall have no further obligation to pay them. If not paid from the trust,
such benefits shall remain the obligation of Employer.
10.5 NONASSIGNABILITY
Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and
nontransferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
PAGE 17 - EXECUTIVE DEFERRED COMPENSATION PLAN
10.6 NOT A CONTRACT OF EMPLOYMENT
This Plan shall not constitute a contract of employment between
Employer and the Participant. Nothing in this Plan shall give a Participant
the right to be retained in the service of Employer or to interfere with the
right of Employer to discipline or discharge a Participant at any time.
10.7 PROTECTIVE PROVISIONS
A Participant will cooperate with Employer by furnishing any and all
information requested by Employer in order to facilitate the payment of
benefits hereunder, and by taking such physical examinations as Employer may
deem necessary and taking such other action as may be requested by Employer.
10.8 GOVERNING LAW
The provisions of this Plan shall be construed and interpreted
according to the laws of the Commonwealth of Virginia, except as preempted by
federal law.
10.9 VALIDITY
In case any provision of this Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
10.10 NOTICE
Any notice required or permitted under the Plan shall be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such
notice shall be deemed as given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Mailed notice to the Committee shall be
directed to the Company's address. Mailed notice to a Participant or
Beneficiary shall be directed to the individual's last known address in
Employer's records.
PAGE 18 - EXECUTIVE DEFERRED COMPENSATION PLAN
10.11 SUCCESSORS
The provisions of this Plan shall bind and inure to the benefit of
Employer and its successors and assigns. The term successors as used herein
shall include any corporate or other business entity which shall, whether by
merger, consolidation, purchase or otherwise acquire all or substantially all
of the business and assets of Employer, and successors of any such
corporation or other business entity.
AMERICAN MANAGEMENT SYSTEMS, INC.
By:
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Dated:
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