EXHIBIT 10.5
AMERICAN MANAGEMENT SYSTEMS, INC.
OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
EFFECTIVE JANUARY 1, 1997
TABLE OF CONTENTS
Page
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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. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8. Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10. Deferral Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11. Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12. Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.13. Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.14. Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.15. Entrance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.16. Entrance Fee Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.17. Financial Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.18. Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.19. Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.20. Participation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.21. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.22. Premium Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.23. Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III - PARTICIPATION AND DEFERRAL COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1. Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2. Deferral Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3. Limitations on Deferral Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4. Modification of Deferral Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV - DEFERRED COMPENSATION ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1. Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2. Timing of Credits; Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3. Determination of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4. Vesting of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5. Statement of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(i)
ARTICLE V - PLAN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1. Distributions Prior to Termination of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2. Termination of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3. Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4. Disability Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5. Accelerated Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6. Withholding for Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.7. Valuation and Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8. Payment to Guardian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9. Company Discretionary Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI - BENEFICIARY DESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1. Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2. Changing Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3. Community Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4. No Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII - ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.1. Committee; Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.2. Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3. Binding Effect of Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4. Indemnity of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VIII - CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1. Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.2. Review of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.3. Notice of Denial of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4. Reconsideration of Denied Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.5. Company to Supply Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.2. Company's Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE X - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.1. Unfunded Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.2. Company Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.3. Unsecured General Creditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.4. Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.5. Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.6. Not a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.7. Protective Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(ii)
10.9. Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.10. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(iii)
AMERICAN MANAGEMENT SYSTEMS, INC.
OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
ARTICLE I - PURPOSE; EFFECTIVE DATE
1.1. PURPOSE
The Compensation Plan is to provide current tax planning opportunities
as well as supplemental funds for retirement or death for outside directors of
the Company. It is intended that the Plan will aid in attracting and retaining
directors of exceptional ability by providing them with these benefits.
1.2. EFFECTIVE DATE
The Plan is effective as January 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 Company 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.
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.
PAGE 1 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
2.5. BOARD
"Board" means the Board of Directors of the Company.
2.6. 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 I (a) of the 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 director' 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 any 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.
2.7. COMMITTEE
"Committee" means the Administrative Committee appointed to administer
the Plan pursuant to Article VII hereof.
2.8. COMPANY
"Company" means American Management Systems, Inc., a Delaware
corporation, or successor thereto.
2.9. COMPENSATION
PAGE 2 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
"Compensation" means all of the fees including retainer, meeting and
committee meeting fees payable by the Company for services on the Board.
2.10. DEFERRAL COMMITMENT
"Deferral Commitment" means a commitment made by a Participant to
defer Compensation pursuant to Article III.
2.11. DEFERRAL PERIOD
"Deferral Period" means each calendar year. The initial Deferral
Period, however, shall be from January 1, 1997, through December 31, 1997.
2.12. DETERMINATION DATE
"Determination Date" means the last day of each calendar month.
2.13. 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 Company 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.
2.14. 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 Company 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.
2.15. 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.
2.16. 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 Commitment subject to the
Entrance Fee times the number of Deferral Periods including, and
PAGE 3 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
subsequent to, the payment of any such additional Entrance Fee, less total
deferrals made prior to the current Deferral Period.
2.17. 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 unforseeable circumstances arising
as a result of events beyond the control of the Participant. The circumstances
that will constitute an unforseeable 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.
2.18. FINANCIAL PLAN
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.
2.19. PARTICIPANT
"Participant" means any eligible individual who has elected to defer
Compensation under this Plan.
2.20. 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.
2.21. PLAN
"Plan" means this Outside Director Deferred Compensation Plan as
amended from time to time.
2.22. PREMIUM RATE
"Premium Rate" means the Base Rate plus three percent (3%) (300 basis
points). 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.
PAGE 4 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
2.23. RETIREMENT
"Retirement" means a termination of service on the Board after the
Participant attains age fifty-five (55).
ARTICLE III - PARTICIPATION AND DEFERRAL COMMITMENTS
3.1. ELIGIBILITY AND PARTICIPATION
ELIGIBILITY. Eligibility to Participate in the plan shall be limited
to outside directors of the Company.
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 fifteenth (15th) day of December the month
immediately preceding the beginning of the Deferral Period.
3.2. DEFERRAL COMMITMENT
FEE DEFERRAL COMMITMENT. A Fee Deferral Commitment shall be related
to the fees payable by the Company to a Participant during the Deferral Period.
The amount to be deferred shall be stated as a percentage amount.
3.3. LIMITATIONS ON DEFERRAL COMMITMENTS
The following, limitations shall apply to Deferral Commitments:
(a) MINIMUM. The minimum deferral amount shall be fifty
percent (5096) of Board lees in the Deferral Period. 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 one
hundred percent (100%) of Board fees.
(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 change may affect
a Deferral Commitment made prior to the Committee's action.
3.4. 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
PAGE 5 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
The amounts deferred by a Participant under the Plan, any Company
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. DETERMINATION OF ACCOUNT
(a) 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:
(b) NEW DEFERRALS. The Account shall be increased by any
deferred Compensation credited since such Determination Date.
(c) ENTRANCE FEE. The Account shall be reduced by the
Entrance fee, if any, on deferred Compensation 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.
4.4. VESTING OF ACCOUNT
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.
4.5. 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.
PAGE 6 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
ARTICLE V - PLAN BENEFITS
5.1. DISTRIBUTIONS PRIOR TO TERMINATION OF SERVICE
A Participant's Account may be distributed to the Participant prior to
termination of service on the Board 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.
(b) HARDSHIP WITHDRAWALS. Upon a finding that a
Participant has sufferer 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 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, 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.l(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 Financial
Hardship, within thirty (30) days after the determination of a
Financial Hardship.
5.2. TERMINATION OF SERVICE
Upon a Participant's termination of service on the Board for any
reason other than Retirement or Disability, the Company shall pay the
Participant, or, in the case of death, the Participant's Beneficiary, a
lump-sum, benefit equal to the balance in the Participant's Account. Such
payment will be paid within sixty (60) days of the termination.
5.3. 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;
PAGE 7 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
(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.
(c) Small Account(s). Notwithstanding Section 5.3(a), if
a Participant's Account is under fiery thousand dollars ($50,000) on
the valuation date, the benefit shall be paid in a lump sum.
(d) Change in Form and Commencement of Payment. A
Participant may elect to file 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.
5.4. 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 5.3 above.
5.5. 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.
5.6. WITHHOLDING FOR TAXES
To the extent required by the law in effect at the time payments are
reads, the Company shall withhold from the payments made hereunder any Taxes
required to be withheld by the federal or ally state or local government,
including any amounts which the Company 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.
5.7. 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.
PAGE 8 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
5.8. 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 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.
5.9. 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 or[e 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 fiend with the
Committee during the Participant's lifetime.
6.2. CHANGING BENEFICIARY
Subject to Section 6.3, any Beneficiary designation new 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 roamed 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 troth 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.
PAGE 9 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
(c) If the Participant's marital status changes after the
Participant has designated a Beneficiary, the following, shall apply:
(i) If the Participant is marked 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 Planner prescribed
in Section 6.3(a).
(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 divas 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
PAGE 10 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
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.
7.3. BINDING EFFECT OF DECISIONS
The decision or action of the Committee with respect to any question
arising, out of or in connection lavish the administration, interpretation ant
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 indemnity and hold harmless the members of the
Committee against my 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 case 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) dam 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 Driven 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 Divas received.
8.3. NOTICE OF DENIAL OF CLAIM
PAGE 11 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
In the event that any Participant, Beneficiary or other claimant
claims to be entitled to a benefit under the Plan, and the Committee determines
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 ant an explanation of why such material or
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, bar 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 duly 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 dental 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
skill 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 reabsorbs for the decision, written in a manner
calculated to be understood by the claimant, as well as specific
references 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 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. COMPANY TO SUPPLY INFORMATION
To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee of all Platters 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 12 - OUTSIDE DIRECTOR 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 or 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. COMPANY'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 pavements thereunder would not be in the best interests
of the Company.
(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 the Company shall pay out each Account
Payment shall be Inane 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 al the rate specified in Section 5.3(b).
PAGE 13 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
ARTICLE X - MISCELLANEOUS
10.1. UNFUNDED PLAN
This plan is an unfunded plan maintainer primarily to provide deferred
compensation benefits for outside directors of the Company and therefore is
exempt from ERISA.
10.2. COMPANY OBLIGATIONS
The obligation to make benefit payments to any Participant under the
Plan shall be the liability of the Company.
10.3. UNSECURED GENERAL CREDITOR
Participants and Beneficiaries shall toe unsecured general creditors,
with no secured or preferential right to any assets of the Company or any other
party for payment of benefits under this Plan. Any life insurance policies,
annuity contracts or other property purchased by the Company in connection with
this Plan shall remain its general, unpledged and unrestricted assets. The
Company's 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, the Company shall have no
further obligation to pay them. It not paid from the trust such benefits shall
remain the obligation of the Company.
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 oared 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.
10.6. NOT A CONTRACT
This Plan shall not constitute an undertaking by the Company that the
Participant shall continue to be a director of the Company for any period of
time.
PAGE 14 - OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
10.7. PROTECTIVE PROVISIONS
Participant will cooperate with the Company toy furnishing any and ail
information requested in order to facilitate the payment of benefits hereunder,
and by taking such physical examinations as the Company Ray deem necessary and
taking such other action as may be requested.
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 hard delivered or sent by registered or certified mail. Such
notice shall be decreed 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 the
Company's records.
10.11. SUCCESSORS
The provisions of this Plan shall bind and inure to the benefit of The
Company 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 the Company, and successors of any such
corporation or other business entity.
AMERICAN MANAGEMENT SYSTEMS, INC.
By:
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Dated:
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