EXHIBIT 10.11
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT (the "Agreement") is
entered into this 5th day of September, 2003 (the "Effective Date") between
XXXXXX X. XXXXXX ("Executive") and URS CORPORATION, a Delaware corporation (the
"Company"). This Agreement is intended to provide Executive with a supplemental
retirement benefit in addition to the benefit that Executive will be eligible to
receive following the termination of his employment with the Company under the
URS Corporation 401(k) Retirement Plan. This Agreement is not intended to meet
the qualification requirements under Section 401 of the Code. Certain
capitalized terms used in this Agreement are defined in Article 8.
The Company and Executive hereby agree as follows:
ARTICLE 1
SCOPE OF AND CONSIDERATION FOR THIS AGREEMENT
1.1 Executive is currently employed by the Company.
1.2 The Company and Executive entered into a Supplemental
Executive Retirement Agreement effective as of July 13, 1999 (the "Prior SERP"),
which sets forth the supplemental retirement benefit that Executive or his
Beneficiary will be eligible to receive following his termination of employment
with the Company.
1.3 The duties and obligations of the Company to Executive under
this Agreement shall be in consideration for Executive's past services to the
Company and Executive's continued employment with the Company.
1.4 This Agreement shall amend, restate and supersede the Prior
SERP and any other agreement with the Company relating to supplemental executive
retirement benefits to be received by Executive upon his termination of
employment with the Company. This Agreement is not intended to amend, restate or
supersede any other agreement into which Executive and the Company have entered
including, but not limited to, employment agreements, stock option agreements
and deferred compensation agreements.
ARTICLE 2
AMOUNT OF BENEFIT
Executive shall be eligible to receive a benefit under this Agreement
following his termination of employment with the Company (the "Benefit"). The
Benefit shall be an annual amount, payable for the life of the Executive with a
guarantee of payments for at least ten (10) years, equal to (a) a percentage of
Executive's Final Average Compensation, which percentage
1
shall be determined based on Executive's age at his termination of employment as
set forth in the following table (with interpolation of percentages for ages
between those whole years specified based on the number of complete weeks beyond
a specified whole year divided by 52), reduced by (b) the annual Social Security
benefit to which Executive is entitled at the time of earliest eligibility:
EXECUTIVE'S AGE AT TERMINATION OF EMPLOYMENT APPLICABLE PERCENTAGE
67 or older 60%
66 55%
65 or younger 50%
If Executive's employment with the Company is terminated (a) by the Company for
any reason within thirteen (13) months following a Change in Control, (b) by
Executive for any reason within two (2) years following a Change in Control or
(c) by the Company for any reason following the occurrence of a Potential Change
in Control and within six (6) months prior to the occurrence of a Change in
Control, Executive's Benefit shall be calculated as if Executive's age at
termination of employment were sixty-seven (67). If Executive terminates
employment with the Company after attaining age sixty-seven (67), the Benefit
shall be the greater of (a) the Benefit computed as of the date of Executive's
termination of employment with the Company or (b) the Actuarial Equivalent (to
reflect later commencement) of the Benefit computed as if it commenced as of the
first day of the month coinciding with or next following the date of Executive's
sixty-seventh (67th) birthday.
ARTICLE 3
TIMING OF BENEFIT PAYMENT
Payment of the Benefit shall commence on the first day of the month
following the month in which the Executive's termination of employment with the
Company occurs; provided, however, that Executive may, upon executing this
Agreement or thereafter, by notice to the Company, elect such later date upon
which Executive's Benefit payments shall commence following termination of his
employment. Such election of a Benefit payment commencement date shall be
irrevocable; provided, however, that Executive may change his election of a
Benefit payment commencement date if the election to change the Benefit payment
commencement date is made at least one (1) year prior to the date that Benefit
payments actually commence to Executive. If Executive elects a change in the
commencement date of Benefit payments and such election is made less than one
(1) year prior to the date that Benefit payments actually commence to Executive,
then such election change shall not be effective until one (1) year from the
date the election change is made, and Benefit payments scheduled to be made
during such one (1) year period shall be paid on schedule. If Executive does not
elect a Benefit commencement date prior to his termination of employment with
the Company, he shall be deemed to have elected to begin receiving Benefit
payments on the first day of the month following the month in which his
employment with the Company terminates.
2
ARTICLE 4
FORM OF BENEFIT PAYMENT
4.1 Executive shall, upon executing this Agreement or thereafter,
elect the form in which his Benefit shall be distributed. Such election of a
distribution form shall be irrevocable; provided, however, that Executive may
change his election of a distribution form if such election is made no later
than one (1) year prior to the date that Benefit payments actually commence to
Executive. If Executive elects a change in the distribution form of his Benefit
and such election is made less than one (1) year prior to the date that Benefit
payments actually commence to Executive, then such election change shall be
ineffective, and the Benefit shall be distributed according to Executive's
immediately prior election. If Executive does not elect a distribution form
prior to becoming eligible to receive a Benefit under this Agreement, he shall
be deemed to have elected the lump sum Benefit pursuant to Section 4.2(b)(ii).
4.2 Executive may elect a distribution form for his Benefit from
among the following forms:
(a) The normal form of Benefit is a life annuity with a
ten (10) year term certain. This form of Benefit shall be paid in equal monthly
installments for the longer of the life of Executive or ten (10) years.
(b) The following optional forms of Benefit shall each be
calculated to be the Actuarial Equivalent of the normal form of Benefit:
(i) A joint and survivor annuity shall be paid
in equal monthly installments for the life of Executive, and after Executive's
death, a fifty percent (50%) continuation of such installments shall be paid to
Executive's Beneficiary for the life of such Beneficiary.
(ii) A single lump sum payment to Executive or
Executive's Beneficiary.
ARTICLE 5
DEATH OF EXECUTIVE
5.1 If Executive should die prior to the commencement of Benefit
payments, Executive's Beneficiary shall be entitled to receive a death benefit
in the form of a single lump sum equal to the value of the lump sum Benefit
Executive would have received pursuant to Section 4.2(b)(ii) above if he had
terminated his employment with the Company on the day before his death and had
received such Benefit on such day. The foregoing death benefit shall be paid
within thirty (30) days following Executive's death.
5.2 If Executive should die after commencing to receive Benefit
payments in the form of a life annuity with a ten (10) year term certain,
Executive's Beneficiary shall be entitled to receive a death benefit equal to
the value of the remaining ten (10) year term certain payments. Such Benefit
will be paid in monthly installments for the remainder of the ten (10) year life
term;
3
provided, however, that if the Beneficiary is the Executive's estate, the
Actuarial Equivalent of the Benefit shall be paid in the form of a single lump
sum. The foregoing death benefit shall be paid, or commence to be paid, within
thirty (30) days following Executive's death.
ARTICLE 6
POST-RETIREMENT HEALTH INSURANCE COVERAGE
6.1 During the eighteen (18) month period commencing upon
Executive's termination of employment with the Company for any reason, including
his death, Executive (and, where applicable, his dependents) shall be entitled,
at the Company's expense, to continue participation in the insurance programs
maintained by the Company, including life, disability and health insurance
programs, as if he were still an employee of the Company. Where applicable,
Executive's salary shall be deemed to be equal to the Base Compensation (as
defined in Section 8.8 below) as in effect immediately prior to his termination
of employment. During Executive's life, such coverage shall be extended to
Executive and his dependents who qualify as such under the terms of the
Company's health insurance programs. Following Executive's death, such coverage
shall continue to be available to Executive's surviving spouse, at the Company's
expense, during such eighteen (18) month period. To the extent the Company finds
it impossible to cover Executive or his surviving spouse or dependents under its
group insurance policies during such eighteen (18) month period, the Company
shall provide Executive with the same level of coverage under individual
policies at the same cost to Executive. The foregoing coverage shall satisfy the
obligations of the Company and its heath insurance programs under the
Comprehensive Omnibus Reconciliation Act of 1985, as amended ("COBRA") and any
analogous state laws, and Executive shall make any elections requested by the
Company to evidence such fact.
6.2 Following the expiration of the extended period of
Company-paid health insurance coverage provided for in Section 6.1 above,
Executive shall be entitled, at his expense but at the Company's group rates, to
continue participation in the health insurance programs maintained by the
Company, including life, disability and health insurance programs, as if he were
still an employee of the Company. During Executive's life, such coverage shall
be extended to Executive and his dependents who qualify as such under the terms
of the Company's health insurance programs. Following Executive's death, such
coverage shall continue to be available to Executive's surviving spouse, at her
expense but at the Company's group rates, for her lifetime. To the extent that
the Company finds it impossible to cover Executive or his surviving spouse or
dependents under its group insurance policies, the Company shall arrange for
Executive or his surviving spouse, at their expense but at a rate equivalent to
the Company's group rates, to be provided with an individual policy providing
substantially the same level of coverage as the Company's health insurance
programs.
ARTICLE 7
FUNDING
7.1 Benefits payable under this Agreement shall be "unfunded," as
that term is used in Sections 201(2), 301(a)(3), 401(a)(1) and 4021(a)(6) of
ERISA with respect to unfunded plans maintained primarily for the purpose of
providing deferred compensation to a select group of
4
management or highly compensated employees, and the Company shall administer
this Agreement in a manner that will ensure that benefits are unfunded and that
Executive will not be considered to have received a taxable economic benefit
prior to the time at which benefits are actually payable hereunder. Accordingly,
the Company shall not be required to segregate or earmark any of its assets for
the benefit of Executive or his spouse or other Beneficiary, and each such
person shall have only a contractual right against the Company for benefits
hereunder. The rights and interests of Executive under this Agreement shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge or encumbrance by Executive or any person claiming under or
through Executive, nor shall they be subject to the debts, contracts,
liabilities or torts of Executive or anyone else prior to payment.
7.2 In satisfaction of the prior agreement between Executive and
the Company to defer the obligation of the Company to establish a grantor
("rabbi") trust following a Change in Control (as defined in the Prior SERP),
and notwithstanding the foregoing Section 7.1, the Company shall, within fifteen
(15) days of the earliest to occur of (i) receiving a written request therefor
from Executive and (ii) the termination of Executive's employment with the
Company for any reason, including the death of Executive, establish a grantor
("rabbi") trust, substantially in the form attached hereto as Exhibit A (or such
other form as the Company and Executive may agree), the assets of which shall be
used exclusively and irrevocably to provide benefits to Executive pursuant to
this Agreement (subject, however, to the claims of the general creditors of the
Company); provided, however, that the establishment of such a trust will not
render this Agreement other than "unfunded" (as that term is defined in Section
7.1). Upon the establishment of any such rabbi trust, and within sixty (60) days
following the end of each of the Company's fiscal years thereafter, the Company
shall deposit in the trust an amount of cash or marketable securities (other
than securities issued by the Company or any of its current or future
affiliates) sufficient so that the total amount so deposited in the trust is
equal in value to the lump sum payment that would be payable to Executive if on
the date such trust is established, and on the last day of each of the Company's
fiscal years thereafter, Executive's employment with the Company had terminated.
Such amount shall be computed based on the thirty (30) year treasury xxxx rate
as of the date such lump sum payment would have been payable.
ARTICLE 8
DEFINITIONS
For purposes of this Agreement, the following terms are defined as
follows:
8.1 "ACTUARIAL EQUIVALENT" shall mean a form of Benefit (including
a lump sum payment) differing in time or manner of payment from the normal form
of Benefit set forth in Section 4.2(a) but having the same present value when
computed using the following actuarial assumptions:
Mortality Table: the table specified in Section 417(e)(3)(A)
(ii)(I) of the Code.
Interest Rate: the annual rate of interest on 30-year
Treasury securities for the month preceding the date Benefit
payments commence.
5
However, for purposes of clause (b) of the final sentence of Article 2, only the
Interest Rate (and not the Mortality Table) shall apply.
8.2 "BOARD" shall mean the Board of Directors of URS Corporation
or of a successor to URS Corporation, as described in Section 11.9.
8.3 "BENEFICIARY" shall mean the beneficiary designated by
Executive to receive benefits under this Agreement after Executive's death. If
Executive designates no Beneficiary, or if the designated Beneficiary does not
survive Executive, the Beneficiary shall be Executive's surviving spouse or, if
none, Executive's estate.
8.4 "CHANGE IN CONTROL" shall mean the occurrence of any of the
following events after the date of this Agreement:
(i) A change in control required to be reported pursuant
to Item 6(e) of Schedule 14A of Regulation 14A under the Securities Exchange Act
of 1934, as amended (the "Exchange Act");
(ii) A change in the composition of the Board as a result
of which fewer than two-thirds (2/3) of the incumbent directors are directors
who either (i) had been directors of the Company twenty-four (24) months prior
to such change or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the directors who had been
directors of the Company twenty-four (24) months prior to such change and who
were still in office at the time of the election or nomination (the directors
described in clauses (i) and (ii) above being referred to as "Incumbent
Directors"); or
(iii) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) through the acquisition or aggregation of
securities is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing under special circumstances) having the right to
vote at elections of directors (the "Base Capital Stock"); except that:
a. The beneficial ownership by a person of
twenty percent (20%) or more, but less than a majority, of the Base Capital
Stock shall not constitute a Change in Control if such beneficial ownership was
acquired in the ordinary course of such person's business and not with the
purpose or effect of changing or influencing the control of the Company and if
such person is eligible to file a short-form statement on Schedule 13G under
Rule 13d-1 under the Exchange Act with respect to such beneficial ownership;
b. The beneficial ownership by Xxxx Capital
Partners, L.P. and any person "affiliated" (within the meaning of the Exchange
Act) with Xxxx Capital Partners, L.P. (collectively, "Xxxx") of the Base Capital
Stock shall not constitute a Change in Control unless and until Xxxx, either
alone or as a member of a group that constitutes a "person" (as defined above),
beneficially owns an aggregate of over twenty-five percent (25%) of the Base
Capital Stock; and
6
c. The beneficial ownership by TCG Holdings,
L.L.C. and any person "affiliated" with TCG Holdings, L.L.C. (collectively,
"TCG") of the Base Capital Stock shall not constitute a Change in Control unless
and until TCG, either alone or as a member of a group that constitutes a
"person" (as defined above), beneficially owns an aggregate of over twenty-five
percent (25%) of the Base Capital Stock.
8.5 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
8.6 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
8.7 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
8.8 "FINAL AVERAGE COMPENSATION" shall mean the higher of (i) the
sum of (a) the average Base Compensation actually earned by Executive during the
thirty-six (36) consecutive calendar months during the final sixty (60) calendar
months of Executive's employment with the Company in which such average Base
Compensation was highest, plus (b) the amount of such average Base Compensation
multiplied by the average Annual Target Bonus (not actual bonus paid), or, if
applicable, Target Bonus percentage (not actual bonus paid), in effect during
the same thirty-six (36) month period, and (ii) $1,600,000. For purposes of this
definition, "Base Compensation" and "Annual Target Bonus" have the meanings
defined in the Employment Agreement between the Company and Executive originally
dated December 16, 1991, as subsequently amended, and as restated in its
entirety effective September 5, 2003, as the same may be further amended or
restated subsequent to the date of this Agreement (the "Employment Agreement"),
and "Target Bonus" has the meaning defined in the Employment Agreement prior to
its restatement. For purposes of calculating Final Average Compensation under
this Agreement, the Annual Target Bonus (and Target Bonus percentage, if
applicable) as in effect on the last day of each of the Company's fiscal years
shall be deemed to have been in effect during each calendar month of such year,
regardless of any increase in the Annual Target Bonus (or Target Bonus
percentage) during such year.
8.9 "POTENTIAL CHANGE IN CONTROL" shall mean the occurrence of any
of the following after the Effective Date:
(i) an event described in Section 8.4(iii), but
substituting "ten percent (10%)" for "twenty percent (20%)," without the
approval of a majority of the Incumbent Directors;
(ii) the institution by any person (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) of a tender offer to acquire
ten percent (10%) or more of the combined voting power of the Company's Base
Capital Stock without the approval of a majority of the Incumbent Directors
prior to or within twenty (20) business days following such offer; or
(iii) a public announcement or receipt by the Board of a
proposal of any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) or group of persons to merge into, combine with or acquire all or
substantially all of the assets or business of the Company without the approval
of a majority of the Incumbent Directors within twenty (20) business days
following such public announcement or receipt.
7
ARTICLE 9
ADMINISTRATION AND OPERATION OF THE AGREEMENT
The Company shall have the authority to control and manage the
operation and administration of this Agreement. The Company has the sole
discretion to make such rules, regulations, and interpretations of this
Agreement and to make such computations and shall take such other actions to
administer this Agreement as it may deem appropriate in its sole discretion.
Such rules, regulations, interpretations, computations, and other actions shall
be conclusive and binding upon all persons. The Company may engage the services
of such persons or organizations to render advice or perform services with
respect to its responsibilities under this Agreement as it shall determine to be
necessary or appropriate. Such persons or organizations may include (without
limitation) actuaries, attorneys, accountants and consultants.
ARTICLE 10
CLAIMS, INQUIRIES AND APPEALS
10.1 APPLICATIONS FOR BENEFITS AND INQUIRIES. Applications for
benefits shall be in writing, signed and submitted to the Company at its primary
office location.
10.2 CLAIMS PROCEDURE. The Company and Executive agree that all
disputes regarding benefits under this Agreement shall be resolved in accordance
with a reasonable claims procedure complying with 29 CFR Section 2560.503-1, as
such regulations of the United States Department of Labor may from time to time
be amended. For purposes of such a procedure, any denied claim shall be subject
to review by the Compensation Committee of the Board.
10.3 EXHAUSTION OF REMEDIES. No legal action for benefits under
this Agreement may be brought until Executive or other claimant has pursued a
resolution of the benefits claim in accordance with Section 10.2.
ARTICLE 11
GENERAL PROVISIONS
11.1 EMPLOYMENT STATUS. This Agreement does not constitute a
contract of employment or impose upon Executive any obligation to remain as an
employee, nor does it impose on the Company any obligation (i) to retain
Executive as an employee, (ii) to change the status of Executive as an at-will
employee, or (iii) to change the Company's policies regarding termination of
employment.
11.2 NOTICES. Any notices provided hereunder must be in writing,
and such notices or any other written communication shall be deemed effective
upon the earlier of personal delivery (including personal delivery by facsimile)
or the third day after mailing by first class mail, to the Company at its
primary office location and to Executive at Executive's address as listed in the
Company's payroll records. Any payments made by the Company to Executive under
the terms of this Agreement shall be delivered to Executive either in person or
at the address as listed in the Company's payroll records.
8
11.3 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
11.4 WAIVER. If either party should waive any breach of any
provisions of this Agreement, he or it shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.
11.5 COMPLETE AGREEMENT. This Agreement and the Employment
Agreement constitute the entire agreement between Executive and the Company and
are the complete, final, and exclusive embodiment of their agreement with regard
to the subject matter hereof and thereof, wholly amending, restating and
superseding all written and oral agreements with respect to supplemental
executive retirement benefits, including, without limitation, the Prior SERP. It
is entered into without reliance on any promise or representation other than
those expressly contained herein.
11.6 AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be
changed or terminated only upon the mutual written consent of the Company and
Executive. The written consent of the Company to a change or termination of this
Agreement must be signed by an executive officer of the Company after such
change or termination has been approved by the Board.
11.7 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
11.8 HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof or to affect the meaning thereof.
11.9 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and his Beneficiary, and
the Company, and any surviving entity resulting from a Change in Control and
upon any other person who is a successor by merger, acquisition, consolidation
or otherwise to the business formerly carried on by the Company, and their
respective successors, assigns, heirs, executors and administrators, without
regard to whether or not such person actively assumes any rights or duties
hereunder.
11.10 NON-ALIENATION. No benefit under this Agreement may be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered or
charged, and any attempt to do so will be void.
11.11 LEGAL CONSTRUCTION. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of California, without
9
regard to such state's conflict of laws rules, to the extent that such laws are
not preempted by ERISA.
11.12 NON-PUBLICATION. The parties mutually agree not to disclose
publicly the terms of this Agreement except to their respective advisors (e.g.,
attorneys, accountants) or to the extent that disclosure is mandated by
applicable law.
11.13 OTHER DOCUMENTS. In the event of a conflict between the text
of this Agreement and any summary, description or other information regarding
this Agreement, the text of this Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
Effective Date written above.
URS CORPORATION XXXXXX X. XXXXXX
/s/ Xxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxx
------------------------------------- ----------------------------
Xxxx X. Xxxxxxxxx Xxxxxx X.Xxxxxx
Executive Vice President and
Chief Financial Officer
10
EXHIBIT A
FORM OF TRUST AGREEMENT
TRUST UNDER URS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This AGREEMENT made this ____ of ______________ by and between URS
CORPORATION (the "Company") and ___________________ (the "Trustee").
WHEREAS, the Company and Xxxxxx X. Xxxxxx ("Executive") have entered
into an Amended and Restated Supplemental Executive Retirement Agreement
effective September 5, 2003 (the "Agreement");
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Agreement with respect to Executive and his beneficiaries;
WHEREAS, Company wishes to establish a trust (hereinafter called the
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Executive and his beneficiaries in
such manner and at such times as specified in the Agreement;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Agreement as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Agreement;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) Company hereby deposits with Trustee in trust [insert amount
deposited], which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company
is the grantor, within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
11
(d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Executive, his beneficiaries, and
general creditors of the Company as herein set forth. Executive and his
beneficiaries shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Agreement and
this Trust Agreement shall be mere unsecured contractual rights of Executive and
his beneficiaries against Company. Any assets held by the Trust will be subject
to the claims of Company's general creditors under federal and state law in the
event of Insolvency, as defined in Section 3(a) herein.
(e) Company shall make additional deposits of cash or marketable
securities (other than securities issued by the Company or any of its current or
future affiliates) with Trustee to augment the principal when and to the extent
required by Section 7.2 of the Agreement, to be held, administered and disposed
of by Trustee as provided in this Trust Agreement, and Trustee, in accordance
with Section 8(e) hereof, shall enforce such obligation.
SECTION 2. PAYMENTS TO EXECUTIVE AND HIS BENEFICIARIES
(a) Company shall deliver to Trustee a copy of the Agreement and a
schedule (the "Payment Schedule") that indicates the amounts payable in respect
of Executive (and his beneficiaries) and provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Agreement), and the time of commencement for payment of such amounts. Except as
provided in (c) below, Trustee shall make payments to the Executive and his
beneficiaries in accordance with the Agreement and such Payment Schedule.
Trustee shall make provision for the reporting and withholding of any federal,
state or local taxes that may be required to be withheld with respect to the
payment of benefits pursuant to the terms of the Agreement and shall pay amounts
withheld to the appropriate taxing authorities or determine that such amounts
have been reported, withheld and paid by Company.
(b) The entitlement of Executive or his beneficiaries to benefits
under the Agreement shall be determined solely under the terms of the Agreement,
and any claim for such benefits shall be considered and reviewed by Trustee
based on Trustee's reasonable interpretation of the Agreement.
(c) Company may make payment of benefits directly to Executive or
his beneficiaries as they become due under the terms of the Agreement. Company
shall notify Trustee of its decision to make payment of benefits directly prior
to the time amounts are payable to Executive or his beneficiaries. In addition,
if the principal of the Trust, and any earnings thereon, are not sufficient to
make payments of benefits in accordance with the terms of the Agreement, Company
shall make the balance of each such payment as it falls due. Trustee shall
notify Company where principal and earnings are not sufficient.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Executive and his
beneficiaries if Company is Insolvent. Company shall be considered "Insolvent"
for purposes of this Trust
12
Agreement if (i) Company is unable to pay its debts as they become due, or (ii)
Company is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided
in Section l(d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of Company under federal and state law as set
forth below.
(i) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in writing
to Trustee that Company has become Insolvent, Trustee shall determine whether
Company is Insolvent and, pending such determination, Trustee shall discontinue
payment of benefits to Executive or his beneficiaries.
(ii) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company's solvency.
(iii) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Executive or his beneficiaries
and shall hold the assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any way diminish any rights
of Executive or his beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Agreement or otherwise.
(iv) Trustee shall resume the payment of benefits to
Executive or his beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that Company is not Insolvent (or is
no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(a)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Executive or his beneficiaries under the terms of the Agreement for the period
of such discontinuance, less the aggregate amount of any payments made to
Executive or his beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, Company shall have no right or
power to direct Trustee to return to Company or to divert to others any of the
Trust assets before all payment of benefits have been made to Executive and his
beneficiaries pursuant to the terms of the Agreement.
13
SECTION 5. INVESTMENT AUTHORITY.
(a) IN GENERAL. With respect to any and all money or other
property received by Trustee from Company, Trustee is authorized to act as an
absolute owner of the assets of the Trust and, not in limitation of, but in
amplification of, the foregoing:
(i) To invest and reinvest the assets of the Trust,
without distinction between principal and income;
(ii) To retain and manage any property at any time
received by it, including any real, personal and mixed property and any tangible
or intangible property of any kind and wherever located, whether or not such
property is unproductive of income;
(iii) To sell for cash or on credit, to grant options,
convert, redeem, exchange for other securities or other property, or otherwise
to dispose of any securities or other property at any time held;
(iv) To exchange, mortgage, or lease any such property and
to convey, transfer, or dispose of any such property on such terms and
conditions as Trustee deems appropriate;
(v) To hold cash uninvested for any reasonable period of
time without liability for interest, pending investment thereof or the payment
of expenses or benefits therewith;
(vi) To collect and receive any and all money and other
property of whatever kind or nature due or owing or belonging to the Trust and
to give full discharge thereto; and to extend the time of payment of any
obligation at any time owing to the Trust, as long as such extension is for a
reasonable period and continues at reasonable interest;
(vii) To pay, contest, or settle any claim by or against
the Trust by compromise, arbitration or otherwise; and to release, in whole or
in part, any claim belonging to the Trust to the extent that the claim is
uncollectible;
(viii) To prosecute or defend actions, claims or proceedings
for the protection of Trust assets and of Trustee in the performance of its
duties;
(ix) To register Trust property in Trustee's own name, in
the name of a nominee or in bearer form, provided Trustee's records and accounts
show that such property belongs to the Trust;
(x) To deposit Trust assets in any commercial, savings or
savings and loan accounts, common funds, mutual funds or certificates of
deposits with any bank or similar financial institution, and to keep such
portion of the Trust assets in cash or cash balances as Trustee may, from time
to time, deem to be in the best interests of the Trust, without liability for
interest thereon;
14
(xi) To employ in the management of the assets of the
Trust, accountants, attorneys, actuaries and any other persons, firms, or
corporations as Trustee may designate, and to pay from the assets of the Trust
the reasonable expenses and compensation of such parties;
(xii) To consult with legal counsel (who may or may not
also be counsel to Company) concerning any question that may arise with
reference to its duties under the Trust or the Agreement;
(xiii) To have all the rights, powers, privileges and
responsibilities of an owner of securities, including (without limiting the
foregoing) the power to vote or refrain from voting, to give general or limited
proxies, to pay calls, assessments, and other sums; to assent to or oppose
corporate sales or other acts; to participate in or oppose any voting trusts,
pooling agreements, foreclosures, reorganizations, consolidations, mergers and
liquidations and, in connection therewith, to give warranties and
indemnifications and to deposit securities with and transfer title to any
protective or other committee; to exchange, exercise or sell stock subscription
or conversion rights; and, subject to any limitations elsewhere in the Trust
relative to investments by Trustee, to accept and retain as an investment
hereunder any securities received through the exercise of any of the foregoing
powers;
(xiv) To continue to exercise any powers and discretion
herein granted for a reasonable time after the termination of the Trust; and
(xv) To do all other acts Trustee may deem necessary or
proper to carry out any of the foregoing powers, or otherwise for the protection
of the assets of the Trust.
Notwithstanding the foregoing, Trustee shall not (i) maintain the indicia of
ownership of any Trust assets outside the jurisdiction of the district courts of
the United States or (ii) invest in securities (including stock or rights to
acquire stock) or obligations issued by Company or its affiliates, other than a
de minimis amount held in common investment vehicles in which Trustee invests.
(b) CUSTODIAN. If Trustee is not a bank or trust company, Trustee
may appoint a bank or trust company to act as custodian (the "Custodian") for
securities and any other Trust assets. Any such appointment shall terminate when
a bank or trust company begins to serve as Trustee hereunder. The Custodian may
be appointed to keep the deposited property, to collect and receive the income
and principal, and to hold, invest, disburse or otherwise dispose of the
property or its proceeds (specifically including selling and purchasing
securities, and delivering securities sold and receiving securities purchased)
upon the order of Trustee.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as
15
shall be agreed upon in writing between Company and Trustee. Within sixty (60)
days following the close of each calendar year and within thirty (30) days after
the removal or resignation of Trustee, Trustee shall deliver to Company a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Agreement or this Trust and is given in
writing by Company. In the event of a dispute between Company and a party,
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its duties or obligations
hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) In the event that Company fails to deposit assets in the Trust
in accordance with the penultimate sentence of Section 7.2 of the Agreement,
Trustee shall take all appropriate action, including the commencement of a legal
action against Company, to enforce such obligation; provided, however, that
Trustee shall not be required to take any such action unless the assets of the
Trust are, at the time in question, sufficient to pay all costs that Trustee
expects to incur in taking such action.
(f) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of
16
the policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(g) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all administrative and Trustee's fees and expenses. If not so
paid, the fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company,
which shall be effective thirty (30) days after receipt of such notice unless
Company and Trustee agree otherwise.
(b) Except as provided in paragraph (c) of this section, Trustee
may be removed by Company on thirty (30) days' notice or upon shorter notice
accepted by Trustee.
(c) Upon a Change in Control, as defined in the Agreement, Trustee
may not be removed by Company for one (1) year.
(d) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within sixty (60) days after receipt of
notice of resignation, removal or transfer, unless Company extends the time
limit.
(e) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraph (a) or (b) of this section. If no such
appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed prior to a Change in Control,
as defined in the Agreement, Company may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing by the new Trustee,
who shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor Trustee
to evidence the transfer.
17
(b) If Trustee resigns or is removed following a Change in
Control, as defined in the Agreement, Trustee may appoint any third party such
as a bank trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace Trustee upon resignation or
removal. The appointment of a successor Trustee shall be effective when accepted
in writing by the new Trustee. The new Trustee shall have all the rights and
powers of the former Trustee, including ownership rights in Trust assets. The
former Trustee shall execute any instrument necessary or reasonably requested by
the successor Trustee to evidence the transfer.
(c) The successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Agreement or shall make the Trust
revocable.
(b) The Trust shall not terminate until the date on which
Executive and his beneficiaries are no longer entitled to benefits pursuant to
the terms of the Agreement. Upon termination of the Trust any assets remaining
in the Trust shall be returned to Company.
(c) Upon written approval of Executive or his beneficiaries
entitled to payment of benefits pursuant to the terms of the Agreement, Company
may terminate this Trust prior to the time that all benefit payments under the
Agreement have been made. All assets in the Trust at termination shall be
returned to Company.
(d) Sections 10, 11(b), and this 12(d) of this Trust Agreement may
not be amended by Company for one (1) year following a Change in Control, as
defined in the Agreement.
SECTION 13. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall
be ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Executive and his beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of California.
18
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be _________________.
COMPANY: TRUSTEE:
URS CORPORATION _____________________________________
By:_________________________________ By:__________________________________
Name:_______________________________ Name:________________________________
Title:______________________________ Title:_______________________________
19
