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EXHIBIT 10.G
KEYSTAFF DEFERRAL PLAN
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
(Effective January 1, 1997)
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KEYSTAFF DEFERRAL PLAN
OF
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
1. Purpose
1.1 The purpose of this Plan is to provide a means to enhance the
Company's capacity to attract and retain outstanding directors and
executives in key positions by assisting them in meeting their
future financial security objectives.
2. Definitions
2.1 Whenever the following terms are used in this document and the
attached Plan Agreement, they shall have the meaning specified
below.
2.2 "Deferral Account" shall mean a bookkeeping account established by
the Company for each Participant, in which shall be recorded the
amounts deferred in accordance with this Plan and the attached
Agreement. The Company shall credit to each Participant's Deferral
Account an amount equal to the compensation which otherwise would
have been paid had the Participant not elected to defer
compensation. Such credits shall be made at the time compensation
would have been paid to the Participant. The Deferral Account shall
also receive quarterly earnings credits in accordance with
provisions of Section 5.
Separate Deferral Accounts shall be established to record amounts
deferred (and earnings credits thereon) with respect to Plan Years
beginning before and after December 31, 1990, to be referred to
herein as Pre-1991 Deferral Accounts and Post-1990 Deferral
Accounts, respectively. Except as otherwise stated herein,
references to Deferral Account(s) shall include both the Pre-1991
and Post-1990 Deferral Account(s).
2.3 "Anniversary Date" shall be the last day of a Plan Year.
2.4 "Beneficiary" shall mean the person or persons, or the estate of a
Participant, entitled to receive any benefits under this Plan upon
the death of a Participant.
2.5 "Ceiling Excess Earnings" shall mean, for each Pre-1991 Deferral
Account, the difference between the Participant's Pre-1991 Deferral
Account if interest had been credited at a rate of Moody's plus 5%
in each Plan Year and the Participant's actual current Pre-1991
Deferral Account.
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A separate calculation of Ceiling Excess Earnings shall be made with
respect to post-1990 Deferral Account(s) using a rate of Moody's
plus 3%.
2.6 "Commitment Period" shall mean that period of time beginning with
the subsequent Plan Year and extending for a number of Plan Years as
determined from time to time by the Committee.
2.7 "Covered Compensation" shall mean a Director's compensation, as a
Director of the Company, excluding expenses reimbursed, or an
Executive's merit bonus in each Plan Year. The Committee, in its
sole discretion, shall determine what constitutes a merit bonus.
2.8 "Committee" shall mean the administrative Committee appointed to
manage and administer the Plan in accordance with the provisions of
this Plan.
2.9 "Company" shall mean SCIENCE APPLICATIONS INTERNATIONAL CORPORATION,
its subsidiaries, or any successor.
2.10 "Director" shall mean any person not in regular full-time employment
of the Company serving on the Board of Directors of SCIENCE
APPLICATIONS INTERNATIONAL CORPORATION.
2.11 "Early Retirement Date" shall mean the date that the Participant
attains his or her fifty-fifth (55th) birthday.
2.12 "Effective Date" shall be January 1, 1986.
2.13 "Employer" shall mean the Company and any subsidiary having one or
more employees who are eligible to participate in the Plan and have
been selected by the Committee to participate. Where the context
dictates, the term "Employer" as used herein refers to the
particular Employer which has entered into a Plan Agreement with a
specific Participant.
2.14 "Executive" shall mean any person in the employment of the Company
who is determined by the Committee to be serving in an executive
capacity, excluding those persons meeting the definition set forth
in Section 2.10.
2.15 "Master Plan Document" is this legal instrument containing the
provisions of the Plan.
2.16 "Xxxxx'x Seasoned Corporate Bond Rate," sometimes referred to as
"Xxxxx'x," is an economic indicator; an arithmetic average of yields
of representative bonds: industrials, public utilities, AAA, AA, A
and BAA. For
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Plan purposes, Moody's Rate shall be determined by the Committee
based on financial services or publications selected by the
Committee.
2.17 "Normal Retirement Date" shall mean the date that the Participant
attains his or her sixty-fifth (65th) birthday.
2.18 "Participant" shall mean any Executive or Director who elects to
participate in the Keystaff Deferral Plan, signs a Plan Agreement,
and is accepted into the Plan.
2.19 "Plan" shall mean the Keystaff Deferral Plan of the Employer which
shall be evidenced by this instrument and by each Plan Agreement.
2.20 "Plan Agreement" shall mean the written agreement(s) entered into
from time to time by and between an Employer and a Participant. A
separate Plan Agreement shall be entered into with respect to the
Pre-1991 Deferral Account and Post-1990 Deferral Account of a
Participant.
2.21 "Plan Year" shall begin on January 1 of each year.
2.22 "Retirement" and "Retire" shall mean severance from employment with
the Employer at or after the attainment of (i) age fifty-five (55)
and ten (10) years of Plan participation or (ii) age sixty-five
(65). The Committee shall have the sole discretion to determine
whether Retirement has occurred in the case of an Executive who
becomes a consulting employee or who continues to be affiliated with
the Company as a consultant or under some other status.
2.23 "Termination of Employment" shall mean cessation of regular
employment, voluntarily or involuntarily, but excluding Retirement
or death, as determined by the Committee in its sole discretion. In
the case of a Director, "Termination of Employment" shall mean the
Director's ceasing to be a Director of the Company. The Committee
shall have the sole discretion to determine (i) whether a change in
status (e.g., from employee to consultant, from employee to
consulting employee, or from director to employee, consulting
employee or consultant) shall be considered a Termination of
Employment, (ii) whether a leave of absence shall be considered a
Termination of Employment, and (iii) when a consultant or consulting
employee will be considered to have a Termination of Employment.
3. Eligibility
3.1 The Committee will determine which Executives and Directors of the
Company are eligible to participate in the Plan.
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4. Deferral Commitments
4.1 Deferral Elections
Each Executive and Director who wishes to participate in the Plan
must elect, prior to the first Plan Year of the Participant's
eligibility, to defer during each year of the Commitment Period a
fixed percentage of the Participant's Covered Compensation. This
election will be irrevocable and binding upon the Participant,
except as provided in Section 4.2, "Changes to Deferral Elections."
Participants may elect to defer up to 100% but not less than 10% of
Covered Compensation, in whole percentages, but not less than $1,000
(before reductions, if any, under Section 4.2.1).
With respect to the Post-1990 Deferral Account elections, the
Committee shall specify annual election periods during which
irrevocable deferral elections by Participants shall be made.
4.2 Changes to Deferral Elections
4.2.1 The maximum allowable total deferral of Covered Compensation for all
Participants under this Plan for any Plan Year will be determined by
the Committee. In the event that Participant deferral elections are
estimated to result in this maximum being exceeded, the following
method will be used to reduce Participant deferral percentages so
that the total estimated deferral is less than the maximum
allowable.
a) All Executives who have elected to defer more than 50% of
Covered Compensation will be reduced, on an equal percentage
basis, but not below 50% of Covered Compensation or $5,000,
whichever is greater.
b) If after implementation of subsection (a) above, the total
deferral is still greater than the maximum allowable total
deferral, all Executives' percentage deferrals will be reduced
on an equal percentage basis until the maximum allowable total
deferral is achieved.
4.2.2 In the event that a Participant rescinds, in whole or in part, his
or her election to defer a percentage of Covered Compensation in any
Plan Year, the Participant may not defer any Covered Compensation
for the balance of the Plan Year, nor in the following Plan Year.
4.2.3 The Committee, in its sole discretion, may elect to terminate the
Plan at any time pursuant to Section 9; in such event, deferrals
will cease effective as of the termination date.
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4.3 Rollover of Balances from Current Deferred Compensation Plan
4.3.1 Participants who hold a balance in the Company's current Deferred
Compensation Plan may elect to transfer that balance on a
bookkeeping basis into this Plan at the beginning of the first Plan
Year.
5. Earnings on Participants' Accounts
5.1 Base Earnings on Deferral
5.1.1 Covered Compensation deferred by a Participant shall be credited to
the Participant's Deferral Account as of the date of deferral.
Interest in each Plan Year will be credited quarterly on the average
Deferral Account balance for that quarter. The rate of interest
applied to the Pre-1991 Deferral Account shall be at a base rate
equivalent to an annual rate equal to Moody's Rate, and the rate
applicable to the Post-1990 Deferral Account shall be at a base rate
equivalent to an annual rate equal to the Moody's Rate less 1%. In
each case, the Moody's Rate in effect on each Anniversary Date shall
be used to determine the applicable rate of interest applied during
the subsequent Plan Year.
5.2 Earnings on Rollover Balances
5.2.1 The portion of a Participant's Pre-1991 Deferral Account resulting
from the transfer of a balance from the Company's current Deferred
Compensation Plan will be credited quarterly with a rate of interest
equivalent to 60% of the interest rate announced by Bank of America
as its "prime rate" on the previous Anniversary Date for the first
four (4) Plan Years. After the fourth Plan Anniversary Date, this
portion of the Pre-1991 Deferral Account will be credited with
interest quarterly at an effective annual rate equal to Moody's Rate
plus 9% until the cumulative interest equals that amount of interest
which would have been credited assuming that Moody's Rate had been
used since Plan inception. At that time, the distinction between
portions of the Pre-1991 Deferral Account from deferrals and from
transfers will cease to exist.
5.3 Additional Earnings
5.3.1 The Committee may, in its sole discretion, determine whether and in
what amount additional earnings shall be allocated to Participants'
Deferral Accounts. It is anticipated, but not guaranteed, that for
Pre-1991 Deferral Accounts, additional earnings will be allocated
beginning with the 10th Anniversary Date of the Plan and that for
Post-1990 Deferral Accounts, additional earnings will be allocated
beginning on January 1, 2001. Whether additional earnings will be
credited and their amount will depend upon several factors,
including the Company's future tax rate and its after-tax return on
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investments. Additional earnings in any Plan Year, if any, as
determined by the Committee, will be allocated to each Participant's
Deferral Account (except as otherwise provided in Section 6.1.3 and
except for Deferral Accounts of Participants who have had a
Termination of Employment prior to ten years of participation in the
Plan) by the ratio of the Participant's Ceiling Excess Earnings to
the sum of all Participants' Ceiling Excess Earnings as of the end
of the Plan Year, with such additional earnings and Ceiling Excess
Earnings calculated separately for Pre-1991 and Post-1990 Deferral
Accounts.
6. Payout of Participants' Accounts
6.1 Early Withdrawal Option
6.1.1 Participants may elect a one-time early withdrawal of up to 75% of
their Pre-1991 and/or Post-1990 Deferral Account(s) to be paid
within 90 days following any Anniversary Date starting with the
seventh Anniversary Date of Plan participation.
6.1.2 Participants shall make an annual election prior to each Anniversary
Date starting with the 6th Anniversary Date whether to continue
their deferral for one or more years or to receive the early
withdrawal payment following the subsequent Anniversary Date.
6.1.3 Participants who elect the one-time early withdrawal of up to 75% of
their Pre-1991 and/or Post-1990 Deferral Account(s) pursuant to
this Section 6.1 shall not be entitled to receive additional
earnings, if any, otherwise allocable under Section 5.3.1 to the
remaining portion of their applicable Deferral Account(s) from which
the withdrawal is made.
6.2 Termination Payouts
6.2.1 A Participant who has a Termination of Employment prior to one year
of Plan Participation shall receive an amount equal to his or her
Deferral Account, less any credited earnings. Payment shall be make
in a lump sum within twelve months following Termination of
Employment.
6.2.2 A Participant who has a Termination of Employment after one year of
Plan Participation but prior to 10 years of Plan participation shall
receive payment in a lump sum within twelve months following
Termination of Employment equal to his or her Deferral Account(s) as
of the most recent quarterly valuation.
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6.2.3 A Participant who has a Termination of Employment after 10 years of
Plan participation shall be subject and entitled to the Normal
Payout provisions set forth in Section 6.4.
6.3 Survivor Payouts
6.3.1 If a Participant dies before Normal Payout commences and the Plan
Agreement is in effect at the time of death, the Employer shall make
a Survivor Payout, as defined in Section 6.3.2, to the designated
Beneficiary.
6.3.2 The Survivor Payout shall consist of the Participant's Deferral
Account(s) at the time of death.
6.3.3 The Survivor Payout shall be paid in a lump sum to the Beneficiary
within twelve months following verification of the Participant's
death.
6.3.4 Notwithstanding subsection 6.3.3 above, a Participant may elect on
the Beneficiary form provided by the Committee that the Survivor
Payout be made over a 20-, 40-, or 60-quarter period rather than as
a lump sum.
6.4 Normal Payouts
6.4.1 Normal Payouts shall commence at age sixty-five (65), Retirement or
ten (10) years of Plan participation, whichever is the latest to
occur.
6.4.2 A Participant who Retires may request that Normal Payout commence
upon such Retirement. The Committee in its sole discretion may grant
such request in the event that the Participant demonstrates
financial need and the cash flow of the Company permits such early
commencement.
6.4.3 The Participant shall elect to receive the Normal Payout over a 20-,
40- or 60- quarter period. The first payment will commence within 90
days of the quarter end following Retirement.
6.4.4 If a Participant does not elect a payout option, the payments shall
be over a 20-quarter period.
6.4.5 Normal Payout shall consist of the Participant's Deferral Account(s)
spread equally over the elected payout period. Earnings, and
additional earnings, if applicable, as provided in Subsection 5.3.1,
shall continue to be credited to the remaining Deferral Account(s)
during the payout period and shall be estimated so that
approximately equal payments can be made.
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6.4.6 If a Participant dies during the Normal Payout period, Normal Payout
shall continue as scheduled to the Participant's Beneficiary.
6.4.7 The election provided in Section 6.4.3 shall be made during the
initial Commitment Period of Plan participation and shall become
irrevocable at the end of such period.
6.5 Payment for Notification of Death
6.5.1 If a Participant dies following either Retirement or Termination of
Employment, the Company will pay a $5,000 notification payment of a
lump sum to the Participant's Beneficiary within 90 days of the
quarter end following verification of the Participant's death.
7. Beneficiary Designation
7.1 Upon forms provided by the Committee, each Participant shall
designate in writing the Beneficiary or Beneficiaries whom such
Participant desires to receive the benefits of this Plan, payable
under Sections 6.3, 6.4 and/or 6.5, in the event of such
Participant's death.
7.2 A Participant may from time to time change his or her designated
Beneficiary or Beneficiaries without the consent of such Beneficiary
or Beneficiaries by filing a new designation in writing with the
Committee.
7.3 If a married Participant wishes to designate an individual other
than his or her spouse as Beneficiary, such designation shall not be
effective (i.e., the surviving spouse shall be treated as the sole
Beneficiary) unless consented to in writing by the spouse, which
consent shall acknowledge the effect of the designation and be
witnessed by a member of the Committee (or an individual designated
by the Committee) or acknowledged before a notary public.
Notwithstanding the foregoing, spousal consent shall not be
necessary if it is established to the satisfaction of the Committee
that there is no spouse of the Participant or that the required
consent cannot be obtained because the spouse cannot be located. The
Company may rely upon the designation of Beneficiary or
Beneficiaries last filed by the Participant in accordance with the
terms of this Plan.
7.4 If the designated Beneficiary does not survive the Participant, or
if there is no valid Beneficiary designation, amounts payable under
the Plan shall be paid to the Participant's spouse, or if there is
no surviving spouse, then to the duly appointed and currently acting
personal representative of the Participant's estate. If there is no
personal representative of the Participant's estate duly appointed
and acting in that capacity within 60 days after the Participant's
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death, then all payments due under the Plan shall be payable to the
person or persons who can verify affidavit or court order to the
satisfaction of the Committee that they are legally entitled to
receive the benefits specified hereunder pursuant to the laws of
interstate succession or other statutory provision in effect at the
Participant's death in the state in which the Participant resided.
7.5 In the event any amount is payable under the Plan to a minor,
payment shall not be made to the minor, but instead shall be paid to
that person's then living parent(s) to act as custodian, or, if no
parent of that person is living, to a custodian selected by the
Committee to hold the funds for the minor under the Uniform
Transfers to Minors Act, or similar law, in effect in the
jurisdiction in which the minor resides.
8. Acceleration Provisions
8.1 Notwithstanding the provisions of Section 6 hereof, a Participant
shall be entitled to request a hardship withdrawal of all or any
portion of their Deferral Account or acceleration of payments of
their Deferral Account if payments have already commenced under the
payout option selected by the Participant. A Participant must make a
written request to the Committee for a hardship withdrawal or
request for accelerated payment, stating the reasons such withdrawal
or acceleration is necessary because of a financial hardship. The
Committee, in its sole discretion, shall determine whether or not to
grant the Participant's request and, in so doing, may rely on the
Participant's statements, and a hardship withdrawal or accelerated
payment may be approved without further investigation unless the
Committee has reason to believe such statements are false.
The Participant shall specify from which of their Deferral
Account(s) (i.e., Pre-1991 or Post-1990, or both) the hardship
withdrawal shall be taken.
8.2 The Committee, acting in its sole discretion, may determine to
accelerate, in whole or in part, payments of some or all Deferral
Account(s) (including Deferral Account(s) as to which payments have
not yet commenced) in the event of a threatened or actual change in
control of the Company, or in the event that a change in the legal,
accounting, or tax treatment of amounts deferred under the Plan are
altered in a manner which would potentially subject the Company, the
Participants, or both, to adverse tax or administrative burdens.
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9. Amendment and Termination of Plan
9.1 The Company may, at its absolute and sole discretion, amend or
terminate the Plan at any time.
9.2 In the event of Company-initiated Plan termination, Participants'
entire Deferral Account(s), including credited interest, will be
paid to Participants within twelve months of the quarter end
following Plan termination.
10. Nature of Accounts
10.1 All amounts credited to the Deferral Account(s) shall remain the
sole property of the Company and shall be usable by it as part of
its general funds for any legal purpose whatsoever. The Deferral
Account(s) shall exist only as bookkeeping entries for the purpose
of facilitating the computation of earnings credits hereunder and
such Deferral Account(s) shall not constitute trust funds, escrow
accounts, or any other form of asset segregation in favor of anyone
other than the Company. No participant shall have any interest in
any specific asset of the Company by virtue of this Plan and each
Participant's rights under this Plan shall at all times be limited
to those of a general unsecured creditor of the Company.
Although sometimes referred to in this Plan as "interest," amounts
credited to Deferral Account(s) pursuant to Section 5.1, 5.2 and 5.3
may be treated as compensation for tax and payroll withholding
purposes, pursuant to applicable Internal Revenue Code and Treasury
regulation requirements.
11. Limitation on Rights of Participants
11.1 If a Participant is an employee of the Company, such employment is
not for any specific term and may be terminated by the Participant
or Company at any time, for any reason, with or without cause.
Neither this Plan nor any election to defer compensation hereunder
shall be held or construed to confer on any person any legal right
to be continued as an employee, consultant or Director of the
Company; nor to constitute any promise or commitment by the Company
regarding future positions, future work assignments, future
compensation or any other term or condition of employment or
affiliation.
12. Non-Transferability
12.1 No right to payment under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or
charge and any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge the same shall be void. No
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right to payment shall in any manner be liable for, or subject to,
the debts, contracts, liabilities or torts of the person entitled
thereto.
13. Restriction Against Assignment
13.1 The Participant or Beneficiary shall not have the power to transfer,
assign, anticipate, modify, or otherwise encumber in any manner
whatsoever any of the payments that will become due pursuant to this
Plan, nor shall said payments be subject to attachment, garnishment
or execution, or be transferable by operation of law in event of
bankruptcy or insolvency.
14. Binding Effect
14.1 The Plan Agreement or Agreements attached hereto, when executed,
is/are solely between the Company and the Participant. The
Participant and any Beneficiary shall have recourse only against the
Company for its enforcement, and any Plan Agreement shall be binding
upon the Beneficiary, heirs, and personal representative of the
Participant and upon the successors and assigns of the Company.
15. Settlement of Disputes
15.1 If any disputes arise with regard to the interpretation of any of
the provisions of this Plan or with regard to the amount of any
payments due under this Plan and the Agreement, the Committee shall
make any resolution of such disputes which it deems, in its sole
discretion, to be in the best interest of the Company and the
Participants. Any such determinations made by the Committee shall be
final and binding on all Participants in the Plan.
15.2 The Committee shall adopt procedures, consistent with Section 503 of
the Employee Retirement Income Security Act of 1974, with respect to
notice to Participants of claims denied under the Plan and review of
denied claims.
16. Administration
16.1 The Plan shall be administered by the Committee, as appointed by the
President of the Company.
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17. Forfeiture
Any payment due to a Participant hereunder which is not claimed by the
Participant, his or her Beneficiary, his or her estate or other person
legally entitled thereto within four years after becoming payable shall be
forfeited and canceled and shall remain with the Company and no other
person shall have any right thereto or interest therein. The Company shall
have no duty under this Agreement to give notice to any person other than
the Participant or his or her designated Beneficiary that amounts are
payable hereunder.
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