Attached files
Exhibit 4.26
ALION DIRECTOR DEFERRED COMPENSATION PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008
ALION DIRECTOR DEFERRED COMPENSATION PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008
ARTICLE I
PURPOSE
PURPOSE
The purpose of this Plan is to permit non-employee Members of the Board of Alion, a Delaware
corporation, to defer receipt of Directors Fees (as defined herein). This Plan shall be unfunded
for tax purposes and for purposes of Title I of ERISA.
ARTICLE II
DEFINITIONS
DEFINITIONS
For purposes of this Plan, unless otherwise clearly apparent from the context, the following
phrases or terms shall have the following indicated meanings:
2.1. Account Balance shall mean, with respect to a Participant, a credit on the records of
the Employer equal to the Deferral Account balance. The Account Balance shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement and determination of the
amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.
2.2. Administrator shall mean the Committee or such other person or persons appointed by the
Committee to be responsible for the daily operations of the Plan. Upon a Change in Control, the
Administrator shall be determined pursuant to Section 9.2 of the Plan.
2.3. Affiliate shall mean an entity which is a member of a controlled group of
corporations with the Company under Code Section 414(b) or a trade or business under common control
with the Company under Code Section 414(c); provided, however, that in applying Code Sections
1563(a)(1), (2) or (3) and for the purposes of Code Section 414(b), the language at least 50
percent will be used instead of at least 80 percent each place it appears, and in applying
Treasury Regulation Section 1.414(c)-2 for purposes of Code Section 414(c), the language at least
50 percent will be used instead of at least 80 percent each place it appears. In addition, to
the extent the Committee determines that legitimate business criteria exist to use a reduced
ownership percentage to determine whether an entity is an Affiliate for purposes of determining
whether a Termination of Service has occurred, the Committee may designate an entity that would
meet the definition of Affiliate by substituting 20 percent in place of 50 percent in the
preceding sentence as an Affiliate. Such designation shall be made by December 31, 2007 or, if
later, at the time a 20 percent or more ownership interest in such entity is acquired.
2.4. Annual Deferral Amount shall mean that portion of a Participants Annual Directors
Fees and SAR or Phantom Stock Payment that a Participant elects to defer in accordance with
Article IV, for any one Plan Year. In the event of a Participants retirement, Disability, death
or a Termination of Service prior to the end of a Plan Year, such years Annual Deferral Amount
shall be the actual amount withheld prior to such event.
2.5. Annual Directors Fees means any compensation, whether for Board meetings or as
retainer fees or otherwise, earned by a Member for services rendered as a Member during a
particular Plan Year in which he or she has elected to be a Participant.
2.6. Beneficiary shall mean one or more persons, trusts, estates or other entities,
designated in accordance with Article VII, that are entitled to receive benefits under this Plan
upon the death of a Participant.
2.7. Beneficiary Designation Form shall mean the form established from time to time by the
Administrator that a Participant completes, signs and returns to the Administrator to designate one
or more Beneficiaries.
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2.8. Board shall mean the Board of Directors of the Company.
2.9. Change in Control shall mean and shall be deemed to have occurred as of the date of the
first to occur of the following events:
(a) any Person or Group acquires stock of the Company that, together with stock held by
such Person or Group, constitutes more than fifty percent (50%) of the total Fair Market
Value or total voting power of the stock of the Company. However, if any Person or Group is
considered to own more than fifty percent (50%) of the total Fair Market Value or total
voting power of the stock of the Company, the acquisition of additional stock by the same
Person or Group is not considered to cause a Change in Control of the Company. An increase
in the percentage of stock owned by any Person or Group as a result of a transaction in
which the Company acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this subsection. This subsection applies only when
there is a transfer of stock of the Company (or issuance of stock of the Company) and stock
in the Company remains outstanding after the transaction;
(b) any Person or Group acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such Person or Group) ownership of stock of the
Company possessing thirty percent (30%) or more of the total voting power of the stock of
the Company;
(c) a majority of members of the Companys Board is replaced during any 12-month period
by Directors whose appointment or election is not endorsed by a majority of the members of
the Companys Board prior to the date of the appointment or election; or
(d) any Person or Group acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such Person or Group) assets from the Company
that have a total gross fair market value equal to or more than forty percent (40%) of the
total gross fair market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the value of
the assets of the Company, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets. However, no
Change in Control shall be deemed to occur under this subsection (d) as a result of a
transfer to:
(i) A shareholder of the Company (immediately before the asset transfer) in
exchange for or with respect to its stock;
(ii) An entity, fifty percent (50%) or more of the total value or voting power
of which is owned, directly or indirectly, by the Company;
(iii) A Person or Group that owns, directly or indirectly, fifty percent (50%)
or more of the total value or voting power of all the outstanding stock of the
Company; or
(iv) An entity, at least fifty percent (50%) of the total value or voting power
of which is owned, directly or indirectly, by a person described in clause (iii)
above.
For these purposes, the term Person shall mean an individual, corporation, association,
joint-stock company, business trust or other similar organization, partnership, limited liability
company, joint venture, trust, unincorporated organization or government or agency, instrumentality
or political subdivision thereof (other than an employee benefit trust established or maintained
for the benefit of employees of the Company). The term Group shall have the meaning set forth in
Rule 13d-5 of the Securities Exchange Commission (SEC), modified to the extent necessary to
comply with Treasury Regulation Section 1.409A-3(i)(5), or any successor thereto in effect at the
time a determination of whether a Change in Control has occurred is being made. If any one Person,
or Persons acting as a Group, is considered to effectively control the Company as described in
subsections (b) or (c) above, the acquisition of additional control by the same Person or Persons
is not considered to cause a Change in Control.
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2.10. Claimant shall have the meaning set forth in Section 11.1.
2.11. Code shall mean the Internal Revenue Code of 1986, as it may be amended from time to
time.
2.12. Committee shall mean the committee described in Article IX.
2.13. Company shall mean Alion, Inc., a Delaware corporation and any successor to such
corporation that adopts the Plan.
2.14. Deferral Account shall mean (a) the sum of all of a Participants Subaccounts and any
portion of the Account Balance to be paid in respect of the Participants Termination of Service,
plus (b) amounts credited in accordance with all the applicable crediting provisions of this Plan
that relate to the Participants Deferral Account, less (c) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral
Account. The Deferral Account, and each other specified account balance, shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement and determination of the
amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.
2.15. Election Form shall mean the form established by the Administrator that a Participant
completes, signs and returns to the Administrator to make his or her deferral election under the
Plan.
2.16. Employer shall mean the Company and any Affiliate that, with the consent of the
Company, elects to participate in the Plan and any successor entity that adopts the Plan. If any
such entity withdraws, is excluded from participation in the Plan or terminates its participation
in the Plan, such entity shall thereupon cease to be an Employer.
2.17. ERISA shall mean the Employee Retirement Income Security Act of 1974, as it may be
amended from time to time.
2.18. Fair Market Value on any given date means the value of one share of Common Stock as
determined by the Committee in its sole discretion, based upon the most recent valuation of the
Companys Common Stock made by an independent appraisal that meets the requirements of Code Section
401(a)(28)(C) and the regulations thereunder as of a date that is no more than 12 months before the
relevant transaction to which the valuation is applied.
2.19. Hardship shall mean an unanticipated emergency that is caused by an event beyond the
control of the Participant that would result in severe financial hardship to the Participant
resulting from (a) a sudden and unexpected illness or accident of the Participant or the spouse,
dependent (as defined in Code Section 152(a)) or Beneficiary of the Participant, (b) a loss of the
Participants property due to casualty (including the need to rebuild a home following damage to a
home not otherwise covered by insurance, for example, not as a result of a natural disaster), or
(c) such other extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant, all as determined in the sole discretion of the Administrator. In
addition, the need to pay for medical expenses, including non-refundable deductibles, as well as
for the costs of prescription drug medication, or the need to pay for the funeral expenses of a
spouse or a dependent may also constitute a Hardship event. The Administrator shall determine
whether the circumstances presented by the Participant constitute an unanticipated emergency. Such
circumstances and the Administrators determination will depend on 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: (i)
through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the
Participants assets, to the extent liquidation of such assets would not itself cause severe
financial hardship, or (iii) by cessation of his elective deferrals under this Plan or a similar
deferred compensation plan for the remainder of the Plan Year.
2.20. Member shall mean, for any Plan Year, any individual who is determined by the
Committee to be a member of the Employers Board.
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2.21. Participant shall mean each Member who elects to participate in the Plan by signing
and returning an Election Form in a manner acceptable to the Administrator, who actually commences
participation in the Plan, and whose participation has not terminated.
2.22. Plan shall mean the Alion Director Deferred Compensation Plan, which shall be
evidenced by this instrument, as may be amended from time to time.
2.23. Plan Year shall mean calendar year; provided however, that for periods before January
1, 2006, the Plan Year shall mean the twelve-month period commencing each October 1 and ending on
September 30, and the period from October 1, 2005 to December 31, 2005.
2.24. Phantom Stock Payment shall mean an amount paid to a Member upon the surrender of a
Phantom Stock Award under the Alion Science and Technology Board of Directors Phantom Stock Plan,
as amended from time to time.
2.25. SAR shall mean an award granted to a Member pursuant to the terms of the Alion Science
and Technology Corporation 2004 Stock Appreciation Rights Plan, as amended from time to time.
2.26. SAR Payment shall mean an amount paid to a Member upon his exercise or payment of an
SAR.
2.27. Scheduled Distribution shall mean a distribution from a Participants Scheduled
Distribution Subaccount in accordance with Section 5.1.
2.28. Scheduled Distribution Subaccount or Subaccount shall mean the separate subaccounts
under the Deferral Account that are established and maintained for each Participant. Such
subaccounts shall reflect (a) the amount deferred pursuant to the Participants Election Form for
each deferral election; (b) amounts credited in accordance with all the applicable crediting
provisions of this Plan that relate to the Subaccount, less (c) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to the Subaccount. In the
event that two or more Subaccounts reflect amounts deferred that are to be paid at the same time,
such Subaccounts may be aggregated into a single Subaccount.
2.29. Termination of Service shall mean termination of the Participants status as a
Director of the Company and, if the Director is otherwise an independent contractor of the Company,
complete and good-faith termination of any such contractual relationship. If the Director is also
an employee of the Company or any Affiliate (as such term is defined in the Alion Executive
Deferred Compensation Plan), the services provided as an employee are not taken into account in
determining whether the Director has incurred a Termination of Service hereunder to the extent this
Plan is not aggregated for purposes of Treasury Regulation Section 1.409-1(h)(5) with any deferred
compensation plan in which he or she participates as an employee.
2.30. Trust shall mean one or more trusts established, effective as of January 1, 2003
between the Company and the trustee named therein, as amended from time to time.
ARTICLE III
SELECTION, ENROLLMENT AND ELIGIBILITY
SELECTION, ENROLLMENT AND ELIGIBILITY
3.1. Enrollment Requirements. As a condition to participation, each Member shall
complete, execute and return to the Administrator an Election Form. The Administrator shall
establish from time to time such enrollment requirements as it determines in its sole discretion
are necessary.
3.2. Eligibility; Commencement of Participation. An eligible Member shall commence
participation in the Plan on the first day of the month following the month in which the Member
completes all enrollment requirements, provided that the Member is then an eligible Member.
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3.3. Termination of Participation and/or Deferrals. If the Committee determines in
good faith that a Participant (a) no longer qualifies as a Member, or (b) is or would be a
Disqualified Person (within the meaning of Sections 409(p)(4) and 4979A of the Code) for any
period during which the Company maintains an employee stock ownership plan, the Committee shall
have the right, in its sole discretion, to terminate any deferral election the Participant has made
for the remainder of the Plan Year in which the Participants status changes, to the extent
permitted under Code Section 409A, and prevent the Participant from making future deferral
elections.
ARTICLE IV
DEFERRAL ELECTIONS/CREDITING/TAXES
DEFERRAL ELECTIONS/CREDITING/TAXES
4.1. Deferrals. For each Plan Year, a Participant may elect to defer his or her
Annual Directors Fees and/or SAR or Phantom Stock Payments in the following percentages:
Deferral | Minimum Amount | |
Annual Directors Fees
|
0% to 100%, in 1% increments | |
SAR or Phantom Stock Payments
|
0% or 100% |
If no election is made, the amount deferred shall be zero.
4.2. Election to Defer; Effect of Election Form.
(a) Annual Election Forms. A Participants Election Form shall be effective
only for the Plan Year that will be listed on the Election Form. The Administrator shall
maintain an open enrollment period preceding each Plan Year in order to allow Participants
to submit Election Forms. An Election Form shall become irrevocable as of the last day for
filing such election as described below.
(b) Timing of Election to Defer Annual Directors Fees. To be effective for
any Plan Year, an Election Form to defer a percentage of Annual Directors Fees must be
received by the Administrator no later than December 31 of the Plan Year preceding the year
in which the Annual Directors Fees are earned. No deferral was permitted for the Plan Year
commencing October 1, 2005 and ending December 31, 2005.
(c) New Members. If an individual first becomes eligible to participate in the
Plan as a result of his or her election to the Board of Directors during the Plan Year, the
individual may submit an Election Form to defer a percentage of Annual Directors Fees for
the Plan Year in which he or she first becomes a Participant by filing such the Election
Form with the Administrator within thirty (30) days after he or she first becomes eligible
to participate in the Plan; provided, however, that the Election Form shall apply only to
Annual Directors Fees earned subsequent to the date of such election.
(d) SAR and Phantom Stock Awards. A Participant may elect to defer receipt of
all of any SAR or Phantom Stock Award, as provided in the Alion Science and Technology
Corporation 2004 Stock Appreciation Rights Plan or the Alion Science and Technology
Corporation Board of Directors Phantom Stock Plan, as applicable. A Participants election
must be made at least twelve months prior to the date that the applicable SAR or Phantom
Stock Award would otherwise be paid under the terms of the respective plan; provided,
however, that an election to defer the receipt of a payment that would, absent such a
deferral election, be treated as a short-term deferral within the meaning of Treasury
Regulation Section 1.409A-1(b)(4) must be made as of a date that is at least one year prior
to the date such payment ceases to be subject to a substantial risk of forfeiture. Such
deferrals shall be considered redeferrals under Treasury Regulation Section 1.409A-2(b)
with respect to an applicable distribution event, and, as such, shall result in further
deferral of the payment with respect to such distribution event for a minimum of five years.
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(e) Timing and Method of Distribution. The Participants election shall, to
the extent applicable, specify the Scheduled Distribution Subaccount or Subaccounts into
which all or a portion of such Annual Deferral Amounts will be directed, as described in
Section 5.1; and the payment commencement date and method of distribution to apply to
benefits distributable upon the Participants Termination of Service as described in
Sections 5.2 and 5.3.
4.3. Withholding of Annual Deferral Amounts. For each Plan Year, the Annual
Directors Fees and SAR or Phantom Stock Payment portions of the Annual Deferral Amount shall be
withheld at the time the Annual Directors Fees and/or SAR or Phantom Stock Payments are or
otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself.
4.4. Crediting/Debiting of Account Balances. In accordance with, and subject to, the
rules and procedures that are established from time to time by the Administrator, in its sole
discretion, amounts shall be credited or debited to a Participants Account Balance in accordance
with the following rules:
(a) Election of Measurement Funds for Deferral Account. A Participant, in
connection with his or her initial deferral election in accordance with Section 4.2 above,
shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section
4.4(c) below) to be used to determine the additional amounts to be credited to his or her
Deferral Account when the Participant commences participation in the Plan and continuing
thereafter for each subsequent business day in which the Participant participates
in the Plan, unless changed in accordance with the next sentence. Commencing with the
business day that follows the Participants commencement of participation in the Plan and
continuing thereafter for each subsequent business day in which the Participant participates
in the Plan, the Participant may (but is not required to) elect, by submitting an Election
Form to the Administrator that is accepted by the Administrator, to reallocate among the
available Measurement Fund(s) to be used to determine the additional amounts to be credited
to his or her Deferral Account, or to change the portion of his or her Deferral Account
allocated to each previously or newly elected Measurement Fund. If an election is made in
accordance with the previous sentence, it shall apply as soon as administratively possible
and shall continue thereafter for each subsequent business day in which the Participant
participates in the Plan, unless changed in accordance with the previous sentence.
(b) Proportionate Allocation. In making any deferral election under the Plan,
the Participant shall specify on the Election Form, in increments of one percentage point
(1%), the percentage of his or her Deferral Account to be allocated to a Measurement Fund
(as if the Participant was making an investment in that Measurement Fund with that portion
of his or her Deferral Account).
(c) Measurement Funds. The Participant may elect one or more measurement funds
(the Measurement Funds) for the purpose of crediting additional amounts to his or her
Deferral Account. The Committee shall, in its sole discretion, select, discontinue,
substitute or add a Measurement Fund at any time.
(d) Crediting or Debiting Method. The performance of each elected Measurement
Fund (either positive or negative) will be determined by the Committee, in its reasonable
discretion, based on the performance of the Measurement Funds themselves. Each
Participants Account balance shall be credited or debited on a daily basis based on the
performance of each Measurement Fund selected by the Participant for the Deferral Account,
as determined by the Committee in its sole discretion, as though (i) a Participants Account
Balance were invested in the selected or required Measurement Fund(s) in the percentages
applicable to such business day, as of the close of business on the business day, at the
closing price on such date; (ii) the portion of the Annual Deferral Amount that was actually
deferred as of the business day were invested in the Measurement Fund(s) selected by the
Participant, in the percentages applicable to such business day, as soon as administratively
possible after the day on which such amounts are actually deferred from the Participants
Directors Fees; and (iii) any distribution made to a Participant that decreases such
Participants Account Balance ceased being invested in the Measurement Fund(s), in the
percentages applicable to such business day, as soon as administratively possible.
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(e) No Actual Investment. Notwithstanding any other provision of this Plan to
the contrary, the Measurement Funds are to be used for measurement purposes only, and a
Participants election of any such Measurement Fund, the allocation to his or her Account
Balance thereto, the calculation of additional amounts and the crediting or debiting of such
amounts to a Participants Account Balance shall not be considered or
construed in any manner as an actual investment of his or her Account Balance in any such
Measurement
Fund. In the event that the Employer or the Trustee (as that term is defined in the
Trust), in its own discretion, decides to invest funds in any or all of the Measurement
Funds, no Participant shall have any rights in or to such investments themselves. Without
limiting the foregoing, a Participants Account Balance shall at all times be a bookkeeping
entry only and shall not represent any investment made on his or her behalf by the Employer
or the Trust; the Participant shall at all times remain an unsecured creditor of the
Employer.
ARTICLE V
DISTRIBUTIONS
DISTRIBUTIONS
5.1. Scheduled Distributions. A Participant may elect to receive a Scheduled
Distribution with respect to an Annual Deferral Amount at the time he or she files the applicable
deferral election under Section 4.2. A Participant may elect in accordance with Section 4.2(e) to
direct all or a portion of his or her Annual Deferral Amounts for the Plan Year into one (or, if
permitted by the Administrator, more than one) Subaccount(s), provided that any such Subaccount has
a scheduled distribution date which is not earlier than twelve (12) months after the end of the
Plan Year to which the Annual Deferral Amount relates; provided, however, that a Sub-Account to
which any SAR or Phantom Stock Award is deferred shall have a Scheduled Distribution date that is
not less than five years after the date such Award would otherwise have been paid. The
Administrator may establish uniform and nondiscriminatory rules and procedures governing Scheduled
Distribution Subaccounts, including establishing limitations on the number of Subaccounts available
to Participants for any Plan Year or in the aggregate, and the minimum length of deferral to be
provided under any newly-established Subaccount, as the Administrator deems appropriate.
To the extent permitted by the Administrator at the time of election, such election may
designate whether the elected Scheduled Distribution will be paid as a result of the Participants
intervening retirement, death, Disability or Termination of Service, or alternatively will continue
to apply notwithstanding such intervening event. Except as otherwise elected by a Participant
under the preceding sentence, an election of a Scheduled Distribution shall automatically terminate
upon the Participants retirement, death, Disability or Termination of Service, at which time the
provisions of Sections 5.2, 5.3 and 5.4 shall govern distribution of the Participants Deferral
Account.
A Participant may, with the consent of the Administrator and to the extent permitted under
Code Section 409A and regulations thereunder, elect to (a) revoke a Scheduled Distribution
(provided that the Participants Scheduled Distribution election would otherwise automatically
terminate upon the Participants Termination of Service for any reason), in which case the balance
of the applicable Subaccount will be restored to the Participants Deferral Account, or (b) extend
to a later date the date permitted under Section 5.4 on which a Scheduled Distribution will occur,
in which case the applicable Subaccount will be redesignated (and merged with another existing
Subaccount having the same designated distribution date). A Participant may make an election under
the preceding sentence by filing a new election prior to his or her Termination of Service at such
time and in such form as the Administrator shall designate. Any election to revoke or extend the
date of a Scheduled Distribution shall not take effect until at least twelve months after the date
on which it is made and must provide for a deferred distribution date not earlier than five years
after the date such Scheduled Distribution was otherwise scheduled to be made and not later than
the date set forth in Section 5.4. A Scheduled Distribution may be made in a single lump sum
payment or in installments over two to eleven years (as described in Section 5.3(a) or 5.3(b),
respectively).
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5.2. Retirement, Death, Disability or Other Termination of Service.
(a) Initial Distribution Election. A Participant who has incurred a
Termination of Service, whether by reason of retirement, voluntary or involuntary
termination, death or Disability (each a Distribution Event), shall receive distribution
of his or her Deferral Account (other than a Scheduled Distribution Subaccount having a
Scheduled Distribution date prior to the date of Termination of Service or a Scheduled
Distribution Subaccount subject to a later Scheduled Distribution date with respect to which
the Participant has elected under Section 5.1 that no intervening Distribution Event shall
apply) in a single lump sum payment as soon as practicable but in any event within ninety
(90) days following such Termination of Service. Notwithstanding the foregoing, the
Administrator may permit a Participant to elect a later payment commencement date permitted
under Section 5.4, or an alternate method of distribution permitted under Section 5.3, by
filing a written request with the Administrator at the time the Participant files an initial
deferral election under Section 4.2. To the extent permitted under rules established by the
Administrator at the time of election, such an election may separately specify different
times or available methods of payment for different Distribution Events.
(b) Changes in Distribution Election. The Administrator may permit a
Participant to defer the commencement of his or her distribution to a date permitted under
Section 5.4, or select an alternative method of distribution permitted under Section 5.3,
after the initial deferral election by filing a written request with the Administrator.
Such a change election shall not take effect until at least twelve months after the date on
which it is made and shall be effective only if: (a) the election is filed with the
Administrator before the Participants Termination of Service; (b) the election does not
accelerate the timing or payment schedule of any distribution; (c) the payment commencement
date in the change election is not less than five years after the date the distribution
would otherwise have commenced for the Distribution Event without regard to such election;
and (d) the Administrator approves such election. Except as otherwise provided in Section
5.5, a Participants distribution election shall become irrevocable upon the Participants
Termination of Service.
(c) Death. If a Participant dies before distribution of his or her Deferral
Account has commenced, except to the extent the Participant has elected otherwise in
accordance with 4.2 as permitted by the Administrator, the Participants benefit under the
Plan shall be paid to his or her Beneficiary in a single lump sum payment as soon as
practicable following the Participants death.
(d) Distribution Event. Whether a Participant has incurred a Distribution
Event shall be determined by the Administrator in a manner consistent with the requirements
of Section 409A and regulations thereunder.
5.3. Method of Payment.
(a) Lump Sum Payment. Distribution of a Participants Deferral Account
pursuant to Section 5.1, 5.2 or 6.1, shall be made in a cash lump sum unless the Participant
elects otherwise.
(b) Installment Distribution. A Participant requesting distribution of a
Deferral Account pursuant to Section 5.2 may, with the approval of the Administrator,
receive distribution in periodic payments in lieu of a lump sum. Periodic payments shall be
paid on an annual, quarterly or monthly basis, as elected by the Participant with the
consent of the Administrator, over a period that does not exceed eleven (11) years. Each
installment payment shall be determined by dividing the Participants then-current Account
balance by the number of payments remaining to be paid. The Administrator may establish
uniform and nondiscriminatory rules and procedures governing the payment of installment
distributions, including the maximum period over which installment distributions shall be
made and the minimum amount which must be distributed in each installment, as the
Administrator deems appropriate.
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(c) Death of Participant or Beneficiary During Installment Distribution Period.
If a Participant who has elected installment payments under Section 5.3(b) dies after
payments have commenced but before all amounts held in the Deferral Account have been
distributed, then to the extent permitted by the Administrator at the time of the
Participants deferral election, the remaining Deferral Account balance shall be paid to the
Beneficiary or Beneficiaries designated by the Participant over the then remaining
installment period, or if the Participant has so elected, in a single lump sum payment as
soon as practicable following the Participants death. If the designated Beneficiary dies
after the Participant but before all amounts held in the Deferral Account have been
distributed, the then remaining balance in the Participants Deferral Account shall be
distributed in a lump sum payment to the Beneficiarys estate as provided in Section 5.3(a)
(except to the extent that the Participant has designated one or more contingent
Beneficiaries) as soon as practicable after the Beneficiarys death.
5.4. Payment Commencement Date. A Participant may not elect a distribution date
later than (a) April 1 of the calendar year after the year in which the Participant attains age
701/2, or (b) five years after the Participants Termination of Service, if later.
5.5. Transition Rule Election. Pursuant to Internal Revenue Service Notice 2005-1,
Q&A-19(c), as extended by Notice of Proposed Rulemaking REG-158080-04, a Participant who has not
incurred a Termination of Service may, prior to December 31, 2007, modify or make new elections
regarding distribution of his or her Deferral Account(s) under Sections 5.1 through 5.3 at such
time and in such form as the Administrator shall designate; provided, however, that no such
distribution election may affect payments that the Participant would otherwise receive in 2007 or
cause payments to be made in 2007.
5.6. Acceleration of Payment Date. Notwithstanding the foregoing, the distribution of
benefits hereunder may be accelerated, with the consent of the Committee, under the following
circumstances:
(a) Compliance with Domestic Relations Order: To permit payment to an
individual other than the Participant as necessary to comply with the provisions of a
domestic relations order (as defined in Code Section 414(p)(1)(B));
(b) Conflicts of Interest: To permit payment as necessary to comply with the
provisions of a Federal government ethics agreement or to avoid violation of applicable
Federal, state, local or foreign ethics law or conflicts of interest law;
(c) Section 409(p): To prevent the occurrence of a nonallocation year (within
the meaning of Code Section 409(p)(3)) in the plan year of an employee stock ownership plan
next following the Plan Year in which such payment is made, provided that the amount
distributed may not exceed 125% of the minimum amount of distribution necessary to avoid the
occurrence of a nonallocation year; or
(d) Tax Event: Upon a good faith, reasonable determination by the Committee,
and upon advice of counsel, that the Plan fails to meet the requirements of Code Section
409A and regulations thereunder. Such payment may not exceed the amount required to be
included in income as a result of the failure to comply with the requirements of Code
Section 409A.
5.7. Delay of Payments. If the Committee reasonably determines that the making of any
payment required under the Plan at the date specified in the Plan would jeopardize the ability of
the Company to continue as a going concern, the payment will be treated as made upon the date
specified under the Plan if the payment is made during the first taxable year of the Company in
which the making of the payment would not have such effect. In addition, a payment otherwise
required to be made under the terms of the Plan may be delayed solely to the extent necessary under
the following circumstances, provided that payment is made as soon as possible within the first
taxable year of the Participant after the reason for delay no longer applies:
(a) Payments Subject to the Code Section 162(m): The Company reasonably
anticipates that such payment would not be deductible under Code Section 162(m);
(b) Violation of Law: The Administrator reasonably determines that making the
payment will violate Federal securities or other applicable laws; or
(c) Other Permitted Event: Upon such other events and conditions as the
Commissioner of Internal Revenue shall prescribe in generally applicable guidance.
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ARTICLE VI
HARDSHIP
HARDSHIP
6.1. Withdrawal for Hardship. If a Participant experiences a Hardship, and
distributions have not yet commenced under Article V, the Participant may petition the
Administrator to receive a distribution of all or part of his or her Account balance. The
Administrator may rely on the Participants representation that the Hardship cannot be alleviated
by the means described in the last sentence of Section 2.19. The distribution shall not exceed the
lesser of the Participants Account Balance or the amount reasonably needed to satisfy the
Hardship, which amount may include amounts necessary to pay any Federal, state, or local income
taxes or penalties reasonably anticipated to result from the distribution. The determinations
of the amount reasonably necessary to satisfy the Hardship will take into account any additional
compensation that becomes available to the Participant as a result of cancellation of a deferral
election. If, subject to the sole discretion of the Administrator, the Hardship distribution is
approved, such distribution shall be made within 60 days of the date of approval. If a Participant
receives a distribution on account of Hardship, he or she shall be prohibited from making deferrals
to the Plan for the remainder of the Plan Year.
ARTICLE VII
BENEFICIARY DESIGNATION
BENEFICIARY DESIGNATION
7.1. Beneficiary. Each Participant shall have the right, at any time, to designate
his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable
under the Plan upon the death of a Participant. The Beneficiary designated under this Plan may be
the same as or different from the beneficiary designation under any other plan of an Employer in
which the Participant participates.
7.2. Beneficiary Designation and Change of Beneficiary. A Participant shall designate
his or her Beneficiary by completing and signing the Beneficiary Designation Form and returning it
to the Administrator or its designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary
Designation Form and the Administrators rules and procedures, as in effect from time to time.
Upon the acceptance by the Administrator of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Administrator shall be entitled to rely on
the last Beneficiary Designation Form filed by the Participant and accepted by the Administrator
prior to his or her death.
7.3. Acknowledgment. No designation or change in designation of a Beneficiary shall
be effective until received and acknowledged in writing by the Administrator or its designated
agent.
7.4. No Beneficiary Designation. If a Participant fails to designate a Beneficiary as
provided above or, if all designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participants benefits, then the Participants designated Beneficiary
shall be deemed to be his or her estate.
7.5. Doubt as to Beneficiary. If the Administrator has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Administrator shall have the right,
exercisable in its discretion, to cause the Employer to withhold such payments until this matter is
resolved to the Administrators satisfaction.
7.6. Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge the Employer, Administrator and the Committee from
all further obligations under this Plan with respect to the Participant and or her
Beneficiary(ies), and that Participants participation in the Plan shall terminate upon such full
payment of benefits.
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ARTICLE VIII
TERMINATION, AMENDMENT OR MODIFICATION
TERMINATION, AMENDMENT OR MODIFICATION
8.1. Termination. Although the Company anticipates that it will continue the Plan for
an indefinite period of time, there is no guarantee that the Company will continue the Plan or will
not terminate the Plan at any time in the future. Accordingly, the Company reserves the right to
discontinue its sponsorship of the Plan and/or to terminate the Plan at any time with respect to
any or all of its participating Members, by action of the Board. Upon termination of the Plan, the
Board may elect to (a) pay benefits hereunder as they become due as if the Plan had not terminated
or (b) to extent permitted by Code Section 409A and regulations thereunder, direct that all
payments remaining to be made under the Plan be made in a single lump sum to Participants (or their
Beneficiaries).
8.2. Amendment. The Company may, at any time, amend or modify the Plan in whole or in
part with respect to an Employer by the action of the Board; provided, however, that: (a) no
amendment or modification shall be effective to decrease or restrict the value of a Participants
vested Account Balance in existence at the time the amendment or modification is made, calculated
as if the Participant had experienced a Termination of Service as of the effective date of the
amendment or modification; and (b) no amendment or modification of this Section 8.2 or Section 9.2
of the Plan shall be effective. The amendment or modification of the Plan shall not affect any
Participant or Beneficiary who has become entitled to the payment of benefits under the Plan as of
the date of the amendment or modification. Notwithstanding the foregoing, the Board may amend the
Plan as necessary to cause the Plan to comply with Code Section 409A.
ARTICLE IX
ADMINISTRATION
ADMINISTRATION
9.1. Committee Duties. Except as otherwise provided in this Article IX, this Plan
shall be administered by a Committee that shall consist of members appointed by the Board. Members
of the Committee may be Participants in this Plan. The Committee shall also have the discretion
and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Plan and (b) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the Plan. Any individual serving on
the Committee who is a Participant shall not vote or act on any matter relating solely to himself
or herself. When making a determination or calculation, the Committee shall be entitled to rely on
information furnished by a Participant or the Employer.
9.2. Administration Upon Change In Control. Upon and after the occurrence of a Change
in Control, the Administrator shall be an independent third party selected by the trustee of the
Trust and approved by the individual who, immediately prior to such event, was the Companys Chief
Executive Officer or, if not so identified, the Companys highest ranking officer (the Ex-CEO).
The Administrator shall have the discretionary power to determine all questions arising in
connection with the administration of the Plan and the interpretation of the Plan and Trust
including, but not limited to, benefit entitlement determinations; provided, however, upon and
after the occurrence of a Change in Control, the Administrator shall have no power to direct the
investment of Plan or Trust assets
or select any investment manager or custodial firm for the Plan or Trust. Upon and after the
occurrence of a Change in Control, the Company must: (a) pay all reasonable administrative expenses
and fees of the Administrator; (b) indemnify the Administrator against any costs, expenses and
liabilities including, without limitation, attorneys fees and expenses arising in connection with
the performance of the Administrator hereunder, except with respect to matters resulting from the
gross negligence or willful misconduct of the Administrator or its employees or agents; and (c)
supply full and timely information to the Administrator on all matters relating to the Plan, the
Trust, the Participants and their Beneficiaries, the Account Balances of the Participants, the date
of circumstances of the death or Termination of Service of the Participants, and such other
pertinent information as the Administrator may reasonably require. Upon and after a Change in
Control, the Administrator may be terminated (and a replacement appointed) by the trustee of the
Trust only with the approval of the Ex-CEO. Upon and after a Change in Control, the Administrator
may not be terminated by the Company.
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9.3. Agents. In the administration of this Plan, the Committee may, from time to
time, employ agents and delegate to them such administrative duties as it sees fit (including
acting through a duly appointed representative) and may from time to time consult with counsel who
may be counsel to any Employer.
9.4. Binding Effect of Decisions. The decision or action of the Administrator with
respect to any question arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the Plan.
9.5. Indemnity of Committee. The Company shall indemnify and hold harmless the
members of the Committee, and any Member to whom the duties of the Committee may be delegated, and
the Administrator against any and all claims, losses, damages, expenses or liabilities arising from
any action or failure to act with respect to this Plan, except in the case of willful misconduct by
the Committee, any of its members, any such Member or the Administrator.
9.6. Employer Information. To enable the Committee and/or Administrator to perform
its functions, the Employer shall supply full and timely information to the Committee and/or
Administrator, as the case may be, on all matters relating to the compensation of its Participants,
the date and circumstances of the, death or Termination of Service of its Participants, and such
other pertinent information as the Committee or Administrator may reasonably require.
ARTICLE X
OTHER BENEFITS AND AGREEMENTS
OTHER BENEFITS AND AGREEMENTS
10.1. Coordination with Other Benefits. The benefits provided for a Participant and
Participants Beneficiary under the Plan are in addition to any other benefits available to such
Participant under any other plan or program of
the Employer. The Plan shall supplement and shall not supersede, modify or amend any other
such plan or program except as may otherwise be expressly provided.
ARTICLE XI
CLAIMS PROCEDURES
CLAIMS PROCEDURES
11.1. Presentation of Claim. Any Participant or Beneficiary of a deceased Participant
(such Participant or Beneficiary being referred to below as a Claimant) may deliver to the
Administrator a written claim for a determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a notice received by the
Claimant, the claim must be made within sixty (60) days after such notice was received by the
Claimant. All other claims must be made within one hundred eighty (180) days of the date on which
the event that caused the claim to arise occurred. The claim must state with particularity the
determination desired by the Claimant.
11.2. Notification of Decision. The Administrator shall consider a Claimants claim
within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimants requested determination has been made, and that the claim has
been allowed in full; or
(b) that the Administrator has reached a conclusion contrary, in whole or in part, to
the Claimants requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the
claim, or any part of it;
(ii) specific reference(s) to pertinent provisions of
the Plan upon which such denial was based;
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(iii) a description of any additional material or
information necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary; and
(iv) an explanation of the claim review procedure set
forth in Section 12.3 below.
11.3. Review of a Denied Claim. Within sixty (60) days after receiving a notice from
the Administrator that a claim has been denied, in whole or in part, a Claimant (or the Claimants
duly authorized representative) may file with the Committee a written request for a review of the
denial of the claim. Thereafter, but not later than thirty (30) days after the review procedure
began, the Claimant (or the Claimants duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion, may grant.
11.4. Decision on Review. The Committee shall render its decision on review promptly,
and not later than sixty (60) days after the filing of a written request for review of the denial,
unless a hearing is held or other special circumstances require additional time, in which case the
Committees decision must be rendered within one-hundred-twenty (120) days after such date. Such
decision must be written in a manner calculated to be understood by the Claimant, and it must
contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which the decision was
based; and
(c) such other matters as the Committee deems relevant.
11.5. Legal Action. A Claimants compliance with the foregoing provisions of this
Article XI is a mandatory prerequisite to a Claimants right to commence any legal action with
respect to any claim for benefits under this Plan.
ARTICLE XII
TRUST
TRUST
12.1. Establishment of the Trust. The Company shall establish the Trust, and shall at
least annually transfer over to the Trust such assets as the Company determines, in its sole
discretion, are necessary to provide, on a present value basis, for its respective future
liabilities created with respect to the Annual Deferral Amounts for Participants for all periods
prior to the transfer, as well as any debits and credits to the Participants Account Balances for
all periods prior to the transfer, taking into consideration the value of the assets in the trust
at the time of the transfer. The Trust shall remain part of the Companys general assets and no
Participant or Beneficiary claiming payments under the Plan shall have any right, title or interest
in the Trust.
12.2. Interrelationship of the Plan and the Trust. The provisions of the Plan shall
govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions
of the Trust shall govern the rights of the Company, Participants, Beneficiaries and the creditors
of the Company to the assets transferred to the Trust. The Company shall at all times remain
liable to carry out its obligations under the Plan.
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12.3. Investment of Trust Assets. The Trustee of the Trust shall be authorized, upon
written instructions received from the Committee or investment manager appointed by the Committee,
to invest and reinvest the assets of the Trust in accordance with the applicable Trust Agreement.
12.4. Distributions From the Trust. The Companys obligations under the Plan may be
satisfied with Trust assets distributed
pursuant to the terms of the Trust. Any such distribution shall reduce the Companys
obligations under this Plan.
ARTICLE XIII
MISCELLANEOUS
MISCELLANEOUS
13.1. Status of Plan. The Plan is intended to be a plan that is not qualified within
the meaning of Code Section 401(a) and that is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a select group of management or highly
compensated employees within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The
Plan shall be administered and interpreted to the extent possible in a manner consistent with that
intent.
13.2. Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or claims in any property
or assets of the Employer. For purposes of the payment of benefits under this Plan, any and all of
the Employers assets shall be, and remain, the general, unpledged unrestricted assets of the
Employer. The Employers obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.
13.3. Employers Liability. The Employer shall have no obligation to a Participant
under the Plan except as expressly provided in the Plan.
13.4. 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, alienate 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 non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be
transferable by operation of law in the event of a Participants or any other persons bankruptcy
or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.
13.5. Continued Board Service. Nothing in this Plan shall be construed as conferring
any right upon any Participant to continuance as a member of the Board.
13.6. Furnishing Information. A Participant or his or her Beneficiary will cooperate
with the Administrator by furnishing any and all information requested by the Committee and take
such other actions as may be requested in order to facilitate the administration of the Plan and
the payments of benefits hereunder, including but not limited to, taking such physical examinations
as the Administrator may deem necessary.
13.7. Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so apply; and whenever
any words are used herein in the singular or in the plural, they shall
be construed as though they were used in the plural or the singular, as the case may be, in
all cases where they would so apply.
13.8. Captions. The captions of the articles, sections and paragraphs of this Plan
are for convenience only and shall not control or affect the meaning or construction of any of its
provisions.
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13.9. Governing Law. Subject to ERISA, the provisions of this Plan shall be construed
and interpreted according to the internal laws of the Commonwealth of Virginia.
13.10. Notice. Any notice or filing required or permitted to be given to the
Administrator or the Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:
Alion
Attention: Stacy Mendler
1750 Tysons Boulevard, Suite 1300
McLean, VA 22102
Attention: Stacy Mendler
1750 Tysons Boulevard, Suite 1300
McLean, VA 22102
Such notice shall be deemed 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.
Any notice or filing required or permitted to be given to a Participant under this Plan shall
be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the
Participant.
13.11. Successors. The provisions of this Plan shall bind and inure to the benefit of
the Company and its successors and assigns and the Participant and the Participants designated
Beneficiaries.
13.12. Validity. In case any provision of this Plan shall be 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 or invalid provision had never been
inserted herein.
13.13. Incompetent. If the Administrator determines in its discretion that a benefit
under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of
handling the disposition of that persons property, the Administrator may direct payment of such
benefit to the guardian, legal representative or person having the care and custody of such minor,
incompetent or incapable person. The Administrator may require proof of minority, incompetence,
incapacity or guardianship as it may deem appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of the Participant and the Participants
Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan
for such payment amount.
13.14. Court Order. The Administrator is authorized to make any payments directed by
court order in any action in which the Plan or the Committee has
been named as a party. In addition, if a court determines that a spouse or former spouse of a
Participant has an interest in the Participants benefits under the Plan in connection with a
property settlement or otherwise, the Administrator, in its sole discretion, shall have the right,
notwithstanding any election made by a Participant, to immediately distribute the spouses or
former spouses interest in the Participants benefits under the Plan to that spouse or former
spouse.
13.15. Trust. If the Trust terminates and benefits are distributed from the Trust to
a Participant, the Participants benefits under this Plan shall be reduced to the extent of such
distributions.
13.16. Legal Fees To Enforce Rights After Change in Control. The Company is aware
that upon the occurrence of a Change in Control, the Board (which might then be composed of new
Members) or a shareholder of the Company, or of any successor corporation might then cause or
attempt to cause the Company or such successor to refuse to comply with its obligations under the
Plan and might cause or attempt to cause the Company to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan. In these circumstances, the
purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should
appear to any Participant that the Company or any successor corporation has failed to comply with
any of its obligations under the Plan or any agreement thereunder or, if the Company or any other
person takes any action to declare the Plan void or unenforceable or institutes any litigation or
other legal action designed to deny, diminish or to recover from any Participant the benefits
intended to be provided, then the Company irrevocably authorizes such Participant to retain counsel
of his or her choice at the expense of the Company to represent such Participant in connection with
the initiation or defense of any litigation or other legal action, whether by or against the
Company or any director, officer, shareholder or other person affiliated with the Company or any
successor thereto in any jurisdiction.
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IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed as of November
13, 2007, and certifies that the foregoing Plan was duly adopted by the Board of the Company on
that date.
Alion Science and Technology Corporation | ||||||
By: | /s/ Bahman Atefi
|
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