Exhibit 10.26
STANLEY EXECUTIVE SAVINGS
PLAN
Stanley, Inc. (the “
Company ”) hereby establishes the Stanley Executive
Savings Plan (the “ Plan ”), effective
May 6, 2009 (the “ Effective Date ”) for
the purpose of attracting high quality executives and promoting in
them increased efficiency and an interest in the successful
operation of the Company. The Plan is intended to, and shall
be interpreted to, comply in all respects with Code
Section 409A and those provisions of ERISA applicable to an
unfunded plan maintained primarily to provide deferred compensation
benefits for a select group of management or highly compensated
employees.
ARTICLE I
DEFINITIONS
1.1
“
Account ” or “
Accounts ” shall mean the
Deferral Accounts and the Company Contribution Accounts established
under this Plan pursuant to Article IV.
1.2
“Administrative
Committee” shall mean the Fiduciary
Committee appointed pursuant to the Stanley, Inc. Employee
Benefits Administration Charter to administer the Plan, as
described herein.
1.3
“Affiliate”
means any entity
that 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 solely for purposes of determining whether a
Termination of Service has occurred, in applying Code Sections
1563(a)(1), (2) and (3) for 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 that the Administrative 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 Administrative Committee may designate an entity that
would meet the definition of “Affiliate” substituting
20 percent in place of 50 percent in the preceding sentence as an
Affiliate. Such designation shall be made by April 1,
2009 or, if later, at the time a 20 percent or more ownership
interest in such entity is acquired.
1.4
“
Base Salary ” shall mean a
Participant’s annual base salary, excluding incentive and
discretionary bonuses, commissions, reimbursements and other
non-regular remuneration, received from the Company prior to
reduction for any salary deferrals under benefit plans sponsored by
the Company, including but not limited to, plans established
pursuant to Code Section 125 or qualified pursuant to Code
Section 401(k).
1.5
“
Beneficiary ” or “
Beneficiaries ” shall mean the
person, persons or entity designated as such pursuant to
Section 7.1.
1.6
“
Board ” shall mean the Board
of Directors of Company.
1.7
“
Bonus(es) ” shall mean amounts
paid to the Participant by the Company annually in the form of
discretionary or incentive compensation or any other bonus
designated by the Administrative Committee before reductions for
contributions to or deferrals under any pension, deferred
compensation or benefit plans sponsored by the Company.
1.8
“Change in
Control” shall have the same meaning
as a “Change of Control” under the Stanley, Inc.
2006 Omnibus Incentive Compensation Plan, or any successor
thereto.
1.9
“
Code ” shall mean the
Internal Revenue Code of 1986, as amended, as interpreted by
Treasury regulations and applicable authorities promulgated
thereunder.
1.10
“Commissions”
shall mean
commissions payable to the Participant for the applicable Plan Year
(as determined by the Administrative Committee) before reductions
for contributions to or deferrals under any pension, deferred
compensation or benefit plans sponsored by the Company.
1.11
“
Company Contributions
” shall
mean the contributions made by the Company pursuant to
Section 3.2.
1.12
“
Company Contribution Account
” shall
mean the Account maintained for the benefit of the Participant
which is credited with Company Contributions, if any, pursuant to
Section 4.2.
1.13
“
Compensation ” shall mean all
amounts eligible for deferral for a particular Plan Year under
Section 3.1(a).
1.14
“
Compensation Committee
” shall
mean the Compensation Committee of the Board.
1.15
“
Crediting Rate ” shall mean the
notional gains and losses credited on the Participant’s
Account balance which are based on the Participant’s choice
among the investment alternatives made available by the
Administrative Committee pursuant to Section 3.3 of the
Plan.
1.16
“
Deferral Account ” shall mean the
Account maintained for each Participant which is credited with
Participant deferrals pursuant to Section 4.1.
1.17
“Director”
shall mean a
member of the Board.
1.18
“
Disability ” shall mean that the
Participant (a) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, or (b) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health
plan covering employees of the Company. The Administrative
Committee may require that the Participant submit evidence
of
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such qualification for
disability benefits in order to determine that the Participant is
disabled under this Plan.
1.19
“
Eligible Executive
” shall
mean a highly compensated or management level employee
of the Company
selected by the Compensation Committee to be eligible to
participate in the Plan. Unless otherwise determined by the
Compensation Committee, an Eligible Executive shall include those
executives with a title of Vice President or above.
1.20
“
ERISA ” shall mean the
Employee Retirement Income Security Act of 1974, as amended,
including Department of Labor and Treasury regulations and
applicable authorities promulgated thereunder.
1.21
“
Financial Hardship
” shall
mean a severe financial hardship to the Participant resulting from
an illness or accident of the Participant, the Participant’s
spouse, or a dependent (as defined in Code Section 152(a)) of
the Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant (but shall in all events correspond to the meaning
of the term “unforseeable emergency” under Code
Section 409A(a)(2)(v)). 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 Financial Hardship.
1.22
“
Fund ” or “
Funds ” shall mean one or
more of the investment funds selected by the Administrative
Committee pursuant to Section 3.3 of the Plan.
1.23
“
Hardship Distribution
” shall
mean a distribution of benefits or a reduction or cessation of
current deferrals pursuant to Section 6.5 to a Participant who
has suffered a Financial Hardship.
1.24
“
Initial Election Period
” shall
mean the period established by the Administrative Committee for
submission of the Participant Election Forms prior to commencement
of participation in the Plan pursuant to
Article II.
1.25
“
Participant ” shall mean any
Eligible Executive who becomes a Participant in this Plan in
accordance with Article II.
1.26
“
Participant Election Forms
” shall
mean the election forms established by the Administrative Committee
by which a Participant makes elections with respect to
(1) voluntary deferrals of his/her Compensation, (2) the
investment Funds which shall act as the basis for crediting of
investment gain or loss on Account balances, and (3) the form
and timing of distributions from Accounts. The Participant
Election Forms may take the form of an electronic communication
followed by appropriate written confirmation according to
specifications established by the Administrative
Committee.
1.27
“
Payment Date ” shall mean the date
by which a lump sum payment shall be made or the date by which
installment payments shall commence. The Payment Date shall
be the date that is thirty (30) days following the date of the
occurrence of an event upon which a
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distribution from the Plan
is triggered. In the case of a Scheduled Distribution, the
Payment Date shall be a date during the month for which the
Participant has elected to receive such Scheduled
Distribution.
1.28
“
Plan Year ” shall mean the
calendar year except that the first Plan Year shall begin on the
Effective Date and end on the last day of the calendar year in
which the Effective Date occurs.
1.29
“Restricted Stock
Units” shall mean amounts payable to
a Participant from the Stanley Associates, Inc. Executive
Deferred Compensation and Equity Incentive Plan, the Stanley Inc.
2006 Omnibus Incentive Compensation Plan or any other applicable
Company plan.
1.30
“Retirement”
shall mean
Termination of Service after (a) having attained age
sixty-five (65) or (b) at fifty-five (55) and above with at
least five (5) Years of Service.
1.31
“
Scheduled Distribution
” shall
mean a scheduled distribution date elected by the Participant for
distribution of amounts from a specified Deferral Account,
including notional earnings thereon, as provided under
Section 6.4.
1.32
“Specified
Employee” means a “key
employee” as defined for purposes of Code
Section 416(i), without regard to paragraph (5) thereof,
of the Company or any Affiliate, subject to the following
modifications. An employee is a Specified Employee if, as of
the date of determination, he or she is (a) one of the 50 (or,
if less, the greater of three or 10% of all employees) highest-paid
officers of the Company or any Affiliate having annual compensation
greater than $135,000 (as adjusted under Code Section 415(d));
(b) a 5% owner of the Company or any Affiliate; or (c) a
1% owner of the Company or any Affiliate having annual compensation
of more than $150,000. If an individual is a Specified
Employee at any time during the twelve month period ending on
December 31 of a Plan Year, he or she shall be treated as a
Specified Employee for the 12-month period beginning on
April 1 of the Plan Year following such
December 31. For purposes of this Section 1.32, the
term “compensation” will be defined in accordance with
Treasury Regulation Section 1.415(c)-2(d)(2); provided,
however, that compensation paid to or on behalf of an individual
who is not a Participant and who is a non-resident alien of the
U.S. will not be taken into account hereunder to the extent that
the compensation is not includable in gross income under the Code
and is not effectively connected to the conduct of a trade or
business within the U.S. Whether an individual is a Specified
Employee will be determined in accordance with the requirements of
Code Section 409A.
1.33
“
Termination of Service
” means
the severing of employment with the Company and any Affiliates,
voluntarily or involuntarily, for any reason. A Termination
of Service will be deemed to have occurred if the facts and
circumstances indicate that the Company and the Participant
reasonably anticipate that no further services will be performed
after a certain date or that the level of bona fide services the
Participant will perform for the Company and its Affiliates after
such date (whether as an employee or as an independent contractor)
will permanently decrease to no more than 30% of the average level
of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding 36-month
period (or the full period of services to the employer if the
Participant has been providing services to the Company and its
Affiliates less than 36 months). A Participant will not be
deemed to have
4
incurred a Termination of
Service while he or she is on military leave, sick leave, or other
bona fide leave of absence (such as temporary employment by the
government) if the period of such leave does not exceed six months
or such longer period as the Participant’s right to
reemployment with the Company is provided either by statute or by
contract. For this purpose, a leave of absence is bona fide
only if there is a reasonable expectation that the Participant will
return to employment at the conclusion of the leave. If the
period of leave exceeds six months and the Participant’s
right to reemployment is not provided either by statute or by
contract, the Termination of Service will be deemed to occur on the
first date immediately following such six-month period. Whether an
individual has incurred a Termination of Service shall be
determined in accordance with the provisions of
Section 409A.
1.34
“
Years of Service ” shall mean the
cumulative consecutive years of service the Participant has
provided services to the Company or any Affiliate. A
Participant shall be providing services for purposes of
accumulating Years of Service at all times prior to Termination of
Service. Years of Service shall include service prior to the
Effective Date.
ARTICLE II
PARTICIPATION
2.1
Commencement of
Participation .
An
Eligible Executive shall become a Participant in the Plan by
submitting the Participant Election Forms, including such other
documentation and information as the Administrative Committee may
reasonably request, to the Administrative Committee during the
Initial Election Period established by the Administrative Committee
prior to the beginning of the first Plan Year in which the Eligible
Executive shall be eligible to participate in the Plan. The
Administrative Committee may establish a special Initial Election
Period for Eligible Executives entering the Plan during a Plan Year
(if the Eligible Executive is not already a participant in another
plan which is aggregated with this Plan under Code
Section 409A) to allow deferrals, within the first thirty (30)
days of initial eligibility, of Compensation earned for services
performed during the balance of such Plan Year after such election
is made.
2.2
Cessation of
Participation . An Eligible Executive shall cease to be a
Participant in the Plan if (a) he or she incurs a Termination
of Service for any reason, (b) the Plan is otherwise amended
so that the Eligible Executive ceases to be eligible for
participation, or (c) the Plan is terminated; provided,
however, that such individual shall continue to be a Participant
solely with respect to his or her vested Account balance until such
Account balance is distributed from the Plan. Such cessation
of participation shall be effective upon the date of the change in
status described in clause (a) above, as of the last day of a
designated deferral period, in the case of an amendment described
in (b) above, or upon the effective date of termination of the
Plan described in clause (c) above. If an Executive
ceases (or has ceased) to be a Participant in the Plan but
continues in the employ of the Company or any Affiliate, he or she
may continue to earn Years of Service for purposes of determining
the vested Account balance.
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ARTICLE III
CONTRIBUTIONS & DEFERRAL
ELECTIONS
3.1
Elections to Defer
Compensation .
(a)
Form of
Elections . A Participant may
only elect to defer Compensation attributable to services provided
after the time an election is made. Elections shall take the
form of a whole percentage (less applicable payroll withholding
requirements for Social Security and income taxes and employee
benefit plans as determined in the sole and absolute discretion of
the Administrative Committee) of up to:
(i)
80 % of Base
Salary;
(ii)
100% of
Commissions;
(iii)
100% of Bonuses;
and
(iv)
100% of
Restricted Stock Units.
Notwithstanding
the foregoing, the Administrative Committee may further limit the
maximum or the minimum amount of deferrals during any Plan Year, by
any Participant or group of Participants, in its sole
discretion. The minimum deferral that an active Participant
may make during any Plan Year is $5,000.
(b)
Timing and
Duration of Compensation Deferral Election . An Eligible
Executive’s initial election to defer Compensation shall be
made during the Initial Election Period established by the
Administrative Committee prior to the effective date of the
Participant’s commencement of participation in the Plan and
shall apply only to Compensation for services performed after such
deferral election is processed. A Participant may increase,
decrease, terminate or recommence a deferral election with respect
to Compensation for any subsequent Plan Year by filing a
Participant Election Form during the enrollment period
established by the Administrative Committee prior to the beginning
of such Plan Year, which election shall be effective on the first
day of the next following Plan Year. In the absence of an
affirmative election by the Participant to the contrary, the
deferral election for the prior Plan Year (including the election
of any distribution options) shall not continue in effect for
future Plan Years. After the beginning of the Plan Year,
deferral elections with respect to Compensation for services
performed during such Plan Year shall be irrevocable.
(c)
Special
Rule for Performance Based Compensation
. To the
extent permitted by the Administrative Committee, an election to
defer Compensation meeting the requirements for
“performance-based” compensation under Treasury
Regulation Section 1.409A-1(e) may be filed with the
Administrative Committee as of a date established by the
Administrative Committee which is at least six months prior to the
end of the performance period in which such Compensation is earned,
provided that (a) performance criteria have been established
in writing by not later than 90 days after the commencement of the
applicable performance period and the outcome is substantially
uncertain at the time the criteria are established, (b) the
Participant is in employment with the Company continuously from the
later of the beginning of the performance period or the date such
performance criteria are
6
set, and
(c) the election is made before such performance-based
compensation has become readily ascertainable ( i.e. , is
both calculable in amount and substantially certain to be
paid).
3.2
Company Contributions
. The Company shall have
the discretion to make Company Contributions to the Plan at any
time on behalf of any Participant. Company Contributions
shall be made in the complete and sole discretion of the
Compensation Committee and no Participant shall have the right to
receive any Company Contribution in any particular Plan Year
regardless of whether Company Contributions are made on behalf of
other Participants.
3.3
Investment Elections
.
(a)
Participant
Direction . At the time of entering the
Plan and/or of making the deferral election under the Plan, the
Participant shall designate, on a Participant Election
Form provided by the Administrative Committee, the investment
Funds in which the Participant’s Account or Accounts shall be
deemed to be invested for purposes of determining the amount of
earnings and losses to be credited to each Account. The
Participant may specify that all or any percentage of his or her
Account or Accounts shall be deemed to be invested, in whole
percentage increments, in one or more of the types of investment
Funds selected as alternative investments under the Plan from time
to time by the Administrative Committee pursuant to subsection
(b) of this Section 3.3. A Participant may change
the designation made under this Section at least monthly by
filing a revised election on a Participant Election
Form provided by the Administrative Committee. During
payout, the Participant’s Account shall continue to be
credited at the Crediting Rate selected by the Participant from
among the investment alternatives or rates made available by the
Administrative Committee for such purpose until all amounts have
been distributed from the Account. If a Participant fails to
make an investment election under this Section 3.3, the
Participant shall be deemed to have elected the Money Market type
of investment Fund selected by the Administrative Committee for
such purpose.
(b)
Investment
Alternatives . The Administrative
Committee shall select from time to time, in its sole and absolute
discretion, investment Funds and shall communicate each of the
alternative types of investment Funds to the Participant pursuant
to subsection (a) of this Section 3.3. The
Crediting Rate of each such investment fund shall be used to
determine the amount of earnings or losses to be credited to
Participant’s Account under Article IV. The
Participant’s choice among investments shall be solely for
purposes of calculation of the Crediting Rate on his or her
Accounts. The Company shall have no obligation to set aside
or invest amounts as directed by the Participant and, if the
Company elects to invest amounts as directed by the Participant,
the Participant shall have no more right to such investments than
any other unsecured general creditor.
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3.4
Distribution Elections
.
(a)
Initial
Election . At the time of making
a deferral election under the Plan, the Participant shall designate
the time and form of distribution of deferrals made pursuant to
such election (together with any earnings credited thereon) from
among the alternatives specified in Article VI. An
election to receive a defer
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