Exhibit 10.18


 


DEFERRED
COMPENSATION PLAN


 


prepared
for


 


DURATEK,
INC.


 

















 


DURATEK, INC.


 


DEFERRED
COMPENSATION PLAN


 


ARTICLE I - PURPOSE;
EFFECTIVE DATE


 


1.1.                              Purpose.
The purpose of this Deferred Compensation Plan (hereinafter, the “Plan”) is to permit
a select group of management and highly compensated employees of DURATEK, INC.
and its subsidiaries to defer the receipt of income which would otherwise
become payable to them.  It is intended
that this plan, by providing this deferral opportunity, will assist the Company
in retaining and attracting individuals of
exceptional ability by providing them with these benefits.


 


1.2.                              Effective Date.  The Plan shall be effective
as of February 1, 2003.


 


ARTICLE II - DEFINITIONS


 


For
the purpose of this Plan, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:


 


2.1.                              Account(s).  “Account(s)” means the account or accounts
maintained on the books of the Company used solely to calculate the amount
payable to each Participant under this Plan and shall not constitute a separate
fund of assets.  The Accounts available
for each Participant shall be identified as:


a)             Retirement Account


b)            In-Service Account; each Participant may maintain
up to two (2) In-Service Accounts based on selecting different times of
payments as selected under Article 5, below.


 


2.2.                              Actuarial Equivalent. “Actuarial Equivalent” means an equivalence in value between two (2)
or more forms and/or times of payment based on a determination by an actuary chosen
by the Company, using sound actuarial assumptions at the time of such
determination, and may be modified
from time to time consistent with sound actuarial assumptions at that time.


 


2.3.                              Beneficiary.  “Beneficiary” means the person, persons or
entity as designated by the Participant, entitled under Article VI to receive any Plan benefits payable after the
Participant’s death.


 


2.4.                              Board.  “Board” means the Board of Directors of the
Company.


 


2.5.                              Change in Control.  A “Change in Control” means a
merger, consolidation, or reorganization of the Company with one or more other entities in which the Company is not
the surviving entity, a


 


2

















 


sale
of substantially all of the assets of the Company to another entity, or any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) that results in any person or entity (or
persons or entities acting as a group or otherwise in concert) other than The
Carlyle Group and/or its affiliates, becoming the beneficial owner of fifty
percent (50%) or more of the combined voting power of all classes of securities
of the Company or obtaining (through stock ownership, proxies, or otherwise)
the right to elect a majority of the Board of Directors of the Company.


 


2.6.                              Committee.  “Committee” means the Committee appointed by
the Board to administer the Plan pursuant to Article VII.


 


2.7.                              Company.  “Company” means DURATEK, INC., a Delaware
corporation, and any directly or indirectly affiliated subsidiary corporations,
any other affiliate designated by the Board, or any successor to the business
thereof.


 


2.8.                              Compensation.  “Compensation” means the base salary payable
to and bonus or incentive compensation earned by a Participant with respect to
employment services performed for the Company by the Participant during a
particular calendar year and considered to be “wages” for purposes of federal
income tax withholding.  For purposes of
this Plan only, Compensation shall be calculated before reduction for any
amounts deferred by the Participant pursuant to the Company’s tax qualified
plans which may be maintained under Section 401(k) or Section 125 of the
Internal Revenue Code of 1986, as amended, (the “Code”), or pursuant to this
Plan or any other non-qualified plan which permits the voluntary deferral of
compensation.  Inclusion of any other
forms of compensation is subject to Committee Approval.


 


2.9.                              Deferral Commitment.  “Deferral Commitment” means a
commitment made by a Participant to defer a portion of Compensation as set
forth in Article III.  The Deferral
Commitment shall apply to each payment of salary and/or bonus payable to a
Participant, and shall specify the Account or Accounts to which the
Compensation deferred shall be credited. 
Such designation shall be made in whole percentages and shall be made in
a form acceptable to the Committee.  A
Deferral Commitment shall remain in effect until amended or revoked as provided
under Sections 3.3, or 3.5, below.


 


2.10.                        Deferral Period..“Deferral Period” means each calendar year.


 


2.11.                      Determination Date.  “Determination Date” means
each day.


 


2.12.                      Disability.  “Disability” means a physical or mental
condition that prevents the Participant from satisfactorily performing the
Participant’s usual duties for Company and qualifies as a “disability” under
the terms of the Company’s Long Term Disability program as then in existence at
that time.


 


2.13.                        Discretionary Contribution. 
“Discretionary Contribution” means the Company contribution credited to
a Participant’s Account(s) under Section 4., below.


 


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2.14.                        Distribution Election.  “Distribution Election” means
the form prescribed by the Committee and completed by the Participant,
indicating the chosen form of payment for benefits payable from each Account
under this Plan, as elected by the Participant.


 


2.15.                        Financial Hardship.  “Financial Hardship” means a
severe financial hardship of the Participant resulting from a Disability of the
Participant, a sudden and unexpected illness or accident of the Participant or
of a dependent of the Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstance arising
as a result of events beyond the control of the Participant.  Financial Hardship shall be determined based
upon such standards as are, from time to time, established by the Committee,
and such determination shall be in the sole discretion of the Committee.


 


2.16.                        401(k) Plan.  “401(k) Plan” means the Duratek 401(k) Plan,
or any other successor defined contribution plan maintained by the Company that
qualifies under Section 401(a) of the Code and satisfies the requirements of
Section 401(k) of the Code.


 


2.17.                        Interest.  “Interest” means the amount credited to a
Participant’s Account(s) on each Determination Date, which shall be based on
the Valuation Funds chosen by the Participant as provided in Section 2.22,
below and in a manner consistent with Section 4.3, below. Such credits to a
Participant’s Account may be either positive or negative to reflect the
increase or decrease in value of the Account in accordance with the provisions
of this Plan.


 


2.18.                        Participant.  “Participant” means any employee who is
eligible, pursuant to Section 3.1, below, to participate in this Plan, and who
has elected to defer Compensation under this Plan in accordance with Article
III, below.  The Participant shall be
designated as being a Group 1 Participant or a Group 2 Participant.   Except as provided in Section 3.6, below,
such employee shall remain a Participant in this Plan for the period of
deferral and until such time as all benefits payable under this Plan have been
paid in accordance with the provisions hereof.


 


2.19.                        Plan.  “Plan” means this Deferred Compensation Plan
as amended from time to time.


 


2.20.                        Retirement.  “Retirement” means the termination of
employment with the Company of the Participant after attaining age sixty (60).


 


2.21.                        Predecessor Plan.  “Predecessor Plan” means any
supplemental executive retirement plan, executive severance plan or like plan
maintained by the Company from which account credits are transferred to the
Plan in a manner and at a time specified by the Committee.


 


2.22.                        Valuation Funds.  “Valuation Funds” means one
or more of the independently established 
funds or indices that are identified and listed by the Committee.  These Valuation Funds are used solely to
calculate the Interest that is credited to each Participant’s Account(s) in
accordance with Article IV, below, and does not represent, nor should it be
interpreted to convey any beneficial interest on the part of the Participant in
any asset or other property of the Company. 
The


 


4

















 


determination
of the increase or decrease in the performance of each Valuation Fund shall be
made by the Committee in its reasonable discretion.  The Committee shall select the various Valuation Funds available
to the Participants with respect to this Plan and shall set forth a list of
these Valuation Funds attached hereto as Exhibit A, which may be amended from
time to time in the discretion of the Committee.


 


2.23.                       Years of Service.  “Years of Service” shall have
the meaning provided for such term for purposes of vesting under the 401(k)
Plan, whether or not the Participant is a participant in such plan.


 


ARTICLE III - ELIGIBILITY
AND PARTICIPATION


 


3.1.                             Eligibility and Participation.


 


a)         Eligibility.                    Eligibility
to participate in the Plan shall be limited to those select key employees of
Company who are designated by management, from time to time, and approved by
the Committee.


b)        Participation.  An
employee’s participation in the Plan shall be effective upon notification to
the employee by the Committee of eligibility to participate, and completion and
submission of a Deferral Commitment, an Allocation Form, and a Form of Payment
Designation to the Committee prior to the beginning of the Deferral Period.


c)         First-Year
Participation.   When an individual first becomes eligible
to participate in this Plan during a Deferral Period, a Deferral Commitment may
be submitted to the Committee within thirty (30) days after the Committee
notifies the individual of eligibility to participate.  Such Deferral Commitment will be effective
only with regard to Compensation earned and payable following submission of the
Deferral Commitment to the Committee.


 


3.2.                             Form of Deferral Commitment.  A
Participant may elect to make a Deferral Commitment in the form permitted by
the Committee.  The Deferral Commitment
shall specify the following:


 


a)         Deferral
Amounts; Accounts.   A Deferral Commitment shall be made with
respect to each payment of salary and/or bonus payable by the Company to a
Participant during the Deferral Period, and shall designate the portion of each
deferral that shall be allocated among the various Accounts, except that no
deferral shall be made to an Account at the same time that a distribution is to
be made from that Account.  The Participant
shall set forth the amount to be deferred as a full percentage of salary and/or
bonus (the Participant may designate a different percentage of salary and bonus
that is to be deferred under this Plan). 
Salary Deferral Commitments shall be made in roughly equal amounts over
the Deferral Period.


b)        Allocation to
Valuation Funds.  The Participant shall specify in a separate
form (known as the “Allocation Form”) filed with the Committee, the
Participant’s initial allocation of the amounts deferred into each Account
among the various available Valuation Funds.


c)         Maximum
Deferral.  The maximum
amount of each payment of base salary that may be 


 


5

















 


deferred by a Group 1 Participant shall be fifty percent (50%); Group 2
Participants shall not be permitted to defer any portion of base salary.   The maximum amount of each payment of bonus
or incentive compensation that may be deferred by any Participant shall be one
hundred percent (100%).


 


 


3.3.                             Period of Commitment.  Once a Participant has made a
Deferral Commitment, that Commitment shall remain in effect for the next
succeeding Deferral Period and shall remain in effect for all future Deferral
Periods unless revoked or amended in writing by the Participant and delivered
to the Committee no later than fifteen (15) days prior to the beginning of a
subsequent Deferral Period.


 


3.4.                             Commitment Limited by Termination or Disability.  If a
Participant suffers a Disability or terminates employment with Company prior to
the end of the Deferral Period, the Deferral Period shall end as of the date of
Disability or termination.


 


3.5.                             Modification of Deferral Commitment.  Except
as provided in Sections 3.3, 3.4, above, 
and 5.4 below, a Deferral Commitment shall be irrevocable by the Participant during a Deferral
Period, except that a Participant may choose to cease in its entirety the
deferral of salary at any time during a Deferral Period.  This cessation will be effective as soon as
practical after the receipt by the Committee of such a request and shall apply
only with respect to salary earned and payable after the time that this request
is filed with the Committee.  Any
resumption of such a Participant’s deferrals shall be permitted by the
Committee only by the election of the Participant in accordance with the
provisions of this Article III.


 


3.6.                             Change in Employment Status.  If the
Committee determines that a Participant’s employment performance is no longer
at a level that warrants reward through participation in this Plan, but does
not terminate the Participant’s employment with Company, the Participant’s
existing Deferral Commitment shall terminate at the end of the Deferral Period,
and no new Deferral Commitment may be made by such Participant after notice of
such determination is given by the Committee, unless the Participant later
satisfies the requirements of §3.1, above. 
If the Committee, in its sole discretion, determines that the
Participant no longer qualifies as a member of a select group of management or
highly compensated employees, as determined in accordance with the Employee
Retirement Income Security Act of 1974, as amended, the Committee may, in its
sole discretion terminate any Deferral Commitment for that year, prohibit the
Participant from making any future Deferral Commitments and/or distribute the
Participant’s Account Balances in accordance with Article V of this Plan as if
the Participant had terminated employment with the Company as of that time.


 


3.7.                             Defaults in Event of Incomplete or Inaccurate Deferral
Commitments.  In the event that a Participant submits a
Deferral Commitment to the
Committee that contains information necessary to the smooth operation of this
Plan which, in the sole discretion of the Committee, is incomplete or
inaccurate, the Committee shall be authorized to assume the following, and such
assumptions shall be communicated to the Participant:


 


6

















 


a)         If no Account is listed – assume Retirement Account was selected;


b)        If Accounts listed equal less than 100% - assume balance is deferred
into Retirement Account;


c)         If Accounts listed equal more than 100% – assume proportionate
reduction to each Account selected;


d)        If no Valuation Fund is selected – assume Money Market Fund was
selected;


e)         If Valuation Fund(s) selected equal less than 100% - assume that Money
Market Fund was selected for balance;


f)           If Valuation Fund(s) selected equal more than 100% - assume
proportionate reduction to each Valuation Fund selected;


g)        If no Distribution Election is chosen – assume lump sum for In-Service
Account and three (3) year for Retirement Account was selected; and,


h)        If no time of payment is chosen for In-Service Account – assume the
earliest possible date available under the provisions of Section 5.2, below was
selected.


 


ARTICLE IV - DEFERRED
COMPENSATION ACCOUNT


 


4.1.                             Accounts.  The Compensation deferred by a Participant
under the Plan, any Discretionary Contributions and Interest shall be credited
to the Participant’s Account(s). 
Separate accounts may be maintained on the books of the Company to
reflect the different Accounts chosen by the Participant, and the Participant
shall designate the portion of each deferral that will be credited to each
Account as set forth in Section 3.2(a), above. 
These Accounts shall be used solely to calculate the amount payable to
each Participant under this Plan and shall not constitute a separate fund of
assets.


 


4.2.                             Timing of Credits; Withholding.  A
Participant’s deferred Compensation shall be credited to each Account
designated by the Participant as of the date which the compensation deferred
would have otherwise been payable to the Participant, or a soon thereafter as
is practical and as provided by the Committee. 
Any Discretionary Contributions shall be credited to the appropriate
Account(s) as provided by the Committee. 
Any withholding of taxes or other amounts with respect to deferred
Compensation that is required by local, state or federal law shall be withheld
from the Participant’s corresponding non-deferred portion of the Compensation to
the maximum extent possible, and any remaining amount shall reduce the amount
credited to the Participant’s Account in a manner specified by the Committee.


 


4.3.                             Valuation Funds.


a)         Designation of
Funds.  A Participant shall designate, at a time and
in a manner acceptable to the Committee, one or more Valuation Funds for each
Account for the sole purpose of determining the amount of Interest to be
credited or debited to such Account. 
Such election shall designate the portion of each deferral of Compensation
made into each Account that shall be allocated among the available Valuation
Fund(s), and such election shall apply to each succeeding deferral of
Compensation until such time as the Participant shall file a new 


 


7

















 


election with the Committee.


b)        Reallocation of
Fund Balances.  Upon notice to the Committee, the
Participant may also reallocate the balance in each Valuation Fund among
the other available Valuation Funds as of
the next succeeding Determination Date, and the reallocation shall become
effective as of the first day of the following month.


c)         Company Stock
Valuation Fund.  Notwithstanding the prior subparagraph, no
Participant shall be permitted to reallocate any portion of an Account balance which
had previously been allocated into a Valuation Fund designated as a Company
Stock Valuation Fund.


 


4.4.                             Discretionary Contributions.  Company
may make Discretionary Contributions to a Participant’s Account.  Discretionary Contributions shall be
credited at such times and in such amounts
as recommended by the Committee and approved by the Compensation Committee of
the Board, or the Board in its sole discretion.  Unless the Committee specifies otherwise, such Discretionary
Contribution shall be allocated among the various Accounts in the same
proportion as set forth in section 4.1, above. 
Discretionary Contributions shall include any Account credits
transferred from a Predecessor Plan pursuant to an action by the Company or
pursuant to a timely election by a Participant in the manner prescribed by the
Committee.  In accordance with rules
established by the Committee, a Participant who is entitled to a benefit under
a Predecessor Plan may agree with the Company to have the Company credit to the
Plan an amount equal to the amount credited on behalf of the Participant under
the Predecessor Plan in exchange for the relinquishment by the Participant of
all rights and interests in and under the Predecessor Plan, provided that the
agreement is executed by the Company and the Participant before the amounts
accrued by the Participant under the Predecessor Plan is first made available
to the Participant.  Amounts so credited
under the Plan will be considered Discretionary Contributions under the Plan.


 


4.5.                             Determination of Accounts.  Each
Participant’s Account as of each Determination Date shall consist of the
balance of the Account as of the immediately preceding Determination Date,
adjusted as follows:


 


a)         New Deferrals.  Each
Account shall be increased by any deferred Compensation credited since such
prior Determination Date in the proportion chosen by the Participant, except
that no amount of new deferrals shall be credited to an Account at the same
time that a distribution is to be made from that Account.


b)        Discretionary
Contributions.  Each Account shall be increased by any
Discretionary Contributions credited since such prior Determination as set
forth above in sections 4.1 and 4.4 or as otherwise directed by the Committee.


c)         Distributions.  Each
Account shall be reduced by the amount of each benefit payment made from that
Account since the prior Determination Date. 
Distributions shall be deemed to have been made proportionally from each
of the Valuation Funds maintained within such Account based on the proportion
that such Valuation Fund bears to the sum of all Valuation Funds maintained
within such Account for that Participant as of the Determination Date
immediately preceding the date of payment.


d)        Interest.  Each
Account shall be increased or decreased by the Interest credited to such


 


8

















 


Account since such Determination Date as though the
balance of that Account as of the beginning of the current month had been
invested in the applicable Valuation Funds chosen by the Participant.


 


4.6.                             Vesting of Accounts.  Each Participant shall be
vested in the amounts credited to such Participant’s Account and Interest
thereon as follows:


a)         Amounts
Deferred.  A Participant shall be one hundred percent
(100%) vested at all times in the amount of Compensation elected to be deferred
under this Plan and Interest thereon.


b)        Discretionary
Contributions.  A Participant’s Discretionary Contributions
and Interest thereon shall become vested as determined by the Compensation
Committee of the Board, or the Board. 
Discretionary Contributions transferred from a Predecessor Plan shall be
vested as and to the extent the credits would have vested under the terms of
the Predecessor Plan.


Notwithstanding the preceding,
in the event of a Change in Control, a Participant’s Discretionary
Contributions and Interest shall immediately become one hundred percent (100%)
vested (if not already vested).


 


4.7.                             Statement of Accounts.  The Committee shall give to
each Participant a statement showing the balances in the Participant’s Account
on a quarterly basis.


 


ARTICLE V - PLAN
BENEFITS


 


5.1.                             Retirement Account.  The vested portion of a
Participant’s Retirement Account shall be distributed to the Participant upon
the termination of employment with the Company.  Benefits under this section shall be payable as soon as
administratively practical after termination of employment.  The form of benefit payment shall be that
form selected by the Participant pursuant to Section 5.6, below, unless the
Participant terminates employment prior to Retirement, in which event, the
Retirement Account shall be paid in the form of a lump sum payment.  Payment of any benefit from the Retirement
Account shall commence as soon as practical after the date of the Participant’s
termination of service with the Company, and subsequent payments, if the Form
of Payment selected provides for subsequent payments, shall be made on the
anniversary of the initial payment.


 


5.2.                             In-Service Account. The vested portion of a Participant’s In-Service Account shall be
distributed to the Participant upon the date chosen by the Participant in the
first Deferral Commitment which designated a portion of the Compensation
deferred be allocated to the In-Service Account, but in no event shall the date
selected be earlier than the first day of the fourth calendar year following
the initial filing of the Deferral Commitment with respect to that In-Service
Account.  The benefit payment shall be
that form selected by the Participant pursuant to Section 5.6, below.  However, if the Participant terminates
employment with the Company prior to the date so chosen by the Participant, the
vested portion of the In-Service Account shall be


 


9

















 


added to the Retirement Account as of the date of termination of
service and shall be paid in accordance with the provisions of Section 5.1,
above.  Payment shall commence as soon
as practical after the date selected by the Participant under this Section, and
subsequent payments, if the Form of Payment selected provides for subsequent
payments, shall be made on the anniversary of the initial payment.


 


5.3.                             Death Benefit.  Upon the death of a Participant prior to the
commencement of benefits under this Plan from any particular Account, Company
shall pay to the Participant’s Beneficiary an amount equal to the vested
Account balance in that Account in the form of a lump sum payment, except that
the Committee may, in its sole discretion, approve a request for payment in an
Actuarial Equivalent form.  In the event
of the death of the Participant after the commencement of benefits under this
Plan from any Account, the benefits from that Account(s) shall be paid to the
Participant’s designated Beneficiary from that Account at the same time and in
the same manner as if the Participant had survived.


 


5.4.                             Hardship Distributions.  Upon a finding that a
Participant has suffered a Financial Hardship or Disability, the Committee may,
in its sole discretion, amend the existing Deferral Commitment, or make
distributions from any or all of the Participant’s Accounts. The amount of such
distribution shall be limited to the amount reasonably necessary to meet (1)
the Participant’s needs resulting from the Financial Hardship or Disability,
and (2) any federal, state or local income taxes or penalties reasonably
anticipated to result from the hardship distribution, and will not exceed the
Participant’s vested Account balances. 
If payment is made due to Financial Hardship, the Participant’s
deferrals under this Plan shall cease for the period of the Financial Hardship
or Disability and for twelve (12) months thereafter.  Any resumption of the Participant’s deferrals under the Plan
after such twelve (12) month period shall be made only at the election of the
Participant in accordance with Article III herein.


 


5.5.                             Effect of Change in Control. 
Notwithstanding anything herein to the contrary, upon a Change in
Control, each Participant shall become entitled to receive the entire balance
of his or her Account(s) in a single lump sum payment on the ninetieth (90th)
day following the Change in Control (or as soon thereafter as administratively
feasible).  Notwithstanding the
preceding, the Participant may irrevocably elect, prior to the end if such
ninety (90) day period, to waive his or her right to receive such Change in
Control distribution.  If such waiver
election is timely made, the Participant shall receive his or her benefits
under this Plan as otherwise provided under the terms of the Plan.


 


5.6.                             Form of Payment.  Unless otherwise specified in
paragraphs 5.1, 5.2, 5.3 or 5.5,  the
benefits payable from any Account under this Plan shall be paid in the form of
benefit as provided below, and specified by the Participant in the Distribution
Election.  The most recently submitted
Distribution Election shall be effective for the entire vested Account balance
unless amended in writing by the Participant and delivered to the Committee.
If, at the time payment of benefits under this Plan become due and payable, the
Participant’s most recent election as to the form of payment was made within
one (1) year of such payment, then the most recent election made by the
Participant more that one year prior to the time of payment shall be used to
determine the


 


10

















 


form of payment.  The permitted forms of benefit payments are:


a)         A lump sum amount which is equal to the vested Account balance; and,


b)        Annual installments for a
period of up to ten (10) years (or in the event of payment of the In-Service
Account, a maximum of five (5) years) where the annual payment shall be equal to the balance of the Account
immediately prior to the payment, multiplied by a fraction, the numerator of
which is one (1) and the denominator of which commences at the number of annual
payment initially chosen and is reduced by one (1) in each succeeding year.  Interest
on the unpaid balance shall be based on the most recent allocation among the
available Valuation Funds chosen by the Participant, made in accordance with
Section 4.3, above.


 


5.7.                             Small Account.  If the total of a Participant’s vested,
unpaid Account balance as of the time the payments are to commence from the
Participant’s Account is less than $15,000, the remaining unpaid, vested
Account shall be paid in a lump sum, notwithstanding any election by the
Participant to the contrary.


 


5.8.                             Withholding; Payroll Taxes.  Company
shall withhold from any payment made pursuant to this Plan any taxes required
to be withheld from such payments under local, state or federal law.  A Beneficiary, however, may elect not to
have withholding of federal income tax pursuant to Section 3405(a)(2) of the
Code, or any successor provision thereto.


 


5.9.                             Payment to Guardian.  If a Plan benefit is payable
to a minor or a person declared incompetent or to a person incapable of
handling the disposition of the property, the Committee may direct payment to
the guardian, legal representative or person having the care and custody of
such minor, incompetent or person.  The
Committee may require proof of incompetency, minority, incapacity or
guardianship as it may deem appropriate prior to distribution.  Such distribution shall completely discharge
the Committee and Company from all liability with respect to such benefit.  


 


5.10.                       Effect of Payment.  The full payment of the
applicable benefit under this Article V shall completely discharge all
obligations on the part of the Company to the Participant (and the
Participant’s Beneficiary) with respect to the operation of this Plan, and the
Participant’s (and Participant’s Beneficiary’s) rights under this Plan shall
terminate.


 


ARTICLE VI - BENEFICIARY
DESIGNATION


 


6.1.                             Beneficiary Designation.  Each Participant shall have
the right, at any time, to designate one (1) or more persons or entity as
Beneficiary (both primary as well as secondary) to whom benefits under this
Plan shall be paid in the event of Participant’s death prior to complete
distribution of the Participant’s vested Account balance.  Each Beneficiary designation shall be in a
written form prescribed by the Committee and shall be effective only when filed
with the Committee during the Participant’s lifetime.


 


11

















 


6.2.                             Changing Beneficiary.   Any Beneficiary designation
may be changed by a Participant without the consent of the previously named
Beneficiary by the filing of a new Beneficiary designation with the Committee.


 


6.3.                             No Beneficiary Designation.   If any
Participant fails to designate a Beneficiary in the manner provided above, if
the designation is void, or if the Beneficiary designated by a deceased
Participant dies before the Participant or before complete distribution of the
Participant’s benefits, the Participant’s Beneficiary shall be the person in
the first of the following classes in which there is a survivor:


a)         The Participant’s surviving spouse;


b)        The Participant’s children in equal shares, except that if any of the
children predeceases the Participant but leaves surviving issue, then such
issue shall take by right of representation the share the deceased child would
have taken if living;


c)         The Participant’s estate.


 


6.4.                             Effect of Payment.   Payment to the Beneficiary
shall completely discharge the Company’s obligations under this Plan.


 


ARTICLE VII - ADMINISTRATION


 


7.1.                             Committee; Duties.   This Plan shall be
administered by the Committee, which shall consist of not less than three (3)
persons appointed by the Board, except in the event of a Change in Control as
provided in Section 7.5 below.  The
Committee shall have the authority, in its discretion, to make, amend,
interpret and enforce all appropriate rules and regulations for the
administration of the Plan and decide or resolve any and all questions,
including interpretations of the Plan, as they may arise in such
administration.  A majority vote of the
Committee members shall control any decision. 
Members of the Committee may be Participants under this Plan.


 


7.2.                             Agents.   The Committee may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit,
and may from time to time consult with counsel who may be counsel to the
Company.


 


7.3.                             Binding Effect of Decisions.   The
decision or action of the Committee with respect to any question arising out of
or in connection with the administration, interpretation and application of the
Plan and the rules and regulations promulgated hereunder shall be final,
conclusive and binding upon all persons having any interest in the Plan.


 


7.4.                             Indemnity of Committee.   The Company shall indemnify
and hold harmless the members of the Committee against any and all claims,
loss, damage, expense or liability arising from any action or failure to act
with respect to this Plan on account of such member’s service on the Committee,
except in the case of gross negligence or willful misconduct.


 


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7.5.                             Election of Committee After Change in Control.   After
a Change in Control, vacancies on the Committee shall be filled by majority
vote of the remaining Committee members and Committee members may be removed
only by such a vote.  If no Committee
members remain, a new Committee shall be elected by majority vote of the
Participants in the Plan immediately preceding such Change in control.  No amendment shall be made to Article VII or
other Plan provisions regarding Committee authority with respect to the Plan
without prior approval by the Committee.


 


ARTICLE VIII - CLAIMS
PROCEDURE


 


8.1.                             Claim.   Any person or entity claiming a benefit,
requesting an interpretation or ruling under the Plan (hereinafter referred to
as “Claimant”), or requesting information under the Plan shall present the
request in writing to the Committee, which shall respond in writing as soon as
practical.


 


8.2.                             Denial of Claim.  If the claim or request is
denied, the written notice of denial shall state:


 


a)         The reasons for denial, with specific reference to the Plan provisions
on which the denial is based;


b)        A description of any additional material or information required and an
explanation of why it is necessary; and


c)         An explanation of the Plan’s claim review procedure.


 


8.3.                             Review of Claim.  Any Claimant whose claim or
request is denied or who has not received a response within sixty (60) days may
request a review by notice given in writing to the Committee.  Such request must be made within sixty (60)
days after receipt by the Claimant of the written notice of denial, or in the
event Claimant has not received a response sixty (60) days after receipt by the
Committee of Claimant’s claim or request. 
The claim or request shall be reviewed by the Committee which may, but
shall not be required to, grant the Claimant a hearing.  On review, the claimant may have
representation, examine pertinent documents, and submit issues and comments in
writing.


 


8.4.                             Final Decision.  The decision on review shall
normally be made within sixty (60) days after the Committee’s receipt of
claimant’s claim or request.  If an
extension of time is required for a hearing or other special circumstances, the
Claimant shall be notified and the time limit shall be one hundred twenty (120)
days.  The decision shall be in writing
and shall state the reasons and the relevant Plan provisions.  All decisions on review shall be final and
bind all parties concerned.


 


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ARTICLE IX - AMENDMENT
AND TERMINATION OF PLAN


 


9.1.                             Amendment.   The Board may at any time amend the Plan by
written instrument, notice of which is given to all Participants and to
Beneficiary receiving installment payments, subject to the following:


a)                   Preservation of Account Balance.   No
amendment shall reduce the amount accrued in any Account as of the date such
notice of the amendment is given.


b)                  Changes in Interest Rate.   No
amendment shall reduce, either prospectively or retroactively, the rate of
Interest to be credited to the amount already accrued in any of the
Participant’s Account and any amounts credited to the Account under Deferral
Commitments already in effect on that date, except as may be provided in
section 2.22, above as a result of a selection or deletion of available
Valuation Funds.


 


9.2.                             Company’s Right to Terminate.   The
Board may at any time partially or completely terminate the Plan if, in its
judgement, the tax, accounting or other effects of the continuance of the Plan,
or potential payments thereunder would not be in the best interests of Company.


a)                   Partial Termination.   The Board may partially
terminate the Plan by instructing the Committee not to accept any additional Deferral
Commitments.  If such a partial
termination occurs, the Plan shall continue to operate and be effective with
regard to Deferral Commitments entered into prior to the effective date of such
partial termination.


b)                  Complete Termination.   The Board may completely
terminate the Plan by instructing the Committee not to accept any additional
Deferral Commitments, and by terminating all ongoing Deferral Commitments.  In the event of complete termination, the
Plan shall cease to operate and Company shall distribute each Account to the
appropriate Participant. Payment shall be made as a lump sum or in the
number of annual installments indicated below based on the sum of the
Participant’s Account Balances at the time of termination of the Plan by the
Board where the annual payment shall be equal to the balance of the Accounts
immediately prior to the payment, multiplied by a fraction, the numerator of
which is one (1) and the denominator of which commences at the number of annual
payment indicated below and is reduced by one (1) in each succeeding year:


 




	
  Account
  Balance

  	
   

  	
  Payout Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than $10,000

  	
   

  	
  Lump
  Sum

  	
   

  
	
  $ 10,000 but less than $50,000

  	
   

  	
  3
  Years

  	
   

  
	
  More than $50,000

  	
   

  	
  5
  Years

  	
   

  






 


Interest on the unpaid
balance shall be based on the most recent allocation among the available
Valuation Funds chosen by the Participant in accordance with Section 4.3.


 


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ARTICLE X - MISCELLANEOUS


 


10.1.                       Unfunded Plan.   This plan is an unfunded plan maintained
primarily to provide deferred compensation benefits for a select group of
“management or highly-compensated employees” within the meaning of Sections
201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), and therefore is exempt from the provisions of Parts 2, 3
and 4 of Title I of ERISA.  Accordingly,
the Board may terminate the Plan and make no further benefit payments or remove
certain employees as Participants if it is determined by the United States
Department of Labor, a court of competent jurisdiction, or an opinion of
counsel that the Plan constitutes an employee pension benefit plan within the
meaning of Section 3 (2) of ERISA (as currently in effect or hereafter amended)
which is not so exempt.


 


10.2.                       Company Obligation.   The obligation to make
benefit payments to any Participant under the Plan shall be an obligation
solely of the Company with respect to the deferred Compensation receivable
from, and contributions by, that Company and shall not be an obligation of
another company.


 


10.3.                       Unsecured General Creditor.  
Notwithstanding any other provision of this Plan, Participants and
Participants’ Beneficiary shall be unsecured general creditors, with no secured
or preferential rights to any assets of Company or any other party for payment
of benefits under this Plan.  Any
property held by Company for the purpose of generating the cash flow for
benefit payments shall remain its general, unpledged and unrestricted assets.  Company’s obligation under the Plan shall be
an unfunded and unsecured promise to pay money in the future.


 


10.4.                       Trust Fund.   Company shall be responsible for the
payment of all benefits provided under the Plan.  At its discretion, Company may establish one (1) or more trusts,
with such trustees as the Board may approve, for the purpose of assisting in
the payment of such benefits.  Although
such a trust shall be irrevocable, its assets shall be held for payment of all
Company’s general creditors in the event of insolvency.  To the extent any benefits provided under
the Plan are paid from any such trust, Company shall have no further obligation
to pay them.  If not paid from the
trust, such benefits shall remain the obligation of Company.


 


10.5.                       Nonassignability.  Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and
non-transferable.  No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgements, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.


 


10.6.                       Not a Contract of Employment.   This
Plan shall not constitute a contract of employment between Company and the
Participant.  Nothing in this Plan shall
give a Participant the right to be


 


15

















 


retained in the service of
Company or to interfere with the right of the Company to discipline or discharge
a Participant at any time.


 


10.7.                       Protective Provisions.   A Participant will cooperate
with Company by furnishing any and all information requested by Company, in
order to facilitate the payment of benefits hereunder, and by taking such
physical examinations as Company may deem necessary and taking such other
action as may be requested by Company.


 


10.8.                       Governing Law.   The provisions of this Plan shall be
construed and interpreted according to the laws of the State of Maryland,
except as preempted by federal law.


 


10.9.                       Validity.   If any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein.


 


10.10.                 Notice.   Any notice required or permitted under the
Plan shall be sufficient if in writing and hand delivered or sent by registered
or certified mail.  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.  Mailed notice to the
Committee shall be directed to the company’s address.  Mailed notice to a Participant or Beneficiary shall be directed
to the individual’s last known address in company’s records.


 


10.11.                 Successors.   The provisions of this Plan shall bind and
inure to the benefit of Company and its successors and assigns.  The term successors as used herein shall
include any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially all of the
business and assets of Company, and successors of any such corporation or other
business entity.


 


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