SALARY DEFERRAL AGREEMENT
This SALARY DEFERRAL AGREEMENT is made as of the 13th day of December,
1989, between Blue Cross and Blue Shield of Virginia (the "Company") and Xxxxxxx
X. Xxxxx, Xx. ("Executive").
RECITALS
Executive has been an employee of the Company for many years and has
accumulated valuable experience and knowledge about the management and affairs
of the Company. The Company wishes to induce Executive to continue his associate
with the Company by providing him with this Salary Deferral Agreement.
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
1. Deferral Elections. In December of each year during the term
of this Agreement, Executive may elect to defer a portion of the salary that he
will earn from the Company for the following year by filing with the Secretary
of the Company a Notice of Salary Deferral insubstantially the form attached
hereto as Exhibit A. The amount deferred for any year shall be deferred at the
rate of 1/12th each moth during the year of deferral. The maximum amount
deferred for any year shall not exceed 50% of the Executive's salary for such
year.
2. Investment of Deferred Amounts. All amounts deferred by
Executive hereunder shall be credited by the Company to a bookkeeping account
designated as Executive's Deferred Salary Account (the "Account"). All amounts
credited to the Account shall be invested by the Company in investments selected
by Xxxxx X. Xxxxxx, Xx., Vice President, Consolidated
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Investment Corporation, or by such other investment manager as the Company may
designate from time to time (the "Investment Manager"). Any earnings (or losses)
on such investment shall be credited (or debited) to the Account.
The Company, acting through the Investment Manager, shall have sole
discretion to selection investment under this Agreement. Annually, the
Investment Manger will report the investment made in the Account to the Chairman
of the Executive Committee and will confer with him about the investment policy
for the Account. The Company and the Investment Manager intend to invest the
Account aggressively. Executive shall have no right to have any particular
investment made in the Account and shall bear all risk of gain or loss with
respect to the investments made in the Account. Neither the Company nor the
Investment Manager shall have any liability to Executive for losses sustained in
the Account.
3. Expenses and Taxes. All fees, commissions, and expenses incurred by
the Company as the result of transactions made in the Account shall be paid from
assets held in the Account to the extent such assets are available, but if such
assets are insufficient to pay such sums, such sums shall be paid by the Company
from its other funds. Income taxes incurred by the Company as the result of
transactions made int he Account shall be paid by the Company and shall not be
charged to the Account.
4. Distribution of Account. The Distribution Date for the Account shall
be the later of (i) the date on which Executive obtains the age of 55 or (ii)
the date on which Executive's employment with the Company terminates. The
Company will, at its option, either (i) transfer all assets in the Account to
the Executive on the Distribution Date, or (ii) transfer the assets in the
Account to Executive in five (5) approximately equal annual installments, the
first such installment
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being transferred to Executive on the Distribution Date and the remaining
installments being transferred to Executive on each of the first four
anniversaries of the Distribution Date. Notwithstanding that the Company may
have initially elected the distribution option referred to in clause (ii) of the
preceding sentence, the Company may, at its option, on any anniversary of the
Distribution Date elect to transfer all of the remaining assets in the Account
to Executive.
In lieu of distributing the assets in the Account in kind, the Company
may, at its option, sell all or any part of the assets in the Account and
distribute the sales proceeds, net of applicable selling expenses, to Executive.
If any asset distributed to Executive in kind does not have a readily
ascertainable fair market value, the Company may at its expense have such asset
appraised by an independent appraiser, and the Company and Executive agree to be
bound by such appraisal for all purposes under this Agreement (including federal
and state income tax filings).
5. Designation of Beneficiary. Executive shall have the right to
designate one or more beneficiaries to receive distributions under Paragraph 4
if Executive dies before all of the distributions under Paragraph 4 have been
made. Any such designation shall be made by written instrument signed by
Executive and delivered to the Secretary of the Company. If Executive dies
before any or all of the distributions under Paragraph 4 have been made, then as
soon as practical following Executive's death, all assets remaining in the
Account shall be distributed to his designated beneficiary, or, if no
beneficiary has been designated, to his estate.
6. Term of Agreement. If Executive remains in the employ of the
Company, Executive shall have the right to make deferrals hereunder for each of
the years 1990, 1991, 1992, 1993, 1994 and 1995 by filing with the Secretary of
the Company a Notice of Salary Deferral in the December preceding each such
year.
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7. Miscellaneous.
a. This Agreement shall not give Executive any right to
continue as an employee of the Company.
b. Title to and beneficial ownership of all assets in
the Account shall remain with the Company, and Executive shall have no property
interest in any such assets.
c. Executive shall have no right to sell, assign, transfer,
alienate, pledge, or encumber any right under this Agreement, and no right under
this Agreement shall be subject to claims by Executive's creditors. This
Agreement shall not create a trust or asset segregation for the benefit of
Executive or create any form of fiduciary relationship between the Company and
Executive. Executive's only right against the Company with respect to this
Agreement is that of a general creditor.
d. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, representatives, and
successors, including, without limitation, any person acquiring directly or
indirectly all or substantially all of the assets of the Company, whether by
merger, consolidation, sale, or otherwise, but neither this Agreement nor any
right hereunder may be otherwise assigned or transferred by either party hereto.
e. This Agreement is an unfunded plan established for the
purpose of providing deferred compensation for a single management employee and
is intended to be exempt from the coverage, vesting, and funding requirements of
the Employee Retirement Income Security Act of 1974, as amended.
f. This Agreement shall be governed by and construed and
enforced in accordance with the laws of Virginia.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BLUE CROSS AND BLUE SHIELD
OF VIRGINIA
By: /s/ Xxxxx X. Xxxxxx
Title: Vice Chairman of
the Board
/s/ Xxxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxx, Xx.
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EXHIBIT A
December ___, 19__
Secretary
Blue Cross and Blue Shield of Virginia
0000 Xxxxxxx Xxxx Xxxx
Post Office Box 27401
Xxxxxxxx, Xxxxxxxx 00000
Notice of Salary Deferral
Dear Sir:
Pursuant to the Salary Deferral Agreement dated December ___, 1989,
between the Company and me, this is to notify you that I elect to defer
$_____________ of the salary that I would otherwise earn from the Company during
the calendar year 199_ (the "Deferred Amount"). I understand that the Deferred
Amount will be deducted from my salary for next year at the rate of 1/12th each
month during the year.
Very truly yours,
Xxxxxxx X. Xxxxx, Xx.
