EXHIBIT 10.5
DIRECTOR'S DEFERRED COMPENSATION AGREEMENT
AGREEMENT, made as of the _____ day of ____________, 19____, between X.X.
XXXXX CO., a Wisconsin corporation ("Company") and _________________________
("Director").
WITNESSETH:
WHEREAS, Director is now serving or has previously served as a director of
the Company, and the Company desires to provide such Director with a tax
deferral opportunity in the form of Company common stock; and
WHEREAS, the Board of Directors of the Company has adopted a plan
permitting Directors of the Company to elect to defer portions of their fees at
the times and upon the terms and conditions of that plan;
WHEREAS, the terms of such deferrals are reflected in individual deferral
agreements that have been executed from time to time with the Directors of the
Company, and
WHEREAS, the parties desire to execute a new agreement to reflect recent
changes adopted by the Board of Directors,
NOW, THEREFORE, in consideration of the premises and the mutual benefits to
be derived herefrom, IT IS AGREED AS FOLLOWS:
1. DEFERRED COMPENSATION ACCOUNT
There shall be created on the books of the Company a Director's Deferred
Compensation Account (the "Account"), which shall be credited with the
amounts specified in Director's elections under this Deferred Compensation
Agreement (the "Election").
Elections shall be in writing, made prior to the beginning of the year, or
partial year, in which the fees would otherwise be paid, and filed with the
Corporate Controller of the Company. Such election shall be effective with
respect to fees to be paid in fee periods occurring in the following year.
Elections with respect to fees shall be in an amount of $100 or a multiple
thereof.
An Election shall be irrevocable with respect to the fiscal year to which
it relates and shall continue in effect from year to year thereafter until
revoked or amended in writing with respect to a subsequent fiscal year
prior to the beginning thereof. Your rate of deferral under your prior
deferral agreement will be your rate of deferral under this Agreement for
the current fiscal year and will continue as the deferral rate for
subsequent years unless revoked or amended by written notice from you to
the Company prior to the beginning of a subsequent fiscal year.
2. VALUATION OF ACCOUNT
Whenever amounts are withheld from the Director's fees, the Director's
Account shall be credited with a number of stock units, calculated by
converting the amount withheld into a number of whole or fractional stock
units as if the amounts had been used to purchase Class A non-voting common
stock of the Company at the price determined under paragraph 5 of this
Agreement. The Account shall also be credited with additional stock units
whenever dividends are paid on the Class A non-voting common stock of the
Company, calculated by assuming that such dividends were used to purchase
additional stock units at the price determined under paragraph 5 of this
Agreement. The Account shall be credited from time to time with additional
shares of stock units equal in number to the number of shares granted in
any stock dividend or split to which the holder of a like number of shares
of Class A non-voting common stock would be entitled. The Account shall
likewise be credited with the stock unit equivalent of all other
distributions made with respect to shares of Class A non-voting common
stock; in the event of a distribution of preferred stock, such preferred
stock shall be valued at is par value (or its voluntary liquidating price,
if it does not have a par value).
3. DISTRIBUTIONS TO DIRECTOR FOLLOWING TERMINATION OF EMPLOYMENT
(a) If the Director's service as a director is terminated due to any
reason, including his retirement, disability, or death, and if no
application and approval under 3(b) has been made, the Company shall
distribute to Director, or his Beneficiary, each year for a fixed
period of ten years, shares of the Class A non-voting common stock
equal to the allocable part of the number of stock units of his
Account determined as of end of each fiscal year. Thus, the first
distribution shall be one-tenth of the number of stock units then
credited to such account, the second one-ninth of the then number of
stock units, etc. Such distributions shall be made within 75 days
following the end of the Company's fiscal year, commencing with the
first fiscal year end after the date of termination of employment. The
number of stock units in the Account shall be reduced by the number of
shares of Class A non-voting common stock distributed in each
distribution.
(b) Upon application of the Director (or Director's Beneficiary if
Director dies prior to termination of service as a Director), the
Company may in its uncontrolled discretion and upon such terms and
conditions as the Board of Directors determines, pay Director the
amount credited to the Director's Account in a different number of
installments (but not to exceed ten) or in a lump sum on a discount or
other basis.
4. DISTRIBUTION TO BENEFICIARY OR ESTATE OF DIRECTOR
(a) In the event of the Director's death, annual distributions will be
made to the Director's beneficiary as follows:
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(1) If the Director dies prior to termination of employment, the
distributions will be in the same annual amounts and for the same
number of years as the distribution would have been received had
the Director terminated employment on the date of death and lived
for the shorter of 10 years or the term permitted under 3(b);
(2) If the Director dies after employment has terminated, the
distributions will be in the same annual amounts as were being
made or were distributable at the date of death for the remaining
period that distributions would have been made had the Director
lived.
(b) The term "Beneficiary" as used herein includes the plural and means
any person(s), including corporation or individual beneficiary(s),
designated by Director in a written instrument in a form acceptable to
and filed with the Company or by a specific appointment in Director's
will referring to this Agreement. Director may designate a primary
beneficiary and a contingent beneficiary provided, however, that the
Company may reject any such instrument tendered for filing if it
contains successive beneficiaries or contingencies unacceptable to it.
In the absence of an acceptable designation or if the Beneficiary so
designated predeceases Director, the payments shall be paid to
Director's estate. If all Beneficiaries who survive Director shall die
before receiving the full amounts payable hereunder, then the payments
shall be paid to the estate of the Beneficiary last to die. The
Company shall not be charged with notice of the appointment of a
personal representative of Director until it shall have received a
certified copy of the appointment.
5. ACCOUNTING AND VALUATION DETERMINATIONS
For the purpose of determining the amounts credited to the Account pursuant
to paragraph 2, the value of a stock unit shall be set equal to the Fair
Market Value of the Class A non-voting common stock. Fair Market Value on
any date shall mean, with respect to the Company's Class A non-voting
common stock or any other stock of the Company, if the stock is then listed
and traded on a registered national securities exchange, or is quoted in
the NASDAQ National Market System, the average of the high and low sale
prices reported in composite transactions as reported in The Wall Street
Journal (Midwest Edition) for such date or, if such date is not a business
day or if no sales of Company stock shall have been reported with respect
to such date, the next preceding date with respect to which sales were
reported. In the absence of reported sales or if the stock is not so listed
or quoted, but is traded in the over-the-counter market, Fair Market Value
shall be the average of the closing bid and asked prices for such shares on
the relevant date.
6. CONVERSION FROM PRIOR AGREEMENT
(a) As of the earlier of the date of election to convert under paragraph
6(b) or August 1, 1998, deferrals under the prior deferral agreement
shall no longer be available. Any new amounts deferred shall be under
the terms of this Agreement, but such
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prior agreement shall remain in effect with respect to amounts
previously deferred, unless conversion is made under the terms of
paragraph 6(b) hereof. Any remaining unconverted balances under any
prior agreement will continue to be valued as described in such
agreement until July 31, 2002, after which date any increase in value
for the following year will be based on the closing yield rate on a
30-year U.S. Treasury Bond as of the preceding July 31.
(b) If Director elects in writing, the amount contained in the Director's
Account under the terms of the prior agreement can be converted into
amounts deferred under the terms of this Agreement, and distributions
will thereafter be made solely under the terms of this Agreement
except that distributions to Directors to whom distributions have
commenced prior to the date hereof shall continue to be made at the
times provided in the prior Agreement. Such conversion may only be
elected on November 19, 1997. The number of stock units credited to
the Director's Account shall be determined as of the date of such
conversion by valuing the Director's Account as of such date under the
terms of the prior agreement, and then converting such value into an
equivalent number of stock units under this Agreement by dividing such
sum by the transfer price as determined under paragraph 6(c).
(c) The transfer price for the conversion of amounts held under the
Director's prior deferral agreement shall be the Fair Market Value of
a stock unit as determined under the provisions of Paragraph 5 for the
date of conversion. A one-time discount of 10%, as determined by the
Board of Directors of the Company, may be offered to the Director if
the Director converts amounts at the conversion date offered by the
Company.
7. GENERAL PROVISIONS
(a) This Agreement shall not be subject to termination, modification or
amendment by the Company with respect to any rights which have accrued
hereunder, the Company reserving the right, however, to terminate,
modify or amend this Agreement effective prospectively as of the first
day of any fiscal year upon not less than 15 days prior written notice
to Director.
(b) The Company shall have the right to assign all of its right, title and
obligation in and under this Agreement upon a merger or consolidation
in which the Company is not the surviving entity or to the purchaser
of substantially its entire business, provided such assignee or
purchaser assumes and agrees to perform after the effective date of
such assignment all of the terms, conditions and provisions imposed by
this Agreement upon the Company. Upon such assignment, all of the
rights, as well as all obligations, of the Company under this
Agreement shall thereupon cease and terminate.
(c) Any action to be taken by the Company under the provisions of this
Agreement shall require the affirmative vote of the majority of the
Board of Directors.
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(d) Neither Director nor Director's Beneficiary or estate shall have power
to transfer, assign, anticipate, mortgage or otherwise encumber any
rights or any amounts payable hereunder; nor shall any such rights or
payments be subject to seizure for the payment of any debts,
judgments, alimony, or separate maintenance, or be transferable by
operation of law in event of bankruptcy, insolvency, or otherwise.
(e) The Company will withhold any necessary shares from the distribution
to satisfy its Federal and State withholding tax obligations, if any,
as a result of the distribution or from other amounts paid to such
individual by the Company. Further, to the extent required by law,
FICA taxes may be withheld from amounts deferred hereunder, thereby
reducing the amount of the deferral to the extent not withheld from
other amounts paid to the Director by the Company.
(f) This Agreement shall not supersede any other service, retainer, or
employment contract, whether oral or in writing, between the Company
and Director, nor affect or impair the rights and obligations of the
Company and Director, respectively, under any other contract,
arrangement, or voluntary pension, profit-sharing or other
compensation plan of the Company, and the benefits and payments under
this Agreement shall be in addition to any and all of Director's
benefits to which he may be entitled under any other such contract,
arrangement or voluntary plan. No amounts credited to any participant
hereunder and no amounts paid hereunder will be taken into account as
wages, salary, base pay or any other type of compensation when
determining the amount of any payment or allocation or for any other
purpose, under any other qualified or non-qualified pension or profit
sharing plan of the Company, except as otherwise may be specifically
provided by such plan. Nothing contained herein shall impose any
obligation on the Company to continue the tenure or employment of
Director.
(g) The Company shall have the right to transfer its rights and
obligations hereunder to the trustees of a grantor trust established
by the Company and shall have the right to transfer sufficient shares
of common stock to such trust to satisfy its obligations hereunder.
(h) If the scheduled payments under this Agreement would result in
disallowance of any portion of the Company's deduction therefore under
Section 162(m) of the Code, the payments shall be limited to the
amount which is deductible, with the balance to be paid as soon as
deductible by the Company. However, in such event, the Company shall
pay the Director on a quarterly basis an amount of interest based on
the prime rate recomputed each quarter on the unpaid scheduled
payments.
(i) This Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company. The Committee shall have all
authority that may be appropriate for administering the Plan,
including the authority to adopt rules and regulations for
implementing, amending and carrying out the Plan, interpreting the
provisions of the Plan and determining the eligibility of directors to
participate in the Plan and an eligible director's entitlement to
benefits hereunder.
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The Committee shall have full and complete discretionary authority to
determine eligibility for benefits under the Plan, to construe the
terms of the Plan and to decide any matter presented through the
claims procedure. Any final determination by the Committee shall be
binding on all parties. If challenged in court, such determination
shall not be subject to de novo review.
(j) If the Director or the Director's Beneficiary (hereinafter refereed to
as "claimant") believes he is being denied any benefit to which he is
entitled under this Plan for any reason, he may file a written claim
with the Committee. The Committee shall review the claim and notify
the claimant of its decision within 90 days of receipt of such claim,
unless the claimant receives written notice prior to the end of the 90
day period stating that special circumstances require an extension of
the time for decision. The Committee's decision shall be in writing,
sent by first class mail to the claimant's last known address, and if
a denial of the claim, shall contain the specific reasons for the
denial, reference to pertinent provisions of the Plan on which the
denial is based, a description of any additional information or
material necessary to perfect the claim, and an explanation of the
claims review procedure.
A claimant is entitled to request the entire Committee to review any
denial by written request to the Committee within 60 days of receipt
of the denial. Absent a request for review within the 60-day period,
the claim will be deemed to be conclusively denied. The Committee
shall afford the claimant or his authorized representative the
opportunity to review all pertinent documents and submit issues and
comments in writing and shall render a review decision in writing, all
within 60 days after receipt of a request for review (provided that in
special circumstances the Committee may extend the time for decision
by not more than 60 days upon written notice to the claimant). The
Committee's review decision shall contain specific reasons for the
decision and reference to the pertinent provisions of the Plan.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its Officers thereunto duly authorized and its corporate seal to be hereunto
affixed, and Director has hereunto set his hand and seal as of the day and year
first above written.
X.X. XXXXX CO.
By: By: (SEAL)
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Xxxxxxxxx X. Xxxxxx Director
President
Attest:
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Xxxxxx X. Xxxxxxx
Assistant Secretary
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AMENDMENT
TO
DIRECTOR'S DEFERRED COMPENSATION AGREEMENT
AGREEMENT made as of the _______ day of ________________, 20____ between
Xxxxx Corporation, a Wisconsin Corporation ("Corporation") and
____________________ ("Director").
W I T N E S S E TH:
WHEREAS, Director and Corporation are parties to a deferred compensation
agreement dated as of the ___1st_____ day of ___November_____, 1997; and
WHEREAS, the parties wish to amend the agreement to provide the Director
with additional distribution options under the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual benefits to
be derived herefrom, IT IS AGREED that the prior deferred compensation agreement
shall be amended in the following respects:
1. Section 3 is amended to read as follows:
3. DISTRIBUTIONS TO DIRECTOR FOLLOWING TERMINATION OF SERVICE
(a) if the Director's service as a director of the Corporation is
terminated due to any reason, including retirement, disability, or
death, and if no effective election exists under paragraph (b) below
and if no application and approval under paragraph (c) below has been
made, the Corporation shall distribute the Director's Account to
Director, or Director's Beneficiary, under the Annual Installment
Method over a period of ten (10) years using the Fractional Method for
a fixed period of ten years.
(b) By submitting an Election Form to the Committee, provided that any
such Election Form is submitted at least one year prior to the date of
the Director's termination of service as a director, the Director
shall elect whether to receive his Account balance following
termination of service as a director in a single lump sum or under an
Annual Installment Method. The Election Form most recently on file
shall govern the payout of the Account. If the Director does not
submit an Election Form or has not submitted one timely, then payment
shall be made under paragraph (a) above unless an application has been
made and approved under paragraph (c) below. Even if a valid election
has been made under this paragraph (b), payment shall instead be made
under paragraph (c) if an application has been made and approved under
paragraph (c). The lump sum payment shall be made, or installment
payments shall commence, within 60 days after the last day of the
fiscal year in which the Director terminates service as a director.
(c) Upon application of the Director (or Director's Beneficiary if
Director is deceased), the Corporation, may if determined by the
Committee in its uncontrolled discretion, and upon such terms and
conditions as the Committee determines, pay Director the amount
credited to the Account in smaller installments or in a lump sum or
other basis.
(d) "Annual Installment Method" shall be an annual installment payment
over the number of years selected by the Director, not to exceed 10.
In each case, the Account balance of the Director shall be calculated
as of the close of the fiscal year commencing with the last day of the
fiscal year in which the Director terminates service as a director of
the Corporation. Each annual installment, regardless of the method
selected, shall be payable within 60 days after such date. The
alternative methods available are as follows:
(1) Fractional Method. The annual installment shall be calculated by
multiplying this balance by a fraction, the numerator of which is
one, and the denominator of which is the remaining number of
annual payments due the Director. By way of example, if the
Director elects a 10 year Annual Installment Method, the first
payment shall be 1/10 of the Account balance. The following year,
the payment shall be 1/9 of the Account balance.
(2) Percentage or Fixed Dollar Method. The annual installment shall
be calculated by multiplying this balance in the case of the
percentage method, by the percentage selected by the Director and
paying out the resulting amount, or in the case of the fixed
dollar method, by paying out the fixed dollar amount selected by
the Director, for the number of years selected by the Director.
However, in the event the dollar amount selected is more than the
Account balance in any given year, the entire Account balance
will be distributed. Further, regardless of the method selected
by the Director, the final installment payment will include 100%
of the then remaining Account balance.
(e) The Director's account balance as of any date shall mean the number of
stock units held in the Director's account as of such date. All
distributions, whether in the form of lump sum payment or installment,
shall be made in shares of the Class A nonvoting common stock of the
Corporation equal to the portion of the number of whole stock units in
the Director's account to be distributed under the distribution method
selected. No distribution of fractional shares shall be made.
(f) "Election Form" shall mean the form established from time to time by
the Committee that Director completes, signs and returns to the
Committee to make an election under the Plan. To the extent authorized
by the Committee, such form may be electronic or set forth in some
other media and need not be signed by the Director.
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2. Section 4 is amended by adding the following clause (3) to paragraph (a)
thereof:
(3) Upon application of the Director's Beneficiary, the Corporation may,
if determined by the Committee in its uncontrolled discretion, and
upon such terms and conditions as the Committee determines, pay
Director's beneficiary the amount credited to the account in smaller
installments or in a lump sum or other basis.
XXXXX CORPORATION
By: __________________________________ By: _______________________________
Director
Title ________________________________
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