DEFERRED COMPENSATION AGREEMENT
This Agreement is made as of the First day of August, 1995, between T.G.I.
Friday's Inc. (the "Company") and Xxxxxx Xxxxxx (the "Employee").
WHEREAS, the Company values the efforts, abilities, and accomplishments of
the Employee as an important member of management and recognizes that the
Employee's future services are vital to its continued growth and profitability;
and
WHEREAS, the Company, in order to retain the services of the Employee, has
agreed to pay the Employee deferred compensation in accordance with this
Agreement.
NOW, THEREFORE, it is mutually agreed that:
1. DEFINITIONS. The following definitions apply for purposes of
this Agreement:
(a) "Beneficiary" means the person or persons eligible to receive any
death benefits payable under this Agreement, determined as follows:
(1) Unless another Beneficiary is designated as provided in paragraph
(2), if the Employee is married at the time of his death, his
Beneficiary is his surviving spouse, and if the Employee is not
married at the time of his death, his Beneficiary is his estate.
(2) However, the Employee may designate a different Beneficiary by
means of a separate written designation filed with the Company.
The Employee may alter or revoke said designation at any time
without the consent of the Beneficiary. Such designations are
not subject to consent by the Employee's spouse. If no
Beneficiary designated under this paragraph (2) survives the
Employee, the Beneficiary will be determined under paragraph (1).
(3) If a Beneficiary (whether determined under paragraph (1) or
designated under paragraph (2)) survives the Employee but dies
before payment of the amount to which the Beneficiary is
entitled, said amount will be paid to the Beneficiary's estate.
(b) "Certified Earnings" means the Employee's total base salary from the
Company before any reduction pursuant to this Agreement or pursuant to
a plan meeting the requirements of Sections 125 or 401(k) of the
Internal Revenue Code.
(c) "Deferred Compensation Account" or "Account" means the Account
established pursuant to section 2 of this Agreement.
2. DEFERRED COMPENSATION ACCOUNT AND EARNINGS. The Company will
maintain a Deferred Compensation Account for the Employee on the books of the
Company. Amounts credited to the Account will earn interest at the rate of 8%
per annum compounded quarterly. Interest will be earned from the day such
amounts are credited to the Account. Interest earned will be credited to the
Account at the end of each calendar quarter. If the Employee becomes eligible
for installment payments under this Agreement, interest will continue to be
credited on the unpaid balance not yet distributed.
3. AMOUNTS CREDITED BY COMPANY. For each payroll period beginning
on or after August 1, 1995, the Company will credit to the Account an amount
equal to 10% of the Employee's Certified Earnings for such payroll period.
4. ADDITIONAL DEFERRAL OPPORTUNITIES.
(a) SALARY. The Employee agrees that his regular monthly salary for each
month beginning after the date of execution of this Agreement shall be
reduced by ____%, but not more than 25%. (Said percentage may be
modified by executing an Addendum to this Agreement.) For each
payroll period the Company will credit to the Account an amount equal
to the amount of said reduction.
(b) BONUS. The Employee agrees that his annual bonus, if any, with
respect to 1995 and each year thereafter shall be reduced by ___%.
(Said percentage may be modified by executing an Addendum to this
Agreement.) On or about the date the amount of said reduction would
otherwise be paid to the Employee, the Company will credit said amount
to the Account.
5. PAYMENT OF BENEFITS. Upon the termination of the Employee's
employment, the Company will pay the Employee (or pay the Employee's
Beneficiary, if the termination of employment was due to the Employee's death)
the total amount credited to his Account. Benefits will be paid as follows:
(a) If the aggregate balance in the Account, determined as of the date the
Employee terminates employment, is less than $100,000, his benefit
will be paid in a single sum not later than 90 days after the date of
his termination of employment.
(b) If the aggregate balance in the Account, determined as of the date the
Employee terminates employment, is $100,000 but less than $500,000,
his benefit will be paid in five annual installments, with the first
installment paid 90 days after termination of employment and the
remaining installments paid at one year intervals thereafter.
(c) If the aggregate balance in the Account, determined as of the date the
Employee terminates employment, is $500,000 or more, his benefit will
be paid in ten annual installments, with the first installment paid 90
days after
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termination of employment and the remaining installments paid at one
year intervals thereafter.
(d) The amount of each installment under (b) or (c) will be the Account
balance immediately before the installment, divided by the number of
remaining installments (including the current installment).
(e) If the Employee's termination of employment is due to his death, or if
he dies after termination of employment but before payment of all
amounts to which he is entitled hereunder, the Company will pay to the
Employee's Beneficiary the amounts remaining in the Employee's
Accounts at the time of his death. Said amount will be paid to the
Beneficiary in a single sum not more than six months after the
Employee's death.
6. MISCELLANEOUS PROVISIONS.
(a) Neither the Employee nor the Employee's Beneficiary shall have any
right to assign, pledge, transfer or otherwise hypothecate this
Agreement or the payments hereunder, in whole or in part. Benefits
under this Agreement will not be subject to execution, attachment, or
similar process.
(b) This Agreement constitutes the Company's unconditional promise to pay
the amounts which become payable pursuant to the terms hereof. The
Employee's rights are solely those of an unsecured wage creditor.
This Agreement does not give the Employee a security interest in any
specific assets of the Company. Accounts are for purposes of
determining the amounts the Company is required to pay. Accounts do
not require any segregation of assets.
(c) The parties agree that any dispute regarding the Employee's benefits
hereunder will be resolved using mediation/arbitration proceedings
similar to those used to resolve disputes under the Xxxxxxx 2000 Long
Term Incentive Plan as in effect from time to time.
(d) This Agreement shall not be construed as a contract of employment and
does not restrict the right of the Company to discharge the Employee
or the right of the Employee to terminate employment.
(e) This Agreement may not be altered, amended or revoked except by a
written statement signed by the Company and the Employee (or by the
Beneficiary if the Employee is no longer living).
(f) The provisions of this Agreement shall be construed and enforced
according to the laws of Minnesota.
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IN WITNESS WHEREOF, the parties have executed this Agreement.
COMPANY
Date Signed: 10/16/95 By /s/ Xxx Xxxxxxx
-------------------------- -------------------------------
Its VP, Human Resources
Date Signed: 10/1/95 /s/ Xxxxxxx X. Xxxxxx
-------------------------- ---------------------------------
Employee
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