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EXHIBIT 10.4
DEFERRED COMPENSATION AGREEMENT
THIS DEFERRED COMPENSATION AGREEMENT ("Agreement") is entered into and
effective as of the 30th day of June, 2000, by and between (i) HEALTHCARE
RECOVERIES, INC., a Delaware corporation ("Corporation"), and (ii) XXXXXXX X.
XXXXXXXX ("Employee").
RECITALS:
A. Employee is the Chairman of the Board and Chief Executive
Officer of the Corporation.
B. The Corporation has made an $886,519.50 loan to Employee as
evidenced by Employee's Amended and Restated Promissory Note in that amount of
even date herewith ("Loan").
C. Employee is a participant in the Corporation's Management
Group Incentive Compensation Plan ("Plan").
D. The Corporation and Employee desire to enter into this
Agreement for the purpose of setting forth the terms and conditions under which
amounts otherwise due Employee under the Plan will be deferred.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFERRED COMPENSATION. Employee and the Corporation hereby
agree that notwithstanding the provisions of the Plan, 50% of all of the amounts
otherwise payable to Employee under the Plan shall not be paid by the
Corporation when otherwise required to be paid in accordance with the terms of
the Plan, but instead shall be deferred and paid as provided in this Agreement.
2. INTEREST ON DEFERRED COMPENSATION. The balance in the Deferred
Compensation Account (as hereinafter defined) from time to time shall bear
interest at the rate of 6.62% per annum, compounded annually.
3. DEFERRED COMPENSATION ACCOUNT. The Corporation shall establish
on its books a deferred compensation account for Employee's benefit ("Deferred
Compensation Account"). The Deferred Compensation Account shall be credited with
(i) all amounts credited thereto in accordance with Section 1, and (ii) the
interest earned in accordance with Section 2, and shall be debited with all
payments made by the Corporation to Employee pursuant to the terms of this
Agreement.
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4. PAYMENT OF DEFERRED COMPENSATION. Subject to the provisions of
Section 9, the amount in Employee's Deferred Compensation Account shall be paid
to Employee within 30 days following the full payment by Employee of all amounts
due under the Loan unless at least six months prior to the full repayment of the
Loan Employee has designated, in such manner as the Corporation shall require,
the manner in which Employee desires the amount in the Deferred Compensation
Account to be paid; provided, however, that in no event may payments be required
more often than quarterly, nor over a period in excess of ten years. The last
designation filed by Employee with the Corporation which was filed more than six
months prior to the full repayment of the Loan shall govern.
5. DESIGNATION OF BENEFICIARY. Employee shall be entitled to
designate a beneficiary or beneficiaries to receive the payments of the amount
in the Deferred Compensation Account in the case of his death. Such designation
may include a designation of a contingent beneficiary or beneficiaries. Employee
may, from time to time, change such designation of beneficiary or beneficiaries
as he shall desire. Notice of the designation shall be given by Employee to the
Corporation in such manner as the Corporation shall require.
6. NO ASSIGNMENT OR ANTICIPATION. Neither Employee nor any
beneficiary shall have any right to commute, sell, assign, transfer or otherwise
convey the right to receive any payments due under this Agreement, which
payments and all rights thereto are expressly declared to be non-assignable and
non-transferable. In the event that there is any attempted assignment or
transfer by Employee or a beneficiary of their rights to receive any payments
under this Agreement, the Corporation shall have no further obligation or
liability hereunder. The benefits payable under this Agreement shall not, in any
manner, be subject to garnishment, attachment, execution, levy, debts,
contracts, liabilities, assignments or torts of Employee or any beneficiary.
7. NOT FUNDED LIABILITY. All amounts payable hereunder shall
constitute a general claim against the Corporation and will not be a lien or
claim on any specific assets of the Corporation. The Deferred Compensation
Account is solely an accounting mechanism and shall not represent any segregated
assets of the Corporation.
8. TAX CONSEQUENCES. It is the intention of the parties that the
amount in the Deferred Compensation Account not constitute taxable income to
Employee or any designated beneficiary until such time as the Corporation has
made actual payment of such amount, and this Agreement shall be so construed.
Employee acknowledges that all payments made to him hereunder will be treated as
compensation and the Corporation will be required to withhold appropriate
amounts of tax therefrom as required by law. Employee further acknowledges that
amounts otherwise payable pursuant to the Plan which are instead credited to the
Deferred Compensation Account will, under current law, be treated as wages for
purposes of the social security and Medicare taxes. Employee hereby agrees to
timely provide the Corporation with sufficient funds to enable it to meet its
withholding obligation with respect to such taxes.
9. RIGHT OF SET-OFF. In the event that Employee is in default
with respect to the Loan, or ceases to be an employee of the Company for any
reason (including death), the Corporation may, in its sole discretion, apply
amounts in the Deferred Compensation Account against amounts to which the
Corporation is then entitled under the Loan (including any amounts becoming due
as a
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result of the acceleration of the Loan). If the Corporation exercises the right
of set-off provided for in this Section 9, such amounts shall be deemed to have
been paid to Employee for all purposes of this Agreement.
10. BINDING AGREEMENT. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective executors,
administrators, heirs, successors and assigns.
11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Kentucky without
regard to its conflict of laws rules.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first written above.
HEALTHCARE RECOVERIES, INC.
By: /s/
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Title:
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("Corporation")
/s/ Xxxxxxx X. XxXxxxxx
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XXXXXXX X. XXXXXXXX
("Employee")
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