Exhibit 10.14
DEFERRED COMPENSATION AGREEMENT
EFFECTIVE DATE: October 30, 1996
PARTIES: Xxxxxxx Investments, Inc. ("KII")
Xxxxxxx X. Xxxxxxx ("Executive")
RECITALS:
A. KII is a Minnesota corporation.
B. Executive has rendered valuable services to KII as
President and Chief Executive Officer of PrimeVest Financial Services, Inc.,
its wholly-owned subsidiary, and as Treasurer of KII.
C. KII has unilaterally decided to provide certain
deferred compensation benefits to Executive.
D. This agreement constitutes an unfunded deferred
compensation arrangement for a select management or highly compensated employee
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 and 29 C.F.R. ss. 2520.104.23(b)(2).
AGREEMENTS:
1. Deferred Compensation Account. KII shall immediately
credit $100,000 to a deferred compensation account for Executive.
2. Ownership Rights in Account. The amount
credited to Executive's account and any assets purchased with amounts so
credited to Executive's account, if any, shall be the sole property of KII,
and Executive shall have no ownership rights of any kind with respect thereto
or any interest therein. The amounts credited to Executive's account under this
Agreement shall at all times be entirely unfunded and no action shall be taken
at any time which would have the effect of segregating assets of KII for
payment of any benefit hereunder. Neither Executive nor any other person shall
have any interest in any particular assets of KII by reason of the right to
receive a benefit hereunder, and Executive or any such other person shall
have only the rights of a general unsecured creditor of KII with respect to any
rights hereunder.
3. Valuation of Account. The value of Executive's
account at any time shall be the amount credited to the account, adjusted for
interest at a rate equal to the prime interest rate, as reported by
First Bank, N.A. on the first business day following January 1 of each year,
plus one (1) percentage point compounded quarterly, until all amounts credited
to such account have been distributed as provided in Section 5 below.
4. Vesting. Amounts credited to Executive's account
under this Agreement shall be fully vested at all times.
5. Distributions. The vested portion of the amounts
credited to Executive's account shall be paid to Executive in cash, in a single
lump-sum payment, on the earlier of (i) January 4, 1999, or (ii) within sixty
(60) days following a "change of control" event. In the event of Executive's
death, such amount shall be paid as soon as administratively practicable to
Executive's beneficiary as determined pursuant to Section 6.
6. Beneficiary. Executive shall designate a
beneficiary to whom payments will be made in the event of Executive's death and
shall have the right to revoke or change his beneficiary designation at any
time without the consent of the beneficiary. To be effective, such
designation, alteration or revocation shall be in writing, in a form
approved by KII, and shall be filed with and accepted by KII. The most recently
dated beneficiary designation form which is validly filed with KII by
Executive shall revoke all previously dated beneficiary designation forms
filed by Executive. If Executive fails to designate a beneficiary or if
no beneficiary designated by Executive survives him, any amounts remaining
shall be paid to Executive's estate.
7. Change of Control. For purposes of this Agreement,
"change of control" shall mean:
(a) A merger or consolidation to which KII is a party if
the individuals and entities who were shareholders of
KII immediately prior to the effective date of such
merger or consolidation have, immediately following
the effective date of such merger or consolidation,
beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of less than
fifty percent (50%) of the total combined voting
power of all classes of securities issued by the
surviving corporation for the election of directors
of the surviving corporation;
(b) The direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of securities of KII representing, in
the aggregate, twenty percent (20%) or more of the
total combined voting power of all classes of KII's
then issued and outstanding securities by any person
or entity or by a group of associated persons or
entities acting in concert;
(c) The sale of substantially all of the properties and
assets of KII to any person or entity which is not a
wholly-owned subsidiary of KII;
(d) The shareholders of KII approve any plan or proposal
for the liquidation of KII; or
(e) A change in the composition of the Board at any time
during any consecutive twenty-four (24) month period
such that the "Continuity Directors" cease for any
reason to constitute at least a sixty percent (60%)
majority of the Board. For purposes of this event, a
"Continuity Director" means a member of the Board who
either:
(1) was a director as of the date of this
Agreement; or
(2) is a director whose election to or
nomination for election to the Board was
approved by at least a two-thirds (2/3)
majority of the Continuity Directors in
office at the time such director was first
elected to the Board.
8. Nontransferability. Neither Executive nor any
beneficiary designated by Executive to receive his benefit hereunder shall have
any right to assign, encumber or otherwise anticipate the right to receive
payment hereunder, and the benefits under this Agreement shall not be
subject to garnishment, attachment or any other legal process by the
creditors of Executive or any beneficiary hereunder.
9. Payment in Case of Incompetence. If, in the judgment
of the Board of Directors of KII, based upon facts and information readily
available to it, any person entitled to receive a payment hereunder is
incapable for any reason of personally receiving and giving a valid receipt
of the payment of a benefit, the Board may cause such payment or any part
thereof to be made to the duly appointed guardian or to the legal
representative of such person or to any person or institution contributing to
or providing for the care and maintenance of such person, provided that no prior
claim for said payment has been made by a duly appointed guardian or legal
representative of such person. The Board shall not be required to see to the
proper application of any such payment made in accordance with the
provisions hereof and any such payment shall constitute a payment for the
account of such person and a full discharge of any liability or obligation of
KII.
10. Liability of KII. KII shall have no liability in
connection with this Agreement except to pay out any vested amounts credited to
Executive's account in accordance with the terms of this Agreement. KII has not
made any statements to Executive with respect to the tax implications of any
transactions contemplated by this Agreement and Executive has been advised by
his counsel with respect to the tax effect of this Agreement.
11. Withholding. To permit KII to comply with all applicable
federal or state tax laws or regulations, KII may take such action as it deems
appropriate to ensure that all applicable federal or state payroll, income or
other taxes are withheld from any amounts payable by KII to Executive pursuant
to this Agreement. If KII is unable to withhold such federal and state taxes,
for whatever reason, Executive hereby agrees to make the necessary arrangements
for the payment of such taxes, which may include paying to KII an amount equal
to the amount KII would otherwise be required to withhold under federal or state
law, or presenting to KII reasonably satisfactory evidence that Executive has in
fact paid the required federal and state income taxes occasioned by the
distribution of the deferred compensation benefits to Executive.
12. Right to Terminate Employment. Neither this Agreement
nor any action taken hereunder shall be construed as giving Executive any right
to be retained in the employment of KII or any of its subsidiaries, or interfere
with the right of KII or any of its subsidiaries to discharge Executive at any
time.
13. Notices. Any notice to be delivered under this
agreement shall be given in writing and delivered, personally or by first-class
mail, postage prepaid, to KII, Executive or any other person at his or its last
known address.
14. Headings. Headings or titles at the beginning of
sections and paragraphs are for convenience of reference, shall not be
considered a part of this agreement, and shall not influence its construction.
15. Amendment or Termination. This Agreement may be
amended or terminated only by written agreement signed by KII and Executive.
16. Binding Effect. This Agreement shall be binding upon
the parties hereto and their heirs, executors and assigns. KII agrees that it
will not be a party to any merger, consolidation or reorganization unless and
until its obligations under this Agreement shall be expressly assumed by its
successor or successors.
17. Compliance with Applicable Laws. The parties intend that
the Agreement comply with the applicable provisions of the Internal Revenue Code
of 1986, as amended from time to time, and the regulations thereunder, with the
applicable provisions of ERISA, as amended, and the regulations thereunder, and
with any provisions of the Securities Exchange Act of 1934, as amended, that may
be applicable. If, at a later date, these provisions are construed in such a way
as to make the Agreement null and void, the Agreement shall be given effect in a
manner that shall best carry out the parties' purposes and intentions.
18. Governing Law. The provisions of this agreement
shall be construed and enforced according to the laws of the State of Minnesota,
to the extent that such laws are not preempted by any applicable federal law.
19. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, KII and Executive have executed this
Agreement in the manner appropriate to each on the day and year first above
written.
XXXXXXX INVESTMENTS, INC.
By /s/ Xxxxxxx X. Xxxxxx
Its Chairman
Dated: October 30, 1996
/s/ Xxxxxxx X. Xxxxxxx
XXXXXXX X. XXXXXXX
Dated: October 31, 1996
