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EXHIBIT 10.5
DEFERRED COMPENSATION AGREEMENT
This is a Deferred Compensation Agreement effective December 27, 1999, by
ZLAND INC., a Delaware Corporation, (hereinafter "the Company" or "ZLAND") and
XXXX XXXXXXXX (hereinafter "the Employee" or "XXXXXXXX"). The Company and
XXXXXXXX are sometimes referred to as the Parties.
WITNESSETH:
WHEREAS the Employee is a valued employee of the Company, and
WHEREAS the Parties wish to create a Deferred Compensation Agreement,
NOW, THEREFORE, in consideration of the following mutual agreements, the Parties
agree as follows:
1. In consideration of services to be rendered to the Company by
Employee and subject to the terms and conditions of this Agreement, the Company
shall pay to Employee $120,000 as deferred compensation for calendar year 2000.
Such deferred compensation shall be attributable to the months of July, 2000
through December, 2000 at the rate of $20,000 per month.
2. The Company has established a Trust to receive, hold, administer
and distribute the deferred compensation of Employee, the XXXX XXXXXXXX 1999
TRUST dated March 17, 1999 (hereinafter called the "Trust"), and the Company
shall contribute to the Trust the deferred compensation funds that shall be held
by the Trustee, subject to the claims of Company's creditors in the event of
Company's Insolvency, as defined in the Trust, until paid to the Employee in
such manner and at such times as specified in the Trust.
a. It is the intention of the Parties that the Trust shall
constitute an unfunded arrangement in accordance with Rev. Proc. 92-64 and shall
not affect the status of this Agreement as an unfunded plan maintained for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees for purposes of Title I of the Employee Retirement
Income Security Act of 1974.
b. The parties acknowledge that the Trust is currently
revocable by the Company; it shall become irrevocable upon a Change of Status,
as defined in the Trust; the Trust is intended to be a grantor trust, of which
the Company is the Grantor or
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Trustor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
3. The Company shall transfer to the Trust the funds required to
satisfy the Company's obligation to pay the deferred compensation to the
Employee as provided below. After the assets have been transferred to the
Trustee, title to such funds shall be fully vested in the Trustee. The Employee
and his designated beneficiary shall not have any proprietary interest
whatsoever in any specific assets of the Company or the Trust. Any such funds so
transferred may be kept in cash or invested and reinvested in mutual funds,
stocks, bonds, securities or any other assets as may be selected by the Trustee
in its discretion. In the exercise of the foregoing discretionary investment
powers, the Trustee may engage investment counsel and, if it so desires, may
delegate to such counsel full or limited authority to select the assets in which
the funds are to be invested.
a. From the date such funds are transferred, the Employee
agrees on behalf of himself and his designated beneficiary to assume all risk in
connection with any decrease in value of the funds which are invested or which
continue to be invested in accordance with the provisions of this Agreement.
b. Upon a Change of Status, as defined in the Trust to include
a change of ownership of the Company, a change of Trustee, or if Employee is no
longer an employee of the Company, the Trust shall become irrevocable; if the
Company has not transferred the funds to the Trust, the Company shall, as soon
as possible, but in no event longer than 10 days following the Change of Status,
make an irrevocable contribution to the Trust in an amount that is sufficient to
pay the Employee the benefits to which the Employee would have been entitled
pursuant to the terms of this Agreement as if the deferred compensation amount
had been contributed on the regular dates of payment following the effective
date of this Agreement, and earned interest at the prime rate published by the
Bank of America from time to time.
4. The deferred compensation to be paid to Employee from the Trust
pursuant to this Agreement shall be paid over five years, commencing June 30,
2002, and otherwise comply with terms of the Trust Payment Schedule. If there is
a Change of Status, the Trust shall commence the payment of the income of the
Trust currently, not less frequently than annually.
5. If the Employee's employment is terminated for any reason,
including death, disability, voluntary termination, involuntary termination, or
retirement, the Trust shall become irrevocable and the payments provided for in
this Agreement shall be made to the Employee, his estate, his designated
beneficiary or to the estate of such designated beneficiary in accordance with
the Trust Payment Schedule.
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6. The right of the Employee or any other person to the payment of
deferred
compensation or other benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by the laws of descent and
distribution.
7. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
8. Any deferred compensation payable under this Agreement shall not
be deemed salary or other compensation to the Employee in 2000 for the purpose
of computing benefits to which he may be entitled under any pension plan or
other arrangement of the Company for the benefit of its employees.
9. The Trustee of the Trust shall have full power and authority to
interpret, construe, and administer this Agreement and the Trustee's reasonable
interpretations and construction thereof, and actions thereunder, including any
valuation of the deferred compensation account, or the amount or identity of the
recipient of the payment to be made therefrom, shall be binding and conclusive
on all persons for all purposes. No member of the Company shall be liable to any
person for any action taken or omitted in connection with the interpretation and
administration of this Agreement unless attributable to his/her own willful
misconduct or lack of good faith.
10. This Agreement shall be binding upon and inure to the benefit of
the Company, its successors and assigns, and the Employee and his heirs,
executors, administrators, and legal representatives. This Agreement shall be
construed in accordance with and governed by the law of the State of California.
In WITNESS WHEREOF, the Corporation has caused this Agreement to
be executed by its duly authorized officers and Employee has executed this
Agreement as of the date first above written.
ZLAND CORPORATION,
a Delaware Corporation Attest:
By: /s/ XXXXX X. XXXXX /s/ XXXXX XXXXX
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XXXXX X. XXXXX, President Xxxxx Xxxxx, Secretary
/s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx, Employee
