Exhibit 10.10
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
WHEREAS, Xxxx'x International, Inc. (the "Company") and Xxxxx Xxxxxxx (the
"Executive") have entered into a series of deferred compensation agreements
(which are set forth in Exhibit A hereto and are referred to herein as the
"Prior Agreements") whereby the Executive elected to defer certain portions of
his compensation from the Company (such compensation deferrals and accrued
interest thereon as provided for under the terms of the Prior Agreements are
referred to herein as the "Deferrals"); and
WHEREAS, the Deferrals amounted to $1,465,141.26 as of December 31, 1996;
and
WHEREAS, the Company and the Executive desire to restate the Prior
Agreements and provide that the Deferrals shall be administered, paid, and
construed in accordance with this Agreement; and
WHEREAS, the Executive has no ability to demand payment of the Deferrals at
the present time pursuant to this Agreement and the Prior Agreements; and
WHEREAS, the Company desires to establish a grantor trust in order to fund
its obligations pursuant to this Agreement, such grantor trust to be actually
funded upon a change in control of the Company or, if earlier, upon the
commencement of payments to the Executive pursuant to the terms of this
Agreement, and such grantor trust to remain subject to the general creditors of
the Company should the Company become bankrupt or insolvent; and
WHEREAS, the Company desires to obtain a general receipt or release of all
claims the Executive (or his spouse or estate) may have against the Company
prior to the time any payments under this Agreement commence; and
WHEREAS, the Company believes that the adoption of this Agreement is in the
best interests of the Company to facilitate the recordkeeping and other
administrative tasks associated with the Deferrals and in order to facilitate
the payment of the Deferrals when such payments become due;
NOW, THEREFORE, it is hereby declared as follows:
1. AMOUNT OF DEFERRALS.
The Deferrals under this Agreement shall be the Executive's
compensation deferrals under the Prior Agreements, plus any interest thereon
through December 31, 1996.
2. CREDITING OF EARNINGS.
The Executive's Deferrals shall bear interest from January 1, 1997 at
the lesser of (i) the rate of 15% per annum, or (ii) the prime rate as quoted by
Bank of America, NT&SA on the last business day of each calendar quarter.
3. VESTING.
The Executive shall be 100% vested in his Deferrals (and interest
thereon) at all time.
4. DISTRIBUTION.
(a) The Deferrals (and interest thereon) shall be paid to the
Executive in the form of quarterly (January 1, April 1, July 1, October 1) cash
installments over a period of ten years. Installments shall be in substantially
equal amounts. The unpaid declining balance of the Deferrals shall continue to
bear interest as set forth in Section 2.
(b) Payment of the Deferrals (and interest thereon) shall
commence as of the first day of the calendar quarter commencing after the later
of (i) the occurrence or event which results in the Executive no longer serving
as the chief executive officer of the Company (including, but not limited to,
the death, disability, resignation, retirement, or termination of the
Executive), or (ii) the date of execution of this Agreement.
(c) In the event that the Executive dies prior to the time all
amounts have been paid pursuant to the terms of this Agreement, payment of such
amounts shall be made at the time and in the form set forth above to the
Executive's spouse (as of his date of death, if she is then living). If the
Executive has no living spouse at such time, payment shall be made at the time
and in the manner set forth above to the Executive's estate.
5. ARBITRATION.
The Company or the Executive (or, following the Executive's death, his
spouse or estate) may, if he or she so desires, submit any claim for payment
under this Agreement or any dispute regarding the interpretation of this
Agreement to arbitration. The "right to select arbitration" does not impose
upon any party a requirement to submit a dispute for arbitration. Any party
may, in lieu of arbitration, bring an action in appropriate civil court. Each
party retains the right to select arbitration, even if a civil action
(including, without limitation, an action for declaratory relief) is brought by
the other. If arbitration is selected by one party after a civil action
concerning a dispute has been brought by another party, the
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Company and the Executive (and his spouse or estate) shall take such actions as
are necessary or appropriate, including dismissal of the civil action, so that
the arbitration can be timely heard. Once arbitration is commenced, it may not
be discontinued without the unanimous consent of all the parties thereto.
During the lifetime of the Executive, only the Company and the Executive can use
the arbitration procedure set forth in this section.
(a) Any claim for arbitration may be submitted as follows: if
the Company or the Executive (or, following the Executive's death, his spouse or
estate) disagrees with an interpretation of this Agreement by the other party,
or disagrees with the calculation of his or her benefit under this Agreement,
such claim may be filed in writing with an arbitrator of said party's choice who
is selected by the method described in the next four sentences. The first step
of the selection shall consist of the party submitting such dispute to
arbitration submitting in writing a list of five potential arbitrators to the
other party. Each of the five arbitrators must be either (i) a member of the
National Academy of Arbitrators located in the State of California or (ii) a
retired California Superior Court or Appellate Court judge. Within fifteen days
after receipt of the list from the party submitting the dispute to arbitration,
the other party shall select one of the five arbitrators as the arbitrator of
the dispute in question. If such party fails to select an arbitrator in a
timely manner, the party submitting the dispute to arbitration then shall
designate one of the five arbitrators as the arbitrator of the dispute in
question.
(b) The arbitration hearing shall be held in the County of
Orange, California within thirty (30) days (or as soon thereafter as possible)
after the selection of the arbitrator. No continuance of said hearing shall be
allowed without the mutual consent of all the parties thereto. Absence from or
nonparticipation at the hearing by any party shall not prevent the issuance of
an award. Hearing procedures that will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing in his
sole discretion when he or she decides he or she has heard sufficient evidence
to justify issuance of an award.
(c) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than thirty (30) days after the close of the
hearing. In the event the arbitrator finds that the Executive (or, following
the Executive's death, his spouse or estate) is entitled to the benefits he
claimed, the arbitrator shall order the Company to pay or deliver such benefits,
in the amounts and at such time as the arbitrator determines. The award of the
arbitrator shall be final and binding on the parties. The Company shall
thereupon pay or deliver to the Executive (or his spouse or estate) immediately
the amount that the arbitrator orders to be paid or delivered in the manner
described in the award. The award may be enforced in any appropriate court as
soon as possible after its rendition. If
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any action is brought to confirm the award, no appeal shall be taken by any
party from any decision rendered in such action.
(d) If the arbitrator determines either that the Executive (or,
following the Executive's death, his spouse or estate) is entitled to the
claimed benefits or that the claim by such party was made in good faith, the
arbitrator shall direct the Company to pay to such party, and the Company agrees
to pay to such party in accordance with such order, an amount equal to such
party's expenses in pursuing the claim, including attorneys' fees.
6. QUARTERLY STATEMENTS.
The Executive (or, in the event of the Executive's death, his spouse
or estate) shall receive a statement with respect to his Deferrals on a
quarterly basis as of each March 31, June 30, September 30 and December 31.
Such statement shall set forth the balance of the Deferrals held by the Company
for the Executive's account for the quarter then ending, and any interest
credited or payments made with respect to such Deferrals during that quarter.
7. UNSECURED GENERAL CREDITOR.
(a) The Executive and his beneficiaries (including his spouse
and his estate), heirs, successors, and assigns shall have no legal or equitable
rights, claims, or interest in any specific property or assets of the Company.
No assets of the Company shall be held in any way as collateral security for the
fulfilling of the obligations of the Company under this Plan. Any and all of
the Company's assets shall be, and remain, the general unpledged, unrestricted
assets of the Company. The Company's obligation under this Plan shall be merely
that of an unfunded and unsecured promise of the Company to pay money in the
future, and the rights of the Executive and his beneficiaries shall be no
greater than those of unsecured general creditors.
(b) Notwithstanding the foregoing, within ninety (90) days of
the event or occurrence which triggers payment of the benefits hereunder
pursuant to Section 4(b), or, if earlier, within thirty (30) days of an Event,
the Company shall fund a grantor trust for the benefit of the Executive (or his
spouse or estate). Such grantor trust shall be funded by the Company within
such ninety (90) day period in an amount equal to the Deferrals (and any
interest thereon). The trustee of the grantor trust shall be permitted to
invest the trust assets solely in obligations of the United States government
with maturities of three (3) years or less. The grantor trust shall provide
that the assets held in the trust are held for the sole purpose of paying
amounts hereunder, subject only to the general creditors of the Company should
the Company become bankrupt or insolvent. In the event of bankruptcy or
insolvency, the Executive (or his spouse or estate) shall have no greater right
with
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respect to such trust assets than that of a general, unsecured creditor of the
Company.
(c) An "Event" shall mean, for purposes of the foregoing
paragraph, the earliest to occur of the following:
(i) Approval by the shareholders of the Company of the
dissolution or liquidation of the Company; or
(ii) Approval by the shareholders of the Company of an
agreement to merge or consolidate, or otherwise reorganize, with or into
one or more entities which are not Subsidiaries (a "Subsidiary" shall mean
any corporation or other entity a majority of whose voting stock or voting
power is beneficially owned directly or indirectly by the Company), as a
result of which less than 50% of the outstanding voting securities of the
surviving or resulting entity are, or are to be, owned by the former
shareholders of the Company (excluding from the term "former shareholders"
a shareholder who is, or as a result of the transaction becomes, an
"affiliate," as that term is used in the Securities Exchange Act of 1934,
as amended from time to time (the "Exchange Act"), and the rules
promulgated thereunder, or any party to such merger, consolidation or
reorganization); or
(iii) Approval by the shareholders of the Company of the
sale of substantially all of the Company's business and/or assets to a
person or entity which is not a Subsidiary; or
(iv) A Change in Control. A "Change in Control" shall
mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act");
provided that, without limitation, such a change in control of Corporation
shall be deemed to have occurred if (A) any "person" (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of
the Company (the "Board") cease for any reason to constitute at least a
majority thereof, unless the election of each new Board member was approved
by a vote of at least two-thirds of the directors then still in office who
were members of the Board at the beginning of such period.
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8. NO EMPLOYMENT CONTRACT.
Nothing contained in this Agreement (or in any other documents related
to this Plan) shall confer upon the Executive any right to continue in the
employ or other service of the Company or constitute any contract or agreement
of employment or other service, nor shall interfere in any way with the right of
the Company to change the Executive's compensation or other benefits or to
terminate the employment of the Executive, with or without cause, but nothing
contained in this Agreement or any document related hereto shall adversely
affect any independent contractual right of the Executive without his specific
consent thereto.
9. RESTRICTION AGAINST ASSIGNMENT.
The Company shall pay all amounts payable hereunder only to the person
or persons designated by this Agreement and not to any other person or
corporation. No portion of such amounts shall be liable for the debts,
contracts, or engagements or the Executive, his beneficiary, or successors in
interest, nor shall such amounts be subject to execution by levy, attachment, or
garnishment or by any other legal or equitable proceeding, nor shall any such
person have any right to alienate, anticipate, commute, pledge, encumber, or
assign any benefits or payments hereunder in any manner whatsoever. If the
Executive, beneficiary or successor in interest is adjudicated bankrupt or
purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any distribution or payment from this Agreement, voluntarily or
involuntarily, the Company, in its discretion, may cancel such distribution or
payment (or any part thereof) to or for the benefit of the Executive,
beneficiary or successor in interest in such manner as the Company shall direct.
10. WITHHOLDING.
The Company shall satisfy any state or federal income or other tax
withholding obligation arising upon payment of any amount hereunder. The
Executive (or his spouse or estate) shall pay or provide for payment in cash of
the amount of any taxes which the Company may be required to withhold with
respect to the benefits hereunder or the Company, in its discretion, may elect
to reduce the amount of any payment in order to satisfy such obligation.
11. GOVERNING LAW.
This Agreement shall be construed, governed and administered in
accordance with the laws of the State of California.
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12. RECEIPT OR RELEASE.
Any payment to the Executive (or his spouse or estate) in accordance
with the provisions of this Agreement shall, to the extent thereof, be in full
satisfaction of any and all claims, be they known or unknown at such time, such
party may have against the Company pursuant to this Agreement. The Company may
require the Executive (or his spouse or estate), as a condition precedent to the
commencement of payments pursuant to Section 4(b), to execute a receipt and
release to such effect.
13. INCAPACITY.
In the event that any amount becomes payable to a person who, in the
sole judgment of the Company, is considered by reason of physical or mental
condition to be unable to give a valid receipt therefor, the Company may direct
that such payment be made to any person found by the Company, in its sole
judgment, to have assumed the care of such person. Any payment or delivery made
pursuant to such determination shall constitute a full release and discharge of
the Company.
14. HEADINGS, ETC. NOT PART OF AGREEMENT.
Headings and subheadings in this Agreement are inserted for
convenience of reference only and are not to be considered in the construction
of the provisions hereof.
15. PAYMENT OF TAXABLE AMOUNTS.
Should any amount held hereunder be includable in the gross income of
the Executive (or his spouse or estate) for federal income tax purposes, the
Company shall distribute such amount to the Executive (or his spouse or estate)
as soon as administratively practicable.
16. PRIOR AGREEMENTS.
This Agreement specifically supersedes any contrary provision in the
Prior Agreements.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement in the
County of Orange, California on the 18th day of February, 1997.
XXXX'X INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its: Vice President-Corporate Affairs
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XXXXX XXXXXXX
/s/ Xxxxx Xxxxxxx
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EXHIBIT A
DEFERRED COMPENSATION AGREEMENTS
Date of Agreement Amount Deferred
----------------- ---------------
November 30, 1990 $50,000.00
February 15, 1993 $136,666.68
April 23, 1993 $244,707.00
August 5, 1994 $440,000.00
November 28, 1995 $356,250.00
