DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement (the "Agreement"), is made and
dated as of May 31, 1997, by and between Xxxxx Healthcare Corporation (the
"Company") and Xxxxxxx X. Xxxxxxxx (the "Executive").
RECITALS
A. The Executive is employed as the Chief Executive Officer of the
Company and is entitled to remuneration from the Company in connection with
such employment.
B. The Company and the Executive acknowledge that the payment of
remuneration to the Executive during fiscal year 1998 and future years could
result in certain amounts being non-tax deductible by the Company as a result
of the limitations imposed by section 162(m) of the Internal Revenue Code of
1986, as amended ("Section 162(m)").
C. The parties desire to enter into this Agreement to defer the
payment to the Executive of certain amounts that would cause the base salary
of the Executive to exceed the limitations of Section 162(m);
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein and for other good, valuable and sufficient
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENT
1. LIMITATION AND DEFERRAL OF PAYMENTS. In the event that all or
any portion of the compensation (including base salary and all other amounts
that legally are required to be included in the Executive's compensation for
purposes of Section 162(m)) to be paid to the Executive during any fiscal
year would be disallowed under Section 162(m) as a federal income tax
deduction by the Company, then the Executive shall receive payments of his
base salary during such fiscal year only to the extent such amounts may be
paid without disallowance of the Company's deduction under Section 162(m), as
determined in good faith by the Company in its sole discretion, and the
balance of the base salary shall be deferred for later payment to the
Executive in accordance with paragraph 3 below. For purposes of determining
the amount of the base salary that may be paid in any given fiscal year to
the Executive in accordance with the foregoing, it shall be assumed that the
Executive will remain in the Company's employ through the close of the
relevant fiscal year and be paid at the same base salary rate as in effect on
the first day of such fiscal year.
2. PRIORITY OF DEFERRALS UNDER COMPANY PLAN. Any amounts to be
deferred under the terms of the Company's Executive Deferred Compensation and
Supplemental Savings Plan, as the same has been or from time to time may be
amended, restated, modified, supplemented, renewed or replaced (the "Plan"),
shall be deferred prior to any deferrals being made under the terms of this
Agreement.
3. INTEREST CREDITING. Any amounts deferred under the terms of
this Agreement shall be held by the Company on behalf of the Executive and
shall accrue interest at a rate equal to the interest rate for amounts
deferred under, and on the same terms as those set forth in, the Plan.
4. PAYMENT OF DEFERRED AMOUNTS. Any portion of the base salary
that is not paid to the Executive as a result of the limitation imposed by
paragraph 1 above, together with interest accrued in accordance with
paragraph 3 above (collectively, the "Deferred Amounts"), shall be paid to
the Executive in full within 10 business days of the earlier of (i) the date
on which his employment with the Company terminates for any reason or (ii)
the occurrence of a "Change in Control" as defined in the Company's 1995
Stock Incentive Plan (or any successor plan); PROVIDED, HOWEVER, that all or
any portion of the Deferred Amounts shall be paid to the Executive in any
earlier fiscal year or fiscal years to the extent that (i) such amount,
together with all other "applicable employee remuneration" for such fiscal
year, would not be disallowed as a federal income tax deduction by the
Company for such fiscal year because of the limitation imposed by Section
162(m), as determined in good faith by the Company in its sole discretion and
(ii) the fiscal year of payment follows by at least one complete calendar
year the fiscal year in which the base salary would have been paid to the
Executive but for the provisions of this Agreement.
5. TAX WITHHOLDING. The Company shall be entitled to withhold
for the payment of taxes all amounts required to be withheld under federal,
state and local income and other tax laws, including, without limitation, all
employment taxes that may be required to be paid on the Deferred Amounts.
6. UNSECURED RIGHTS; NONTRANSFERABILITY. The Executive's rights
under this Agreement shall be those of a general unsecured creditor of the
Company, and all payments to the Executive of the Deferred Amounts shall be
made from the general assets of the Company. Notwithstanding the foregoing,
the Company may in its discretion set aside funds or assets to satisfy its
obligations hereunder through the establishment of a grantor trust subject to
the claims of the Company's creditors, or through any other set aside of
funds or assets that are held as part of the Company's general assets. The
Executive's rights under this Agreement may not be anticipated, alienated,
sold, transferred, assigned, pledge, encumbered, attached or garnished by
creditors of the Executive.
7. SUCCESSORS; BENEFICIARY. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company upon
any sale of all or substantially all of the Company's assets, or upon any
merger, consolidation or reorganization of the Company with or into any other
corporation, all as though such successors and assigns of the Company and
their respective successors and assigns were the Company. This Agreement
shall inure to the benefit of and be binding upon the executors, heirs,
assigns and/or designees of the Executive. The Executive shall be entitled
to designate a beneficiary for the payment upon his death of any Deferred
Amounts to which the Executive is entitled under this Agreement.
8. GENERAL. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of California, without
giving effect to the choice of law
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principles thereof. This Agreement constitutes the entire agreement between
the Company and the Executive with respect to the subject matter hereof.
9. NO THIRD-PARTY BENEFICIARIES. This Agreement is for the
benefit of only the Executive and the Company and, except as expressly
provided in paragraph 7, no other person shall be entitled to any benefits
hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
THE COMPANY XXXXX HEALTHCARE CORPORATION
/s/ Xxxxx X. Xxxxx
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By: Xxxxx X. Xxxxx
Title: Sr. Vice President
THE EXECUTIVE /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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