EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
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THIS DEFERRED COMPENSATION AGREEMENT ("Agreement") is made and entered
into as of the 1st day of July, 1995 (the "Effective Date"), by and between
Software AG Americas, Inc., a Virginia corporation (the "Company"), and
Xxxxxx Xxxxxx, ("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed by the Company in the capacity of
President & Chief Executive Officer, and has experience and knowledge of
considerable value to the Company; and
WHEREAS, the Company wishes to offer an inducement to Executive to remain
in its employ by providing him with a supplemental compensation arrangement for
services which he has rendered or will render; and
WHEREAS, Executive desires to continue in the employ of the Company in
order to earn certain deferred compensation benefits contingent on the
satisfaction of the provisions and conditions set forth herein; and
WHEREAS, the Company agrees to make such contingent deferred compensation
benefits available to Executive; and
WHEREAS, the Company and Executive desire to record in this Agreement the
terms and conditions for the earning and payment of such contingent deferred
compensation benefits.
NOW, THEREFORE, in consideration of the foregoing premises, and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive hereby agree as follows:
1. Scope of this Agreement. The Company hereby continues to employ
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Executive in the capacity of President & Chief Executive Officer, and Executive
hereby agrees to such continued employment. The parties acknowledge that this
Agreement does not generally include terms and conditions of the employment of
Executive by the Company but is intended only to address Executive's right to
certain deferred compensation benefits, as specified herein. The Company's
obligation to pay to Executive deferred compensation hereunder is independent
of, and unrelated to, any employment agreement or any other agreement, contract
or understandings which may exist between the Company and Executive, and any
amounts payable to Executive hereunder shall be in addition to, and not in
substitution for, any salary, bonus, other compensation, benefits or other
amounts otherwise paid or provided by the Company to Executive.
2. Deferred Compensation Account. The Company shall establish on its books
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a separate deferred compensation account (the "Account") which shall reflect the
amount of the Company's contingent liability to pay deferred compensation to
Executive in accordance with the terms of this Agreement. Amounts shall be
periodically credited to the Account as follows:
(a) The balance of the Account shall initially be zero (0).
(b) Effective as of July 31, 1995 the Company shall credit the Account
with the amount of Forty-One Thousand Eight Hundred Thirty-Eight Dollars
($41,838.00). Effective as of March 31, 1996 and on each March 31 occurring
thereafter during Executive's term of active employment with the Company, the
Company shall credit the Account with an additional Forty-One Thousand Eight
Hundred Thirty-Eight Dollars ($41,838.00.00). In the event that Executive's
employment with the Company is terminated as of a date other than April 1 due to
death, incurrence of Permanent Disability (as defined in Section 3(b)) or
retirement on or after attaining age sixty (60), the Account will be credited as
of the date of termination of employment by an amount determined by multiplying
Forty-One Thousand Eight Hundred Thirty-Eight ($41,838.00). by a fraction, the
numerator of which is the number of days elapsed between the most recent March 3
1 and the date of termination of employment (or, if earlier, the date on which
Executive attains age sixty (60)) and the denominator of which is 365. If
Executives employment with the Company is terminated for any other reason as of
a date other than April 1, no additional credit will be made to the Account. In
addition, if Executive performs services for the Company subsequent to the
attainment of age sixty (60), a final credit will be made to Executive's Account
under this Paragraph (b), computed under the methodology described above as if
Executive had terminated employment on his sixtieth (60th) birthday. No
subsequent adjustments will be made to Executive's Account under this Paragraph
(b) with respect to any continued employment beyond Executive's sixtieth (60th)
birthday.
(c) Effective as of September 30, 1995 (adjusted by 50% for the half
year of 1995 only) and on each September 30 occurring thereafter during
Executive's term of active employment with the Company, the Company shall credit
the Account with an amount equal to Executive's Adjusted Estimated Bonus. The
Adjusted Estimated Bonus as of each September 30 shall be equal to the product
of (i) fifty percent (50%) of the bonus which the Company estimates will be paid
to Executive with respect to the then-current calendar year, computed by the
Company after considering all relevant facts and circumstances including
specified management goals, multiplied by (ii) a factor of .53. In the event
that Executive's employment with the Company is terminated as of a date other
than October 1, due to death, incurrence of Permanent Disability (as defined in
Section 3(b)) or retirement on or after attaining age sixty (60), the Account
shall be credited as of the date of termination of employment by an amount equal
to the Adjusted Estimated Bonus, as defined above, multiplied by a fraction, the
numerator of which is the number of days elapsed between the most recent
September 30 and the date of termination of employment (or, if earlier, the date
on which Executive attains age 60) and the denominator of which is 365. If
Executive's employment with the Company is terminated for any other reason as of
a date other than October 1, no additional credit will be made to the Account.
In addition, if Executive performs services for the Company subsequent to the
attainment of age sixty (60), a final credit will be made to Executive's Account
under this Paragraph (c), computed
under the methodology described above as if Executive had terminated employment
on his sixtieth (60) birthday. No subsequent adjustments will be made to
Executive's Account under this Paragraph (c) with respect to any continued
employment beyond Executive's sixtieth (60th) birthday.
(d) Effective as of December 31, 1995, and on each December 31 (adjusted by
50% for the half year of 1995 only), occurring thereafter during the Executive's
term of active employment with the Company, the Company shall credit the Account
with an amount equal to the difference between (i) .53 times the bonus actually
paid to the Executive in respect of the then-current calendar year and (ii) the
amount of the Adjusted Estimated Bonus credited to the Account as of the
immediately preceding September 30 pursuant to the provisions of Paragraph (c)
above. In the event that Executive's employment with the Company is terminated
as of a date other than January 1 due to death, incurrence of Permanent
Disability (as defined in Section 3(b)) or retirement on or after attaining age
sixty (60), the Account will be credited as of the date of termination of
employment by an amount equal to the product of (i) the difference between .53
times Executive's actual bonus paid in respect of the then-current year less the
Adjusted Estimated Bonus credited to the Executive's Account as of the
immediately preceding September 30 pursuant to the provisions of Paragraph (c),
above, multiplied by (ii) a fraction, the numerator of which is the number of
days elapsed between the most recent December 31 and the date of termination of
employment (or, if earlier, the date on which Executive attains age sixty (60))
and the denominator of which is 365. If the Executive's employment is terminated
for any other reason as of a date other than January 1, no additional credit
will be made to the Account. In addition, if Executive performs services for the
Company subsequent to the attainment of age sixty (60), a final credit will be
made to Executive's Account under this Paragraph (d), computed under the
methodology described above as if Executive had terminated employment on his
sixtieth (60th) birthday. No subsequent adjustments will be made to Executive's
Account under this Paragraph (d) with respect to any continued employment beyond
Executive's sixtieth (60th) birthday.
(e) The Account balance shall be credited as of September 30 and March 31
of each year during which the Account has a positive balance by an interest
factor equal to three percent 3% of the then-existing Account balance. As such,
the rate of return to be applied pursuant to this Paragraph (e) is six percent
(6%) per year, compounded semi-annually.
3. Entitlement to Deferred Compensation Benefits.
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(a) In the event that Executive terminates employment for any reason
other than Permanent Disability, death, termination for "cause", as defined
below, or a voluntary quit, Executive shall have the right, commencing on or
about the date of termination of employment, to receive Deferred Compensation
Benefits, as defined in Section 5, below. It is intended and expected that
Executive give at least sixty (60) days notice prior to the date upon which such
termination becomes effective. Executive's entitlement to receipt of benefits
pursuant to this Agreement shall be conditioned upon Executive's compliance with
all terms and provisions of this Agreement.
(b) If Executive shall become Permanently Disabled, he shall become
entitled, as of the date on which the Company determines that Executive is
Permanently Disabled, to receive Deferred Compensation Benefits in accordance
with Section 5 hereof. For purposes of this Agreement, the term "Permanently
Disabled" means unable, by reason of any physical or mental illness, injury or
incapacity of permanent or indefinite duration, to perform substantially full-
time services to the Company in the capacity and at the level theretofore
employed, except that Executive shall not be deemed to be Permanently Disabled
unless and until such illness, injury or incapacity has continued unabated for
at least six (6) consecutive months. Executive agrees, as a condition of his
receipt of benefits hereunder, to undergo such physical examinations and tests
as any physician selected by the Company may reasonably request to ascertain
whether he is Permanently Disabled.
4. Vesting. Executive's rights to receive deferred compensation hereunder
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shall be automatically forfeited except to the extent that he has become vested
in a designated percentage of the Account balance on or before the date of his
retirement or termination of employment in accordance with the following rules.
In the event that Executive's employment is terminated for "cause", as defined
below, or in the event Executive voluntarily quits his employment, Executive
will forfeit entitlement to any and all benefits hereunder. Subject to the
provisions of Section 10, below, the vesting schedule is as follows and is based
upon total continuous employment performed by the Executive from his initial
date of hire.
A. Termination due to the Permanent Disability of Executive - Vesting
100%
B. Termination for any reason other than Permanent Disability, death,
termination for "cause" or a voluntary quit, Vesting will be based
on the number of full years of continuous employment from
Executive's initial date of hire as follows:
Less than 1 Year 0% Vested
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1 Year 20% Vested
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2 Years 40% Vested
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3 Years 60% Vested
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4 Years 80% Vested
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5 or More Years 100% Vested
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For purposes of this Agreement, "cause" means: 1) Misconduct or conduct by
Executive which is illegal, dishonest, or involves moral turpitude; 2) Conduct
which jeopardizes the Company's right or ability to operate its business; 3) The
breach or violation of any other signed agreements, i.e. Confidentiality
Agreements, etc.; or 4) The destruction of Company property or business.
5. Payment of Deferred Compensation Benefits. Provided that the vesting
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requirements specified in Section 4 above are (or become) satisfied in whole or
in part as of the date of Executive's termination of employment, the Executive
shall, as of the termination of his employment (the "Entitlement Date"), become
entitled to receive from the Company payments of deferred compensation as set
forth below ("Deferred Compensation Benefits"). Prior to the
Entitlement Date, Executive shall have the option (1) to direct the Company to
pay to him his Deferred Compensation Benefits as a lump-sum payment effective as
of the Entitlement Date; (2) to direct the Company to purchase and assign an
annuity to him, effective as of the Entitlement Date or (3) to direct the
Company to make specified payments to him in installments over a fifteen (15)
year period commencing on the Entitlement Date. This election as to the form of
Deferred Compensation Benefits shall be made by Executive in a written notice to
the Company signed by Executive ("Election Notice") no less than ninety (90)
days prior to the Entitlement Date. If Executive fails to make an election at
least ninety (90) days prior to the Entitlement Date, the Company shall pay the
Deferred Compensation Benefits in the form of a lump-sum distribution.
The forms in which Deferred Compensation Benefits may be paid are
described in greater detail as follows:
(a) If Executive elects to receive a lump-sum payment or if Executive
otherwise fails to file an Election Notice on a timely basis, the Company shall
pay to Executive, in immediately-available funds, no later than thirty (30) days
after Entitlement Date, an amount equal to the total Account Balance, determined
as of the Entitlement Date, plus interest thereon through the Entitlement Date,
at the rate set forth in Section 2 hereof ("Final Account Balance").
(b) If Executive elects in a timely manner to have the Company
purchase an annuity contract and to transfer such annuity contract to Executive,
the Company shall, within thirty (30) days after the date of the Election
Notice, assign and transfer to Executive a fully-paid annuity policy pursuant to
which an insurance company or other financial institution will make annuity
payments directly to Executive on the same dates as specified in
subparagraph (c) below.
(c) If Executive elects in a timely manner to have the Company pay
Deferred Compensation directly to Executive in annual installments, the Company
shall compute the amount of each annual installment based on amortization, over
a fifteen (15) year period, of the Final Account Balance, with interest thereon
at six percent (6%) per year, compounded annually, with the first annual
installment payment to be paid within thirty (30) days of the Entitlement Date.
6. Death of Executive.
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(a) If Executive should die while still in the employ of the Company,
the Company shall pay to the "Beneficiary" in lieu of any other payments
hereunder, a death benefit equal to the amount in the Executive's deferred
compensation account at the time of death ("Death Benefit"). The Death Benefit
shall be paid to the Beneficiary, in immediately-available funds, on the first
day of the second month commencing after the date of death of Executive. For
purposes of this Agreement, the "Beneficiary" of the Executive is the person or
persons whose name or names and address or addresses, are set forth on Exhibit A
attached hereto and in effect on the date of Executive's death. Executive
retains the right to change his Beneficiary at any time by providing the Company
with his written, signed notice advising the Company of the name or names and
address or addresses of the person or persons who shall be the Beneficiary
after the date of such notice. Upon receipt of any such notice, the Company
shall cause Exhibit A attached hereto to be changed to reflect the name or names
and address or addresses of the new Beneficiary. In the event that Executive
fails to designate a beneficiary or in the event the designated beneficiary
fails to survive Executive, Executive's Beneficiary shall be deemed to be his
estate.
(b) If Executive shall die after becoming entitled to receive Deferred
Compensation Benefits pursuant to Section 5 hereof but before all of the
Deferred Compensation Benefits have been paid to him, his Beneficiary shall not
receive any Death Benefit under Section 6(a), above, but shall become entitled
to receive all Deferred Compensation Benefits that were not paid to Executive
prior to his death.
7. No Employment Obligation. This Agreement does not, in any manner,
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commit or obligate the Company to continue to employ Executive, nor does it
commit to obligate Executive to continue in the employ of the Company.
Accordingly, the Company shall have the right, at any time, to terminate its
employment of the Executive for any reason, subject to the provisions of any
employment agreement or other contract between the Company and Executive.
8. Unfunded Obligation. The rights of Executive and his Beneficiary
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to receive Deferred Compensation Benefits or a Death Benefit hereunder shall be
solely those of an unsecured creditor of the Company. Neither Executive nor his
Beneficiary shall have any right with respect to any insurance policy, annuity
contract or any other asset which may be acquired or held by the Company in
connection with the contingent liabilities assumed by the Company hereunder. Any
such insurance policy, annuity contract or other asset shall not be deemed to be
held under any trust for the benefit of Executive or his beneficiaries or to be
held in any way as collateral security for the fulfillment of the obligations of
the Company under this Agreement, but shall be, and remain, a general,
unpledged, unrestricted asset of the Company, which the Company may modify or
cancel at any time.
9. Nonassignability. Except to the extent that Executive may designate
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his Beneficiary pursuant to Section 6 hereof to receive payments hereunder after
the date of his death, neither the Beneficiary nor Executive shall have the
right to commute, sell, assign, pledge, hypothecate or otherwise transfer or
encumber the right to receive any payments hereunder, which payments and the
right thereto are expressly declared to be nonassignable and nontransferable.
10. Sale, Merger or Consolidation. In the event the Company receives
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an offer to sell substantially all of its operating assets to another entity or
in the event of a proposed merger, consolidation or other business transfer, the
Company shall diligently pursue an attempt to cause the succeeding or continuing
corporation or other organization to expressly assume all of the obligations and
liabilities of the Company under this Agreement. In the event that the Company
is not able to cause such an assumption of obligations under this Agreement,
this Agreement shall be terminated.
Upon termination, the Executive will be entitled to receive a lump-sum
distribution of the portion of his Account in which he has then attained vested
status under the schedule set forth in Section 4B, based upon his years of
continuous employment earned through the effective date of such merger,
consolidation or acquisition. Such payment shall be made within thirty (30) days
of the consummation of such merger, consolidation or acquisition.
11. Miscellaneous.
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(a) This Agreement shall be governed by, and interpreted in accordance
with, the laws of the Commonwealth of Virginia, without giving effect to the
principles of conflicts of laws.
(b) Where text requires, words in the singular shall be deemed to
include the plural and vice-versa, and words of any gender shall be deemed to
include all genders.
(c) Any headings preceding the text of the several sections of this
Agreement are inserted solely for convenience of reference and shall not
constitute a part of this Agreement nor shall they affect its meaning,
construction or effect.
(d) For purposes of this Agreement, employment of Executive by the
Company shall include not only employment of Executive by Software AG Americas,
Inc., but also employment of Executive by any subsidiary, parent or other
affiliate of Software AG Americas, Inc.
(e) All notices pertaining to this Agreement shall be either hand-
delivered or sent by certified mail, return receipt requested, with first class
postage prepaid as follows: (i) if to the Company, to Software AG Americas,
Inc., 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000, Attention: Chief
Financial Officer; or (ii) to such other address as either of the parties shall
designate by written notice to the other from time to time pursuant to this
Section. Time periods contained in any notice shall commence on the date of hand
delivery or mailing, as the case may be. Any notice which is required to be
given within a stated period of time shall be considered timely if either hand
delivered or postmarked on or before midnight of the last day of such period.
(f) This Agreement is binding upon, and inures to the benefit of, the
parties hereto and their heirs, executors, personal and legal representatives,
successors and permitted assigns.
(g) This Agreement may be modified, amended, altered or revoked only
by mutual consent of the parties or by the Company within ninety (90) days of
either (i) a meaningful Company-wide reduction in compensation and/or benefits,
or (ii) following a meaningful reduction in force. However, no such
modification, amendment, alteration or revocation shall adversely affect
Executive's entitlements hereunder to the component of Executive's Account (as
determined on the date of the adoption of such modification, amendment,
alteration or revocation) in which Executive is then vested under the schedule
set
forth in Section 4.B. In addition, in the event of the adoption of any
modification, amendment, alteration or revocation which would otherwise reduce
or eliminate the amount of future additions to Executive's Account, Executive's
rights upon termination of employment to the balance of the Account in existence
on the date of the adoption of such modification, amendment, alteration or
revocation shall be based upon the vesting schedule set forth in Section 4.B
computed by reference to Executive's full period of employment through the date
of such termination of employment (including employment subsequent to the date
of the modification, amendment, alteration or revocation of this Agreement).
IN WITNESS WHEREOF, the Company, by its duly-authorized officers, has
caused this Agreement to be executed and sealed, and Executive has by his hand
signed and sealed this Agreement, all as of the day and year first set forth
above.
ATTEST: THE COMPANY:
Software AG Americas, Inc.
/s/ Xxxxx XxXxxxxx By: /s/ Xxxxxx Xxxxxx
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Xxxxx XxXxxxxx, Chief Financial Officer Xxxxxx Xxxxxx, President & CEO
WITNESS: EXECUTIVE:
/s/ Xxxxxxx X.Xxxxx /s/ Xxxxx X. Xxxx
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Xxxxxxx X. Xxxxx, Vice President Xxxxx X. Xxxx, General Counsel
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT is made as of March 27, 1997, by and between
Software AG Americas, Inc., a Virginia corporation (the "Company"), and Xxxxxx
X. Xxxxxx ("Executive").
W I T N E S S E T H :
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WHEREAS, Executive and the Company have previously entered into a
Deferred Compensation Agreement, dated as of July 1, 1995 (the "Agreement"),
which, subject to the terms of the Agreement, allows Executive to earn certain
contingent deferred compensation benefits; and
WHEREAS, Executive and the Company desire to amend the Agreement to (a)
terminate the crediting of additional contingent deferred compensation benefits
as of December 31, 1998, and (b) vest previously earned deferred compensation
benefits as of such date, subject to the terms and conditions set forth herein
and in the Agreement;
NOW, THEREFORE, the Agreement is hereby amended to add a new section 12
to read as follows:
12. Freeze of Benefits as of December 31. 1998. If Executive is an
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active employee of the Company as of December 31, 1998: (a) solely for purposes
of Section 2 of this Agreement, he shall be treated as if he attained age sixty
(60) as of such date, such that he shall be entitled to such credits to his
Account for employment through December 31, 1998 as provided for in Section 2,
but no additional credits shall be made to his Account with respect to
employment after such date, except for the crediting of interest pursuant to
Section 2(e) of this Agreement; and (b) he shall be deemed, as of such date, to
have completed five (5) or more years of service for purposes of Section 4 of
this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SOFTWARE AG AMERICAS, INC.
By: /s/ Xxxxx XxXxxxxx
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Xxxxx XxXxxxxx
Vice President and
Chief Financial Officer
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
