1
EXHIBIT 10.18
DEFERRED COMPENSATION AGREEMENT
FOR
ALAN M. PURDY
THIS AGREEMENT is made this 27th day of November, 1996, between
RemedyTemp, Inc., a Delaware corporation (the "Corporation"), and Alan M. Purdy,
an individual residing in Laguna Beach, California (the "Employee").
In consideration of the mutual promises and obligations set forth
herein the parties hereto agree as follows:
1. (a) The Corporation shall credit to a book reserve (the "Deferred
Compensation Account"), specifically established for purposes of this Agreement,
the Employee's compensation bonus to be earned in fiscal year 1997 (the
"Bonus"). The Deferred Compensation Account shall be reflected in the
Corporation's books and records in a manner that clearly segregates the amounts
deferred under this Agreement from any other amounts credited to book reserves
established in connection with other deferred compensation agreements entered
into by the Employee and the Corporation or any deferred compensation plans
established by the Corporation in which the Employee participates.
(b) The full amount of the Bonus, if any, will be credited to the
Deferred Compensation Account. In addition, social security, Medicaid and any
other required payroll taxes shall be withheld on an annual basis from the
amount credited to the Deferred Compensation Account.
(c) Any such funds so credited to the Deferred Compensation
Account 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 Employer. The
Employee may make recommendations as to specific investments which the Employer
shall consider. The income, gains, and losses from those investments shall be
credited or charged to the Deferred Compensation Account. Any expenses incurred
which are attributable to those investments shall be borne by the Deferred
Compensation Account.
(d) 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.
(e) Title to and beneficial ownership of any assets which the
Corporation may earmark to pay the deferred compensation hereunder, shall at all
times remain in the Corporation and the Employee and his designated beneficiary
shall not have any property interest whatsoever in any specific assets of the
Corporation.
12
2
2. The benefits to be paid as deferred compensation are as follows:
(a) If the Employee's employment hereunder is terminated on or after
the Employee shall have reached the retirement age of 65 (the "Normal Retirement
Age"), the Corporation shall pay to him a retirement benefit, either in the form
of 10 annual installments or in the form of a lump sum payment, equal to the
balance in the Deferred Compensation Account. The determination as to the form
of payment shall be made by the Employee in the year preceding the year in which
he reaches normal retirement age in such manner as the Corporation shall direct.
In the event the Employee fails to make such a determination, then he shall be
deemed to have selected the 10 year installment option. If the installment
option is selected, then the total payable to the Employee shall be
appropriately increased or decreased, as the case may be, but not more than
semi-annually, to reflect the appreciation or depreciation in value and the
income, gain or loss on the funds which remain invested in the Deferred
Compensation Account. If the Employee should die on or after his 65th birthday
and before the 10 annual payments are made, the unpaid balance will continue to
be paid in installments for the unexpired portion of such 10 year period to his
designated beneficiary in the same manner as set forth above. If both the
Employee and his designated beneficiary should die before a total of 10 annual
payments are made by the Corporation, then the remaining value of the Deferred
Compensation Account shall be determined as of the date of the death of the
designated beneficiary and shall be paid as promptly as possible in one lump sum
to the estate of such designated beneficiary.
(b) If the Employee's employment is terminated on account of the
Employee becoming disabled before his Normal Retirement Agent, or if the
Employee's employment is terminated on account of the Employee electing to
retire prior to reaching Normal Retirement Age, then the balance in the Deferred
Compensation Account shall be paid in installments as provided in paragraph 2(a)
above and shall commence at the time established by Section 2(f) below.
(c) If the Employee's employment hereunder is terminated for any
reason other than death or disability but before the Employee shall have reached
the Normal Retirement Age, then the amount in the Deferred Compensation Account
shall be paid in a lump sum payment within 30 days of such termination of
employment.
(d) The beneficiary referred to in this paragraph may be designated
or changed by the Employee (without the consent of any prior beneficiary) on a
form provided by the Corporation and delivered to the Corporation before his
death. If no such beneficiary shall have been designated, or if no designated
beneficiary shall survive the Employee, the installment payments payable under
paragraph 2(a) shall be payable to the Employee's estate.
(e) The Employee shall be deemed to have become disabled for
purposes of paragraph 2(b) above, if the Corporation shall find on the basis of
competent medical evidence satisfactory to the Corporation that the Employee is
totally disabled, mentally or physically, so as to be prevented from engaging in
further employment by the Corporation and that such disability will be permanent
and continuous during the remainder of his life.
(f) The installment payment to be made to the Employee under
paragraphs 2(a) and (b) above, shall commence on the fifth anniversary of the
date of the Employee's termination of employment. The installment payments to be
made to the designated beneficiary
13
3
under the provisions of this paragraph 2 shall commence on a date to be selected
by the Corporation but within six months from the date of death of the Employee.
3. Nothing contained in this Agreement and no action taken pursuant to
the provisions of this Agreement shall create or be construed to create a trust
of any kind, or a fiduciary relationship between the Corporation and the
Employee, his designated beneficiary or any other person. Any funds which may be
invested under the provisions of this Agreement shall continue for all purposes
to be a part of the general funds of the Corporation and no person other than
the Corporation shall by virtue of the provisions of this Agreement, have any
interest in such funds. To the extent that any person acquires a right to
receive payments from the Corporation under this Agreement, such right shall be
no greater than the right of any unsecured general creditor of the Corporation.
4. 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.
5. If the Corporation shall find that any person to whom any payment is
payable under this Agreement is unable to care for his affairs because of
illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee or other
legal representative) may be paid to the spouse, a child, a parent, or a brother
or sister, or to any person deemed by the Corporation to have incurred expense
for such person otherwise entitled to payment, in such manner and proportions as
the Corporation may determine. Any such payment shall be a complete discharge of
the liabilities of the Corporation under this Agreement.
6. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Corporation.
7. Any deferred compensation payable under this Agreement shall be
deemed salary or other compensation to the Employee for the purpose of computing
benefits to which he may be entitled under any pension plan or other arrangement
of the Corporation which may be adopted by the Corporation for the benefit of
its employees.
8. The Corporation shall have full power and authority to interpret,
construe and administer this Agreement and the Corporation's interpretations and
construction thereof, and actions thereunder, including a determination of the
amount of any payment to be made, shall be binding and conclusive on all persons
for all purposes. No officer of the Corporation 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 own willful
misconduct or lack of good faith. The Employee hereby agrees to indemnify and
hold the Corporation harmless against (i) any and all costs, liabilities or
expenses incurred by the Corporation in the administration of this Agreement
according to its terms and (ii) any and all costs, liabilities or expenses,
including without limitation, attorneys fees and disbursements, arising as a
result of any claims made by a designated beneficiary or other third parties
against the Corporation for its actions in accordance with this Agreement.
Without limitation of any of its other remedies otherwise available under
14
4
law, the Corporation shall be entitled to offset any amounts owed pursuant to
the above indemnification against and thereby reduce any amounts otherwise due
to Employee or his beneficiaries under this Agreement.
9. This Agreement shall be binding upon and inure to the benefit of
the Corporation, its successors and assigns and the employee and his heirs,
executors, administrators and legal representatives.
10. This Agreement shall be construed in accordance with and governed
by the laws of the State of California.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer and Employee and his wife have hereunto
set their hands as of the date first written above.
REMEDYTEMP, INC.
/s/ PAUL W. MIKOS
------------------------------------
Paul W. Mikos, President and Chief
Executive Officer
/s/ ALAN M. PURDY
------------------------------------
Alan M. Purdy
/s/ SARAH R. PURDY
-----------------------------------
Sarah R. Purdy
15