EXHIBIT 10.16
SPLIT-DOLLAR AGREEMENT
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THIS AGREEMENT is made and entered into as of the 11th day of November,
1998, by and between PREMIERE TECHNOLOGIES, INC., a Georgia corporation (the
"Company"), and XXXXXX X. XXXXXX (the "Owner" and the "Insured").
WITNESSETH:
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WHEREAS, the Insured is employed by the Company as a valuable key
executive; and
WHEREAS, the Insured wishes to provide life insurance protection for the
Insured's family when the Insured is dead, under a policy of life insurance (the
"Policy") which is described in Exhibit A attached hereto and by this reference
made a part hereof, and which is issued by Mass Mutual Life Insurance Company
(the "Insurer"); and
WHEREAS, the Company is willing to pay a portion of the premiums due on the
Policy, on the terms and conditions hereinafter set forth; and
WHEREAS, the Company wishes to have the Policy collaterally assigned to it
by the Owner, in order to secure the repayment of the amounts which it will pay
toward the premiums on the Policy;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
1. By virtue of the Insured's change of employment from Scientific-
Atlanta, Inc., the Company has temporarily become the owner of the Policy.
However, as of the execution of this Agreement, the Insured (i.e., Xxxxxx
Xxxxxx) shall become the Owner of the Policy, subject to the collateral
assignment in favor of the Company made herein, and for all purposes under this
Agreement, the amount of premiums payments deemed to have been made by the
Company shall be determined
as provided in paragraph 4 of this Agreement. The total face amount of the
Policy (as of the date of this Agreement) is $1,399,502.13. The Policy shall be
subject to the terms and conditions of this Agreement and of the collateral
assignment relating to the Policy.
2. The Owner shall be the sole and absolute owner of the Policy, and may
exercise all ownership rights granted to the owner thereof by the terms of the
Policy, except as may otherwise be provided herein. The Company shall have no
"incidents of ownership" in the Policy within the meaning of I.R.C. (S) 2042.
In particular, the Company may not borrow against the Policy or pledge it as
security for any indebtedness.
3. Any dividend declared on the Policy shall be applied in accordance with
the dividend election currently in force.
4. On or before the due date of each Policy premium, or within the grace
period provided therein, the Owner shall remit (or the Insured may remit on the
Owner's behalf) to the Company an amount of such premium equal to the one-year
term cost of the life insurance protection to which the Owner is entitled in
that year, determined in accordance with the principles of Rev. Rul. 64-328,
1964-2 C.B. 11, and Rev. Rul. 66-110, 1966-1 C.B. 12 (and the Company shall
cooperate with the Owner in obtaining this information from the Insurer). The
Company shall use such remittance for the payment of such premium to the Insurer
and shall pay the balance of the premium to the Insurer from its own funds, and
the Company shall also have the authority to pay the Insured taxable bonuses or
other taxable compensation to enable the Insured to pay the Owner's remittance
hereunder. If the Owner fails to pay its share of the premium as required by
this paragraph, the Company may elect to pay the full premium, and in such case
the Company shall be considered to have paid the full amount of such premium
even if such payment results in taxable income to the Insured and/or a taxable
gift from the Insured to the Owner. For all purposes under this Agreement, the
amount of premium payments deemed to have been made by the Company shall be (1)
the payment of $72,382.54 paid to Scientific-Atlanta, Inc., in connection with
the Insured's change of employment, plus (2) any premium payments subsequently
made by the Company pursuant to this Agreement or during the period between the
Company's acquisition of the policy from Scientific-Atlanta, Inc. and the date
of execution of this Agreement.
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5. To secure the repayment to the Company of the amount of the premiums on
the Policy paid by it hereunder, the Owner has, contemporaneously herewith,
assigned the Policy to the Company as collateral, under the form used by the
Insurer for such assignments. The collateral assignment of the Policy to the
Company hereunder shall not be terminated, altered or amended by the Owner
without the express written consent of the Company. The parties shall take all
action necessary to cause such collateral assignment to conform to the
provisions of this Agreement.
6. a. Except as otherwise provided herein, the Owner shall not sell,
assign, transfer, borrow against, surrender or cancel the Policy, change the
beneficiary designation provision thereof, nor terminate the dividend election
thereof, without the express written consent of the Company.
b. Notwithstanding any provision hereof to the contrary, (1) if the
Owner is the Insured, the Owner may transfer all of its right, title and
interest in and to the Policy to a trust created by the Insured for the
exclusive benefit (disregarding any remote and contingent beneficial interests)
of the Owner's spouse and/or one or more descendants of the Owner, and (2) if
the Owner is a trust created by the Insured, the Owner may distribute to a
beneficiary all of its right, title and interest in and to the Policy, in either
case subject to the collateral assignment of the Policy to the Company pursuant
hereto. The Owner may exercise such right by executing a written transfer of
ownership in the form used by the Insurer for such transfers of insurance
policies, and delivering this form to the Company. Upon receipt of such form,
executed by the Owner and duly accepted by the transferee or distributee
thereof, the Company shall consent thereto in writing, and shall thereafter
treat the Owner's transferee or distributee as the sole owner of all of the
Owner's right, title and interest in and to the Policy, subject to this
Agreement and the collateral assignment of the Policy to the Company pursuant
hereto, whereupon the Owner shall be considered a "former Owner" and such
transferee or distributee shall be considered the new Owner for all purposes
under this Agreement. Thereafter, the former Owner shall have no right, title or
interest in and to the Policy, all such rights being vested in and exercisable
only by such distributee or transferee.
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7. a. Upon the death of the Insured, the Owner shall promptly take all
action necessary to obtain the death benefit provided under the Policy, and the
Company shall cooperate with the Owner in this regard.
b. The Company shall have the unqualified right to receive a portion
of such death benefit equal to the total amount of the premiums paid by it
hereunder. The balance of the death benefit provided under the Policy, if any,
shall be paid directly to the beneficiary or beneficiaries designated by the
Owner (or the Owner's estate if the Company is inadvertently named as
beneficiary of such balance), in the manner and in the amount or amounts
provided in the beneficiary designation provision of the Policy. In no event
shall the amount payable to the Company hereunder exceed the Policy proceeds
payable at the death of the Insured. No amount shall be paid from such death
benefit to the beneficiary or beneficiaries designated by the Owner until the
full amount due the Company hereunder has been paid. The beneficiary
designation provision of the Policy shall conform to the provisions hereof.
c. Notwithstanding paragraph 6(a) of this Agreement, the Owner may
surrender, partially surrender, make withdrawals from or borrow against the
Policy at any time if the proceeds of such surrender, withdrawal or loan are at
least equal to the amount that the Company would be entitled to receive if the
Insured had died on the date of such borrowing or surrender and such amount is
immediately paid to the Company. The Owner may pay the Company the full amount
to which it would be entitled pursuant to the preceding sentence from other
sources at any time. Upon payment to the Company of the full amount to which it
is entitled, this Agreement shall terminate, and the Company shall release the
collateral assignment of the Policy to it.
d. In addition to the borrowing and withdrawals permitted under
paragraph 7(c), and notwithstanding paragraph 6(a) of this Agreement, the Owner
may make withdrawals from or borrow against the Policy at any time and continue
such borrowing provided such withdrawals and borrowing, including any accrued
but unpaid interest thereon, do not reduce the Policy's interpolated terminal
reserve (net of outstanding policy loans and accrued interest thereon) below the
amount that the Company would be entitled to receive if the Insured had died on
the date of such withdrawal or borrowing or any later date while any policy loan
remains outstanding.
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8. This Agreement shall terminate, without notice, (1) upon the total
cessation of the business of the Company, or the bankruptcy, receivership or
dissolution of the Company; (2) upon the failure of the Owner to pay its share
of premium in accordance with paragraph 4 if the Company does not elect to pay
the full premium as provided in paragraph 4; (3) upon the termination of the
Insured's employment with the Company for "cause" as defined in the Owner's
Executive Employment Agreement with the Company (the "Employment Agreement"), or
upon the Insured's voluntary termination of employment with the Company prior to
Disability (as defined in the Employment Agreement) or normal retirement; (4) at
the election of the Company upon the violation by the Owner of the policy loan
conditions specified in paragraph 7(d); or (5) upon death of the Insured or as
provided in paragraph 7(c). In addition, the Owner may terminate this Agreement
by written notice to the Company. Such termination shall be effective as of the
date of such notice.
9. In the event this Agreement is terminated, the Company shall have no
further obligation to pay any share of premiums on the Policy which subsequently
become due. The Owner shall continue to hold the Policy subject to the
Company's right to a share of death proceeds or proceeds of any surrender or
loan as provided in this Agreement, except that in the case of termination under
clause (2), (3) or (4) of paragraph 8 (failure to pay share of premium, certain
terminations of employment, or excessive borrowing), the Company shall be
entitled to immediately have the Owner take all necessary steps to cause the
cancellation of the Policy and enable the Company to receive out of the
cancellation proceeds the amount that the Company would be entitled to receive
if the Insured had died on the date of such termination (or the Company may
allow the Owner to pay the Company such amount from other sources).
10. The Insurer shall be fully discharged from its obligations under the
Policy by payment of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy, except insofar as the provisions hereof are
made a part of the Policy by the collateral assignment executed by the Owner and
filed with the Insurer in connection herewith. In no event shall the Insurer be
considered a party to this Agreement, or any modification or amendment hereof.
No provision of this Agreement, nor of any modification or amendment hereof,
shall in any way be
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construed as enlarging, changing, varying, or in any other way affecting the
obligations of the Insurer as expressly provided in the Policy.
11. This Agreement may not be amended, altered or modified, except by a
written instrument signed by the parties hereto, or their respective successors
or assigns, and may not otherwise be terminated except as provided herein.
12. This Agreement shall be binding upon and inure to the benefit of the
Company and the Owner and their successors and assigns, and the Insured, his
successors, assigns, heirs, executors, administrators, and beneficiaries.
13. Any notice, consent, or demand required or permitted to be given under
the provisions of this Agreement must be in writing, and must be signed by the
party giving or making the same. If such notice, consent or demand is mailed to
a party hereto, it shall be sent by United States certified mail, postage
prepaid, addressed to such party's last known address. The date of such mailing
shall be deemed the date of notice, consent, or demand.
14. This Agreement, and the rights of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the day and year first above written.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Title: Senior Vice President
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Owner and Insured
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EXHIBIT A
DESCRIPTION OF POLICY
Mass Mutual Policy Number 0 020 173
Insured: Xxxxxx X. Xxxxxx
Level Death Benefit to Age 65: $1,399,502.13
Level Death Benefit from Age 65 on: $ 233,247.00
Annual premium based on above benefits: $ 4,016.64
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