AGREEMENT TERMINATING SPLIT DOLLAR AGREEMENT, dated October 28, 2004,
among PEGASUS COMMUNICATIONS CORPORATION, a Delaware corporation (the
"Corporation"); XXX X. LODGE, not in his individual capacity, but solely as
Trustee (the "Trustee") under that certain irrevocable Deed of Trust of Xxxxxxxx
X. Xxxxx, Settlor (known as the "2001 Xxxxxxxx X. Xxxxx Insurance Trust," and
hereinafter referred to as the "Trust"), dated December 6, 2001; and XXXXXXXX X.
XXXXX, a resident of Pennsylvania (the "Employee").
The Corporation and the Trust are party to a Split Dollar Agreement,
effective as of December 6, 2001 (the "Split Dollar Agreement"). Pursuant to the
Split Dollar Agreement, the Trust has purchased the life insurance policies
identified as the "Policies" in the Split Dollar Agreement; the Corporation has
agreed to pay a portion of the premiums for the Policies as an additional
employment or retirement benefit to the Employee; and the Trust has agreed to
pay to the Corporation, from the death benefit or cash surrender value of the
Policies, an amount equal to the amounts paid by the Corporation on account of
the Policy premiums.
A substantial question has arisen concerning whether the Corporation's
payment of the premiums on the Policies constitutes a "personal loan" to or for
the benefit of the Employee within the prohibition of section 4.02 of the
Xxxxxxxx-Xxxxx Act of 2002. As a result of this, the Corporation has refrained
from making premium payments pursuant to the Split Dollar Agreement, and neither
the Trust nor the Employee has received the benefit intended to be provided by
the Split Dollar Agreement.
The Corporation, the Trust, and the Employee have considered various
alternatives to achieve the benefits intended to be provided by the Split Dollar
Agreement and have concluded that it is in the best interest of all parties to
terminate the Split Dollar Agreement on the terms set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows, intending to be legally
bound.
1. Termination of Split Dollar Agreement. The Split Dollar Agreement
is hereby terminated, effective upon the Corporation's making the payment
required under section 2. Without limiting the generality of the foregoing:
(a) the Corporation shall have no obligation to make further
payments on account of Policy premiums, including payments required to
be made, but not made, before the date of this Agreement;
(b) the Trust shall have no obligation to pay or cause to be paid
to the Corporation the amount of Policy premiums previously paid by
the Corporation, or any other amount payable under the Split Dollar
Agreement; and
(c) the Corporation hereby releases the collateral assignment of
the Policies held by it pursuant to the Split Dollar Agreement, and
agrees to execute
and deliver such further instruments and documents as shall be
reasonably required to confirm such release.
The Trust will continue to be the sole owner of the Policies.
2. Payment to Employee. Promptly upon the execution and delivery of
this Agreement, the Corporation will pay to the Employee a lump-sum bonus of
$2,261,021, subject to required tax and other payroll withholding. The amount of
this payment has been calculated (as more fully set forth on Exhibit A) as
follows:
Present value of the Corporation's unpaid $1,365,431
payment obligations under the Split Dollar
Agreement, net of the present value of the
Trust's obligation to repay Corporation
amounts paid by it under the Split Dollar
Agreement
Additional amount to make Employee
whole for tax payments on above net amount 895,590
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Total payment $2,261,021
3. Miscellaneous.
(a) Binding Agreement. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns. References herein to the "Trustee" shall
include any additional or successor trustee under the Trust.
(b) Governing Law. This Agreement will be governed by and
construed according to the laws of Pennsylvania.
(c) Severability. No part of this Agreement will be affected if
any other part of its is held invalid or unenforceable.
(d) Waiver. Any party's failure to insist on compliance or
enforcement of any provision of this Agreement shall not affect its
validity or constitute a waiver of future enforcement of that
provision or of any other provision of this Agreement.
(e) Copies. More than one copy of this Agreement may be executed
and all parties agree and acknowledge that each executed copy shall be
a duplicate original.
(f) Gender and Number. Whenever the context of this Agreement
requires, the masculine gender includes the feminine and neuter, and
the singular number includes the plural and vice versa.
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first written above.
PEGASUS COMMUNICATIONS CORPORATION
By /s/ Xxxxx Xxxxx
-----------------
Name: Xxxxx X. Blank
Title: Sr. Vice President
/s/ Xxx X. Lodge
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Xxx X. Lodge, Trustee
/s/ Xxxxxxxx X. Xxxxx
---------------------
Xxxxxxxx X. Xxxxx
EXHIBIT A
Calculation of Payment Under Section 2
