EXHIBIT B
Split-Dollar Insurance Agreement
THIS AGREEMENT is made and entered into this 24th day of December 1992 by
and between MicroAge, Inc., a Delaware corporation (the "Company") and Xxxx Xxxx
(the "Executive");
WHEREAS, the Company has agreed to provide a $1,000,000 death benefit to
the Executive during the term of his employment under the Employment Agreement
dated as of October 1, 1992 by and between the Company and the Executive (the
"Employment Agreement"); and
WHEREAS, the Company and the Executive agree that this death benefit will
be provided under a life-paid-up-atage-65 policy (the "Policy") issued by The
Northwestern Mutual Life Insurance Company (the "Insurer"); and
WHEREAS, the Company shall receive the Policy Cash Value (as defined
herein) or the face value of the Policy in excess of $1,000,000 in the event the
Executive incurs a Substantial Risk of Forfeiture (as defined herein); and
WHEREAS, this Agreement is being entered into pursuant to Section 2-A(a) of
the Employment Agreement (terms not otherwise defined herein shall have the
meanings attributed to them in the Employment Agreement);
NOW, THEREFORE, effective as of the date hereof, the Company and the
Executive agree as follows:
SECTION 1
ISSUANCE, OWNERSHIP, PREMIUMS
The Insurer shall issue the Policy to the Executive, who shall own the
Policy, subject to the Company's rights recited hereinafter. The Company shall
pay all required annual premiums of at least $58,000 during the term of the
Policy, but not after death, Retirement, Total Disability or other termination
of employment of the Executive under the Employment Agreement. The Executive
agrees to report taxable income attributable to the Policy as required under
applicable rulings of the Internal Revenue Service. The total death benefit
under the Policy shall be of whatever amount is selected by the Company, so long
as the proceeds of the Policy are at least adequate to pay Executive's
designated beneficiary the $1,000,000 death benefit. The Policy shall be
dividend-bearing, and the dividends shall be used to purchase additional amounts
of paid-up life insurance on the Executive's life. Neither an insured amount in
excess of the $1,000,000 nor the additional amounts provided by application of
dividends shall expand the Company's obligation to provide the stated death
benefit of $1,000,000. Photostatic copies of the Policy, including the policy
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application theref or, shall be attached as exhibits to this Agreement. During
the term of this Agreement, the Company will not exercise nor withhold its
consent TO the exercise by Policy Owner of any rights, privileges or options
conferred by the terms of the Policy on the Insured other than the right to
borrow (which shall require the prior written consent of the Company) against
the aggregate cash value in the Policy (subject to the rights of the Company as
SET forth herein). With the prior written consent of the Executive, the Company
may borrow against the aggregate cash value in the Policy.
SECTION 2
DEATH
The Policy shall be appropriately endorsed to provide that at the death of
the Executive his designated beneficiary shall be paid $1,000,000 and the excess
of the Policy proceeds shall be paid to the Company.
SECTION 3
POLICY CASH VALUE AND
SUBSTANTIAL RISK OF FORFEITURE
For all purposes of this Agreement, the term "Policy Cash Value" shall mean
the lesser of (i) the aggregate premiums paid by the Company or (ii) the total
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cash value of the Policy on the date the Policy Cash Value IS determined. For
all purposes of this Agreement, "Substantial Risk of Forfeiture" means (i) in
the event of Executive's death prior to age 65, the death proceeds of the Policy
in excess of $1,000,000; and (ii) in the event of Executive's termination of
employment for any reason other than death, the Policy Cash Value.
SECTION 4
RETIREMENT, ETC.
At the Executive's age 65 (or earlier termination of his employment under
the Employment Agreement by the Company other than for dearh), the Policy Cash
Value shall paid to the Company, and the Policy shall become solely the property
of the Executive. Any cash value in excess of the Policy Cash Value shall be the
property of the Executive.
SECTION 5
COLLATERAL ASSIGNMENT
Notwithstanding that the Executive is the owner of the Policy, the Company
has certain rights thereto as provided herein. The Executive has a right to (i)
$1,000,000 in death proceeds if he dies prior to his termination of employment
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and (ii) any CASH value in excess of the Policy Cash Value. So much of the
Policy proceeds upon Executive's death as exceeds $1,000,000 shall be paid by
the Insurer to the Company, and, upon Executive's termination of employment for
any reason other than death, the Policy Cash Value shall be paid by the Insurer
to the Company. Those rights of the Company shall be written into a collateral
assignment of the Policy, which shall be executed by the Executive, delivered to
the Company and made a part of this Agreement.
SECTION 6
MISCELLANEOUS
(1) This Agreement shall terminate at termination of the Executive's employment
under the Employment Agreement.
(2) This Agreement may be amended only in a writing signed by the Company and
the Executive. Executive agrees not to amend the Policy without the written
consent of the Company.
(3) This Agreement shall be construed in accordance with the laws of the State
of Arizona.
(4) If any provision hereof is deemed unenforceable, said provision shall be
interpreted in a manner which approximates the desired outcome. The
unenforceability Executive") of any provision hereunder shall not affect
the other provisions hereunder.
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(5) This Agreement may not be assigned by either party without the consent of
the other, except that a corporate successor to the Company may accede to
the Company's rights and obligations hereunder.
(6) Except as otherwise expressly provided for herein, the provisions of
Section 6 of the Employment Agreement are incorporated herein and made a
part hereof.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement on this 24th day of December, 1992, at Tempe, Arizona.
/s/ Xxxx Xxxx
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Witness: Xxxx Xxxx
("Executive")
----------------------------- MICROAGE, INC.
Witness: ("Company")
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title:
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COLLATERAL ASSIGNMENT
Under Policy Number 12331341 (the "Policy")
Issued by The Northwestern Mutual Life Insurance Company
Policy Owner and Insured: Xxxx Xxxx
In compliance with the Employment Agreement dated as of October 1,
1992 executed by and between MicroAge, Inc. (the "Company") and Xxxx Xxxx (the
"Policy Owner") and a split-dollar insurance agreement of even date herewith
between the Policy Owner and the Company, Policy Owner hereby agrees to assign
the following interests in the Policy to the Company:
(1) If Policy Owner dies prior to his termination of employment with the
Company, The Northwestern Mutual Life Insurance Company ("NML") shall
pay any death benefit in excess of $1,000,000 to the Company.
(2) In the event of Policy Owner a termination of employment with the
Company for any reason other than death, NML shall pay the Policy Cash
Value (i.e., the lesser of the total cash value of the Policy or the
aggregate amount of premiums paid by the Company) to the Company.
(3) The Policy Owner shall be the owner of the Policy, subject to the
interests assigned to the Company herein. The Policy Owner alone may
exercise all of the rights and privileges specified in the Policy,
except neither Policy Owner nor Company may borrow against the
aggregate cash value in the Policy without the written consent of both
parties.
Dated: December 24, 1992
/s/ Xxxx Xxxx
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Xxxx Xxxx
MICROAGE, INC.
/s/ Xxxxxxx X. XxXxxxxx
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Xxxxxxx X. XxXxxxxx
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