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SPLIT DOLLAR
LIFE INSURANCE AGREEMENT
AGREEMENT made as of the 15th day of September 1996, by and between VMARK
SOFTWARE, INC., a Delaware corporation ("VMARK") and Xxxxx X. Xxxxx (the
"Insured").
WHEREAS, the Insured is an executive officer and key employee of VMARK; and
WHEREAS, VMARK wishes to provide an incentive for the Insured's continued
performance of services to VMARK by making available to him a split-dollar life
insurance program; and
WHEREAS, the Insured wishes to participate in such program; and
WHEREAS, the Insured and VMARK have arranged for the purchase of Policy No.
9895313 in the face amount of $988,830 on the life of the Insured (the "Policy")
issued by Massachusetts Mutual Life Insurance Company (the "Insurance Company");
and
WHEREAS, the Policy is a whole-life policy which will be fully paid upon
the payment of 10 consecutive annual premiums of $39,000 each (if the annual
installment option is elected).
NOW, THEREFORE, the parties agree as follows:
1. $29,250 of each annual premium due on the Policy (or a proportionate
amount of any other premium installment) shall be paid when due by VMARK until
such obligation shall terminate in accordance with the provisions of paragraph 2
or 13 below, provided that VMARK shall have no obligation to any pay premiums in
respect of benefits hereafter added to the Policy
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by the Insured.
2. VMARK's obligation to make premium payments pursuant to paragraph 1
above shall be subject to the following:
(a) In the event the employment of the Insured by VMARK is terminated for
any reason, VMARK's obligation to make premium payments shall terminate
immediately unless, prior to such termination of employment, there has been
a Change of Control (as defined in paragraph 17(c) below), in which event
VMARK's obligation to make premium payments shall terminate on the fifth
anniversary of such termination of employment, subject to (b) below.
(b) In the event the Insured voluntarily terminates his employment with
VMARK following a Change of Control and, within the 24 month period
immediately following such termination, directly or indirectly engages in
any activity which is in competition with the business of VMARK, VMARK's
obligation to make premium payments shall immediately terminate.
(c) In the event, and to the extent, the board of directors of VMARK
determines, in its sole reasonable judgement, that any premium payment
would have a materially detrimental effect upon its financial condition,
such payment or a portion thereof may be deferred until such time or times
as the payment of all or a portion of the deferred amount may be paid
without such effect. Payment of deferred amounts shall be applied, as
appropriate, to (i) make the premium payment, (ii) repay the amount
borrowed against the Policy to make such payment, or (iii) reimburse the
Insured for making such payment. Any such deferrals and subsequent payments
shall be effected pro rata in respect of the Policy and other policies
issued in connection with similar executive split-dollar life insurance
programs.
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3. VMARK acknowledges that ownership of the Policy is held by the
Insured, including without limitation the rights to transfer such ownership,
designate beneficiaries and borrow against the Policy, subject only to the
Collateral Assignment (as defined in paragraph 5 below) and other limitations
specifically described herein.
4. The Insured acknowledges that VMARK makes no representations or
warranties regarding the Policy, including without limitation regarding the
amounts which may become available for borrowing against the Policy or the tax
treatment of any proceeds of or other matters in connection with the Policy.
5. The Insured has executed and delivered to VMARK an assignment (the
"Collateral Assignment") of certain rights in the Policy in order to secure the
right of VMARK to receive, not later than the death of the Insured, an amount
equal to the aggregate of all premiums thereon paid by VMARK, including any
amounts paid or reimbursed pursuant to paragraph 2(c)(ii) or (iii) above ("2-c
Amounts"). A copy of the Collateral Assignment is attached as Exhibit A hereto.
6. In the event either party wishes to exercise a right which under the
Policy, subject to the provisions hereof and of the Collateral Assignment, may
be exercised by such party alone, the other party shall co-sign any documents
and take such other steps as may be required by the Insurance Company to effect
the exercise of such right.
7. VMARK acknowledges that any borrowing by it against the Policy could
materially reduce the intended benefits to the Insured pursuant to this
Agreement. Any such borrowing shall be subject to the following:
(a) No such borrowings shall be made except to the extent that the board
of directors of VMARK determines, in its sole reasonable judgment, that
alternative sources of funds are not available on reasonably satisfactory
terms and that the failure to make such
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borrowing would have a materially detrimental effect upon VMARK.
(b) VMARK shall pay all interest due on any such borrowings in such timely
manner that the intended benefits to the Insured pursuant hereto are, to
the extent possible by reason of prompt interest payments, preserved.
(c) Any such borrowings shall be made substantially pro rata, in
accordance with the aggregate premiums paid by the Company, against the
Policy and all other similar policies of the Company on the lives of its
executive officers. Any repayment of principal on such borrowings against
the Policy and other such policies shall be allocated in such manner as the
Company, in its reasonable discretion, deems will ensure, to the extent
possible by reason of such allocation, that the intended benefits to the
respective insureds are preserved, and otherwise pro rata as set forth
above.
8. The Insured shall not surrender the Policy unless the cash value
thereof at the time of surrender, net of any then outstanding borrowings against
the Policy, exceeds the aggregate amount of all premiums thereon paid by VMARK
through such time, including any 2-c Amounts.
9. The Insured shall not borrow against the Policy if the aggregate
amount of (a) such borrowing and any other borrowings against the Policy by the
Insured or his assigns other than VMARK, including interest accrued and expected
to be accrued thereon ("Borrowings") and (b) all premiums thereon paid by VMARK
through such time, including any 2-c Amounts, shall exceed (i) prior to January
1, 2022, the cash value of the Policy without regard to any Borrowings, or (ii)
on or after said date, the death benefit of the Policy (including any additions
thereto) without regard to any Borrowings, provided that the foregoing shall not
prevent any borrowing to pay premiums not paid by VMARK pursuant to paragraph
2(c) above.
10. The Insured shall elect to have premiums paid on an annual installment
basis unless
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VMARK agrees in writing to the election of another installment option.
11. Upon the death of the Insured while the Policy is in effect, but prior
to the exercise by either the Insured or VMARK of his or its respective rights
to acquire full ownership of the Policy pursuant to paragraph 12 below, VMARK
shall promptly furnish the Insurance Company an affidavit specifying the amount
of proceeds payable to it pursuant to the Collateral Assignment.
12. The Insured shall have the right after September 30, 2000 to reacquire
from VMARK the rights assigned pursuant to the Collateral Assignment. Such right
may be exercised (a) at any time, by payment to VMARK in cash or by certified or
bank check of an amount equal to the aggregate of all premiums on the Policy
paid by VMARK through such time, including any 2-c Amounts, or (b) on or after
September 15, 2006, if VMARK's obligation to make premium payments has not
terminated pursuant to paragraph 2(a) or (b) above due to the Insured's
voluntary termination of his employment (as limited by paragraph 17(a) below),
by delivery to VMARK of a non-interest bearing promissory note in such amount
payable not later than the death of the Insured and secured by a pledge of
collateral, provided that the board of directors of VMARK at the time may reject
such method of exercise if, in its sole reasonable discretion, it deems such
note and collateral to provide repayment arrangements less secure or otherwise
not commercially equivalent to the arrangements otherwise provided herein.
Against receipt of such payment or delivery, VMARK shall execute and deliver to
the Insured a full release of the Collateral Assignment satisfactory in form to
the Insurance Company. In the event that (i) VMARK's obligation to make premium
payments has terminated pursuant to paragraph 2(a) or (b) above due to the
Insured's voluntary termination of his employment (as limited by paragraph 17
(a) below), and (ii) the Insured does not exercise his rights under this
paragraph 12 within sixty days following such termination of VMARK's obligation,
then his rights under this paragraph 12 shall lapse. Upon the lapse of such
rights, VMARK shall have the right from time to time to acquire from the Insured
all rights and other incidents of ownership in and under the Policy upon
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payment of ten dollars to the Insured. Against receipt of such payment the
Insured shall execute and deliver such documents and take such other steps to
effect the transfer of such ownership to VMARK as may be satisfactory in form to
the Insurance Company.
13. VMARK's obligation to make premium payments pursuant to paragraph 1
above shall, if not previously terminated pursuant to the provisions of
paragraph 2 above, terminate upon the exercise of the Insured's rights or the
lapse thereof under paragraph 12 above.
14. Nothing herein shall be construed to obligate VMARK to continue the
employment of the Insured or to pay any benefits under the Policy under any
circumstances.
15. In the event VMARK shall sell or otherwise dispose of substantially
all its business and assets, it shall (a) cause the acquiring party to deliver
to the Insured a written assumption of all the respective obligations of VMARK
hereunder and under the Policy and Collateral Assignment or (b) retain
sufficient assets to pay premiums on the Policy to the extent required. In the
event of an assumption under (a) above, the word "VMARK" shall mean or include,
as the context indicates, any such acquiring party.
16. The Insured may assign all its rights hereunder and under the Policy
and Collateral Assignment, provided that the assignee shall deliver to VMARK a
written assumption of all the respective obligations of the Insured hereunder
and thereunder. In the event of such assignment and assumption, the word
"Insured" shall mean or include, as the context indicates, any such assignee,
provided that the Policy shall insure the life of the initial Insured only and
not of any assignee or other successor.
17. For purposes of paragraph 2 above:
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(a) The Insured shall not be deemed to have voluntarily terminated his
employment with VMARK if the termination occurs within nine months
following (i) a reduction of his salary other than a reduction applicable
to executives generally, (ii) a material demotion in the level of his
duties, or (iii) a material change of the location of his employment;
(b) "Cause" shall mean (i) commission by the Insured of a willful,
wrongful act, such as embezzlement, against VMARK, (ii) conviction of the
Insured of a felony involving moral turpitude, (iii) willful, gross and
repeated neglect by the Insured of his executive employment duties, or (iv)
intentional and repeated failure of the Insured to observe specific
directives or policies of the board of directors of VMARK applicable to his
executive employment duties; and
(c) "Change of Control" shall mean (i) the direct or indirect
acquisition by any person, entity or group acting in concert of more than
35% of the aggregate voting power of the outstanding securities of VMARK
having the right to vote at elections of directors, (ii) a majority of the
board of directors of VMARK ceasing to consist of individuals who are
currently members of such board or for whose nomination for such membership
a majority of such current members voted in favor, or (iii) the disposition
by VMARK of substantially all its business, other than in
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connection with a mere change of place of incorporation or similar mere
change in form.
18. This Agreement shall be construed and enforced under the laws of
Massachusetts. Except as provided by paragraphs 15 and 16 above, no rights or
obligations hereunder or under the Policy or Collateral Assignment shall be
voluntarily assigned without the prior written consent of the other party, which
consent shall not be unreasonably withheld. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors, assigns, heirs and legal representatives. This
Agreement may not be amended or otherwise modified without the prior written
consent of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
VMARK Software, Inc.
By
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(Witness) Its Chairman
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(Witness) Xxxxx X. Xxxxx
