EXHIBIT 10.7
REVERSE SPLIT DOLLAR INSURANCE AGREEMENT
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This AGREEMENT is made and entered into this 15th day of March, 1993, by
and between NANOMETRICS INCORPORATED (hereafter, "Corporation") and XXXXXXX X.
XXXXXX (hereafter, "Employee").
RECITALS
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WHEREAS, Employee is a valuable and efficient employee of Corporation and
has been since incorporation; and
WHEREAS, Employee has agreed to continue to provide such services to
Corporation, and Corporation desires that Employee do so; and
WHEREAS, in the continuation of such relationship the parties desire to
establish a reverse split dollar arrangement in order to provide insurance
protection for the benefit of both Employer and Corporation; and
WHEREAS, Employee has applied for a Universal Life Plan of Insurance
(hereafter, including any and all supplemental riders or endorsements thereto,
"the Policy") issued by Chubb Life Insurance Company, Concord, New Hampshire
(hereafter, "Chubb") in the face amount of Eight Million Dollars ($8,000,000);
and
WHEREAS, Employee and Corporation agree to make the Policy subject to this
split-dollar agreement (hereafter, "Agreement");
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
OWNERSHIP OF POLICY
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1.1 Employee as Owner. Employee shall be the owner of the Policy and may
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exercise all ownership rights granted to the owner thereof by the terms of the
Policy, except as may otherwise be provided herein. Employee and Corporation
agree that the Policy shall be subject to the terms and conditions of this
Agreement.
1.2 Collateral Assignment. Employee agrees to execute a collateral
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assignment of the Policy (hereafter, "the Assignment") to Corporation, in
substantially the form of Exhibit A attached hereto, to secure Corporation's
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rights under this Agreement.
a. Corporation's rights. Corporation's interest in and to the Policy
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shall be specifically limited to (i) the right to realize against the
proceeds of the Policy, in the event of Employee's death, an amount
(hereafter, "Corporation's Portion") equal to its Policy interest as
provided in paragraph 3.2 of Article III below; (ii) the right to realize
against the cash value of the Policy, in the event of a termination of this
Agreement as provided in paragraph 4.1 of Article IV below, an amount equal
to the unearned portion of the premium paid by Corporation for the policy
year in which the termination occurs; and (iii) the right to execute a
written release of the Assignment upon receipt by Corporation of its Policy
interest.
b. Employee's Rights. Employee shall retain all rights as owner of
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the Policy, including, but not limited to, (i) the right to assign
Employee's interest in and to the Policy; (ii) the right to designate and
to change the beneficiary(ies) of that portion of the proceeds of the
Policy to which Employee is entitled under paragraph 3.1 of Article III
below (hereafter, "Employee's Portion") upon the death of Employee; (iii)
the right to elect any settlement option available with respect to
Employee's Portion; (iv) the right
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to exercise all nonforfeiture or lapse option rights permitted by the terms
of the Policy; (v) the right to cause the surrender of the Policy, provided
that Employee shall give Corporation at least thirty (30) days' advance
written notice of such exercise; and (vi) the right to obtain, directly or
indirectly, one or more loans or advances against the cash surrender value
of the Policy and the right to pledge or assign the Policy as security for
such loans or advances, provided that any such action by Employee shall in
no way diminish Corporation's rights pursuant to subparagraph a above.
The Assignment shall set forth the rights of Corporation in and to the Policy as
herein set forth. Employee and Corporation agree to be bound by the terms of
the Assignment.
1.3 Division of Benefits. It is agreed that benefits under the Policy may
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be paid by Chubb either by separate checks to the parties entitled thereto, or
by a joint check. In the latter instance, Employee and Corporation agree that
the benefits shall be divided as provided herein.
ARTICLE II
PAYMENT OF PREMIUMS
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2.1 "Premium" Defined. As used herein, the term "premium" shall include
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all costs associated with any and all supplemental riders and endorsements to
the Policy.
2.2 Premium Shares. Corporation's annual share of the premium shall be
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Two Hundred Thousand Dollars ($200,000). Employee's annual share of the premium
shall equal the premium required to maintain the Policy in force less the share
of the premium allocated to Corporation above.
2.3 Time for Payment. Corporation (i) shall pay to Chubb the full premium
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due on the Policy on or before the due date of each premium payment, and in any
event, not later than the expiration of the grace period under the Policy for
such premium payment; and (ii) shall furnish Employee with
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written notice of such timely payment. Within ten (10) days of Employee's
receipt of such notice, Employee shall reimburse Corporation for that portion of
the premium payment equal to Employee's share of the premium as provided in
paragraph 2.2 above.
Notwithstanding the foregoing, if Corporation shall fail to pay any premium
payment within twenty (20) days after its due date, Employee may pay the premium
due; and within ten (10) days of Employee's payment of such premium, Corporation
shall reimburse Employee for the portion of the premium payment not payable by
Employee pursuant to the terms hereof.
2.4 Excess Premiums. Notwithstanding any other provision in this
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agreement, Employee may deposit premiums with Chubb in excess of the premium
required to maintain the Policy in force.
ARTICLE III
RIGHTS UPON DEATH OF INSURED
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3.1 Corporation's Portion of Death Benefit. Upon the death of Employee,
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Corporation shall be entitled to receive, from the proceeds of the Policy, an
amount equal to Eight Million Dollars ($8,000,000).
3.2 Employee's Portion of Death Benefit. Upon the death of Employee, the
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beneficiary designated by the Employee shall be entitled to receive the balance
of the proceeds of the Policy remaining after deducting Corporation's Portion.
3.3 Beneficiary Designation. Employee and Corporation agree to conform
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the beneficiary designation for the Policy to the provisions hereof.
ARTICLE IV
RIGHTS UPON TERMINATION OF AGREEMENT
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4.1 Events of Termination. This Agreement shall automatically terminate
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upon the occurrence of any of the following events: (a) the bankruptcy,
receivership or dissolution of Corporation;
(b) the termination of Employee's employment with Corporation, other
than by reason of Employee's death;
(c) Employee's notice, pursuant to clause (v) of paragraph 1.2b of
Article I above, of its intent to exercise its right to surrender the Policy;
(d) Corporation's written notice of its intent to terminate the
Agreement; or
(e) the mutual written agreement of Corporation and Employee.
4.2 Rights Upon Termination. In the event of termination of this
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Agreement as specified above, Employee shall pay to Corporation the amount
determined in accordance with paragraph 4.3 below. Upon receipt of such amount,
Corporation's interest in the Policy will be extinguished, and Corporation shall
execute an appropriate instrument of release of the Assignment, taking all other
steps necessary to effect said release.
4.3 Amount Payable. If this Agreement is terminated as hereinabove
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provided, Corporation shall be entitled to receive from Employee an amount equal
to the unearned portion of the premium paid by Corporation for the policy year
in which the termination occurs.
ARTICLE V
ADMINISTRATIVE PROVISIONS
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5.1 Insurer's Responsibility. Insurer shall not be considered a party to
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this Agreement and shall not be bound hereby. No provision of this Agreement,
or any amendment hereof, shall in any way
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enlarge, change, vary or affect Insurer's obligations as expressly provided in
the Policy, except as the same may become a part of the Policy by Insurer's
acceptance of the Assignment.
5.2 Amendment. This Agreement may not be cancelled, amended, altered or
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modified except by a written instrument signed by Employee and a duly authorized
representative of Corporation.
5.3 Notice. Any and all notices required or permitted under the terms of
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this Agreement to be given by one party to another shall be in writing, signed
by the party giving such notice, and may be given either (i) by delivering the
same to such other party personally or (ii) by mailing the same by United States
certified mail, postage prepaid, to the other party's appropriate address, in
which case the date of mailing shall be deemed the date of such notice.
5.4 Binding Effect. This Agreement shall be binding upon and shall inure
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to the benefit of Corporation and its successors, Employee and all Policy
beneficiaries. Employee and Corporation agree that either party may assign its
interest under this Agreement upon the written consent of the other party, and
any assignee shall be bound by the terms and conditions of this Agreement as if
made an original party hereto.
5.5 Governing Law. This Agreement and the interests and rights of the
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parties hereunder shall be governed by and construed in accordance with the laws
of the State of California.
5.6 Headings. All headings or captions in this Agreement are for
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reference purposes only and shall not expand, limit, change or affect the
meaning of any provision of this Agreement.
5.7 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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5.8 Term. This Agreement shall be effective as of the date the Policy is
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issued by Chubb, and shall continue until terminated as herein provided or until
all covenants herein activated by the death of Employee are fully carried out.
Corporation
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NANOMETRICS INCORPORATED
By /s/ Xxxx Xxxxxxxxx
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Its Senior Vice President
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Employee
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/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Employee
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COLLATERAL ASSIGNMENT
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This ASSIGNMENT is made and entered into effective as of the _____ day of
_______________, 19___, by XXXXXXX X. XXXXXX (hereafter, "Assignor"), as owner
of that certain insurance policy issued by Chubb Life Insurance Company
(hereafter, "Insurer") on his life, as more fully described in Exhibit A
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attached hereto and made a part hereof (hereafter, including with any and all
supplemental riders or endorsements thereto, "the Policy"), to NANOMETRICS
INCORPORATED (hereafter, "Assignee").
WITNESSETH:
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WHEREAS, Assignor and Assignee entered into that certain Reverse Split-
Dollar Insurance Agreement dated _________________, (hereafter, "the
Agreement"); and
WHEREAS, in consideration of Assignee's agreeing to pay a portion of the
Policy premiums, Assignor agrees to grant to Assignee a security interest in and
to the Policy to secure Assignee's rights to certain benefits from the Policy;
NOW, THEREFORE, for value received, Assignor hereby assigns, transfers and
sets over to Assignee, and its successors and assigns, the following specific
rights in and to the Policy, subject to the terms and conditions hereof:
1. This Assignment is made, and the Policy is to be held, as collateral
security for Assignee's interest in the Policy pursuant to the terms of the
Agreement.
2. Assignee's interest in and to the Policy shall be specifically limited
to:
(a) the right to realize against the proceeds of the Policy, in the
event of Assignor's death, an amount equal to its Policy interest as
provided in paragraph 3.1 of the Agreement;
(b) the right to realize against the cash value of the Policy, in the
event of a termination of the Agreement pursuant to paragraph 4.1 of said
Agreement, an amount equal to the unearned portion of the premium paid by
Assignee for the policy year in which the termination occurs; and
(c) the right to release this Assignment upon receipt of the amount
specified in paragraph 4.3 of the Agreement.
3. Assignor shall retain all incidents of ownership in the Policy,
including, but not limited to:
(a) the right to assign Assignor's interest in and to the Policy;
(b) the right to designate and to change the beneficiary(ies) of the
Policy;
(c) the right to elect any settlement option available with respect to
the Policy;
(d) the right to exercise all nonforfeiture or lapse option rights
permitted by the terms of the Policy;
(e) the right to cause the surrender of the Policy; and
(f) the right to obtain, directly or indirectly, one or more loans or
advances against the cash surrender value of the Policy and the right to
pledge or assign the Policy as security for such loans or advances,
provided that any such action by Assignor shall in no way diminish
Assignee's right to receive the Corporation's Portion (as defined in para
graph 1.2.a of the Agreement);
provided, however, all rights retained by Assignor shall be subject to the terms
and conditions of the Agreement.
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4. Assignee shall forward the Policy to Insurer, without unreasonable
delay, for endorsement of any designation or change of beneficiary, any election
of an optional mode of settlement or the exercise of any other right required by
this collateral assignment agreement.
5. Insurer is hereby authorized to recognize Assignee's claims to rights
hereunder without investigating the reason for any action taken by Assignee, the
amount of Assignee's premium outlay or the existence of any default therein, the
giving of any notice required herein or under the Agreement or the application
to be made by Assignee of any amounts to be paid to Assignee. The signature of
Assignee shall be sufficient for the exercise of any rights under the Policy
assigned hereby to Assignee and the receipt of Assignee for any sums received by
Assignee shall be a full discharge and release therefor to Insurer.
6. Insurer shall be fully protected in recognizing the requests made by
Assignor for surrender of the Policy, with or without the consent of Assignee,
and upon such surrender, the Policy shall be terminated and shall be of no
further force or effect.
7. Upon full payment to Assignee of the Corporation's Portion (as defined
in paragraph 1.2.a of the Agreement), Assignee shall reassign to Assignor the
Policy and all specific rights included in this Assignment.
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IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the
date first above written.
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Witness XXXXXXX X. XXXXXX, Assignor
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EXHIBIT A
Description of Insurance Policy(ies)
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Insurance Type of Policy
Policy # Company Insurance Insured Amount
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