SPLIT-DOLLAR INSURANCE AGREEMENT
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THIS AGREEMENT is made as of this 29th day of January, 1997, by and
between MICROAGE, INC., a Delaware corporation (hereinafter referred to as
"Corporation"), and XXXX X. XXXX (hereinafter referred to as "Insured").
WHEREAS, Insured plans to acquire insurance on his life of under a
policy issued by Northwestern Mutual Life Insurance Company (hereinafter
referred to as "Insurer"); and
WHEREAS, Corporation wants to assist Insured by paying all premiums due
on the policy; and
WHEREAS, Insured will be the owner of the insurance policy and the
policy will be assigned to Corporation as security for the repayment of the
premiums which Corporation will pay when due on the policy;
The parties, therefore, in consideration of the mutual promises
contained herein, hereby agree as follows:
ARTICLE I
Insured plans to acquire from the Insurer a policy on the life of the
Insured in the face amount of One Million Two Hundred Eighty Six Thousand Seven
Dollars ($1,286,007) (hereinafter referred to as the "Policy"). The policy
number, face amount and plan of insurance will be recorded on Schedule A
attached to this Agreement and the Policy will then be subject to the terms of
this Agreement. During the term of this Agreement, Corporation will not exercise
nor withhold its consent to the exercise by Insured of any
rights, privileges or options conferred by the terms of the Policy, except as
otherwise provided in Article V, paragraph C hereof.
ARTICLE II
All premiums due on the Policy which shall be Fifty-Six Thousand Five
Hundred Fifty Dollars and One Cent ($56,550.01) per year, shall be paid by
Corporation until the first to occur of (i) the death of the Insured, (ii)
Insured's termination of employment with Corporation, or (iii) Corporation has
paid fifteen (15) premium payments.
ARTICLE III
A. Insured shall execute and deliver a collateral assignment of the
Policy to Corporation on a form approved by Insurer, as a security interest for
the amounts paid by Corporation towards its share of the premiums to be paid on
the Policy in accordance with Article II of this Agreement. In the event of the
death of Insured pursuant to Article IV hereof, or in the event of the surrender
or acquisition of the Policy pursuant to Article V hereof, such security
interest shall be for an amount equal to the total premiums paid by the
Corporation (less any outstanding loans to Corporation pursuant to Article III,
paragraph B hereof).
B. Corporation may not borrow against the Policy's loan value, without
the prior written approval of Insured.
C. Corporation shall pay all interest with respect to loans made
pursuant to subparagraph B; provided, however, that no payment of interest shall
constitute a premium payment under this Agreement.
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D. The term "net cash surrender value" when used in this Agreement
shall mean the gross value as determined by Insurer less any outstanding loans
made to Corporation and interest then due on such loans.
ARTICLE IV
In the event of the death of Insured, the proceeds of the Policy shall
be divided into two parts and paid by Insurer as follows:
Part A - This part shall be paid to Corporation in an amount
equal to the Corporation's security interest in the
Policy as determined pursuant to Article III,
paragraph A hereof. Corporation shall supply Insurer
with any information necessary for Insurer to
determine such amount.
Part B - The balance of the death benefit shall be paid to the
beneficiary designated by the Insured.
ARTICLE V
A. The Insured may, at any time with the Corporation's prior written
consent, surrender the Policy and receive the net cash surrender value thereof.
Insured shall pay to Corporation an amount equal to Corporation's security
interest in the Policy as determined in Article III, paragraph A hereof, or may
authorize and instruct Insurer to pay such amount directly to Corporation.
B. The Insured may acquire Corporation's interest in the Policy for an
amount equal to the Corporation's security interest in the Policy as determined
in Article III, paragraph A hereof upon the Insured's termination of employment
with Corporation.
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C. Except as provided in the collateral assignment or as necessary to
protect Corporation's security interest, Insured shall be entitled to exercise
all of the rights available under the terms of the Policy, except the Insured
may not assign or borrow on the Policy as long as a collateral assignment is in
effect on the Policy.
ARTICLE VI
A. Subject to Article VI, paragraph B below, this Agreement shall
terminate upon the occurrence of any of the following:
1. Surrender or acquisition of the Policy by Insured,
pursuant to Article V of this Agreement.
2. Cessation of the corporate business.
3. Bankruptcy, receivership or dissolution of
Corporation.
4. The termination of Insured's employment with the
Corporation.
5. The death of Insured.
B. If this Agreement is terminated pursuant to Article VI, paragraph
A.2 or 3. above, Insured shall pay Corporation an amount equal to Corporation's
security interest in the Policy as determined in Article III, paragraph A
hereof. Upon receipt of such amounts, Corporation shall thereupon execute and
deliver to Insured a release of the collateral assignment of the Policy.
C. If this Agreement is terminated pursuant to Article VI, paragraph
A.4 above, Insured shall pay Corporation an amount equal to Corporation's
security interest in the Policy as determined in Article III, paragraph A above.
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D. If Insured does not remit the amounts described in paragraph B and C
above, within thirty (30) days of the event described in Article VI, paragraph
A.2, 3. or 4., then all obligations of Corporation under this Agreement shall be
terminated and Insured shall transfer the ownership of the Policy to
Corporation.
ARTICLE VII
Insurer is not a party to this Agreement and the obligations of Insurer
are those set forth in the Policy.
ARTICLE VIII
This Agreement shall be binding upon the parties hereto, their heirs,
legal representatives, successors and assigns.
ARTICLE IX
This Agreement may be altered, amended or modified only by written
instrument signed by Corporation and the Insured.
ARTICLE X
This Agreement shall be construed according to the laws of the State of
Arizona.
ARTICLE XI
Insured may add a rider to the Policy for the benefit of his
beneficiaries. Upon written request by Corporation, Insured will add a rider to
the Policy for the benefit of Corporation. The additional premium for any rider
which is added to the Policy will be paid by the party entitled to receive the
proceeds of the rider.
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ARTICLE XII
A. The party designated as the "named fiduciary" for the
Split-Dollar Plan established by this Agreement shall have the
authority to control and manage the operation and
administration of such plan; provided, however, the Insurer
shall be the fiduciary of the plan solely with regard to the
review and final decision on a claim for benefits under its
Policy as provided in Article XIII Claims Procedure, set forth
below.
B. The Fiduciary may allocate his responsibilities for the
operation and administration of the Split-Dollar Plan,
including the designation of persons to carry out fiduciary
responsibilities under any such plan. He shall effect such
allocation of his responsibilities by delivering to the
Corporation a written instrument signed by him that specifies
the nature and extent of the responsibilities allocated,
including, the persons who are designated to carry out these
fiduciary responsibilities under the Split-Dollar Plan,
together with a signed acknowledgment of their acceptance.
ARTICLE XIII
The following claims procedure shall apply to the Split-Dollar Plan:
A. The beneficiary of such Policy shall make a claim for the
benefits provided under the Policy in the manner provided in
the Policy.
B. With respect to a claim for benefits under said Policy, the
Insurer shall be the entity which reviews and makes decisions
on claim denials.
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C. If a claim is wholly or partially denied, notice of the
decision, meeting the requirements of paragraph D below, shall
be furnished to the claimant within a reasonable period of
time after the claim has been filed.
D. The Insurer shall provide to any claimant who is denied a
claim for benefits, written notice setting forth in a manner
calculated to be understood by the claimant, the following:
1. The specific reasons for the denial;
2. Specific reference to the pertinent Policy or plan
provisions on which the denial is based;
3. A description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary;
4. An explanation of the plan's claim review procedure,
as set forth in paragraph E and F below.
E. The purpose of the review procedure set forth in this
paragraph and in paragraph F below, is to provide a procedure
by which a claimant under the Split-Dollar Plan may have a
reasonable opportunity to appeal a denial of a claim for a
full and fair review. To accomplish that purpose, the claimant
or his duly authorized representative:
1. May request a review upon written application to the
Insurer;
2. May review pertinent plan documents or agreements;
and
3. May submit issues and comments in writing.
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A claimant (or his duly authorized representative)
shall request a review by filing a written application for
review at any time within sixty (60) days after receipt by the
claimant of written notice of the denial of his claim.
F. A decision on review of a denial of a claim shall be made in
the following manner:
1. The decision on review shall be made by the Insurer,
which may in its discretion hold a hearing on the
denied claim. The Insurer shall make its decision
promptly, unless special circumstances (such as the
need to hold a hearing) require an extension of time
for processing, in which case a decision shall be
rendered as soon as possible, but not later than one
hundred twenty (120) days after receipt of the
request for review.
2. The decision on review shall be in writing and shall
include specific reasons for the decisions, written
in a manner calculated to be understood by the
claimant, and specific references to the pertinent
Policy or plan provision on which the decision is
based.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MICROAGE, INC., a Delaware Corporation
By /s/Xxxxxxx X. XxXxxxxx
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Its Chairman and CEO
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By /s/Xxxx X. Xxxx
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XXXX X. XXXX
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SCHEDULE A
Face Amount $1,286,007
Policy Number 13929759
Plan of Insurance The Northwestern Mutual Life Insurance
Company
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COLLATERAL ASSIGNMENT FORM
Appln. No., Contract No. Date this form is signed:
or Policy No.: 13929759 January 29, 1997
Insured: XXXX X. XXXX
Insurance Company: The Northwestern Mutual Life Insurance Company
The undersigned request and direct the Insurance Company to make the provisions
of this form a part of the policy.
All previous designations of payees are hereby revoked. It is hereby requested
and directed that:
BENEFICIARIES
(1) In the event of the death of the Insured, MicroAge, Inc., a Delaware
corporation, or its successors ("Corporation"), will be the direct beneficiary
of an amount equal to the premiums paid to the Insurance Company by Corporation
for the Policy. In the event of Corporation's cessation of business, bankruptcy,
receivership or dissolution, Corporation will be the direct beneficiary of an
amount equal to the premiums paid to the Insurance Company by Corporation for
the Policy.
In the event of termination of Insured's employment or the surrender or the
acquisition of the Policy, Corporation will be the direct beneficiary of the
premiums paid to the Insurance Company by Corporation for the Policy.
Any indebtedness by Corporation to the Insurance Company will be deducted first
from the share of the proceeds payable to said Corporation as direct
beneficiary.
It is understood and agreed that the Insurance Company will have the right to
rely on any statement signed by said Corporation setting forth said
Corporation's share of the premium payments referred to above, and any decision
made by Insurance Company in reliance upon such statement will be conclusive and
will fully protect the Insurance Company.
(2) XXXXXXXX X. XXXX if living and married to the Insured on his date of death
will be the direct beneficiary of any remaining proceeds, and if she is either
not married to Insured or living on Insured's date of death, the proceeds will
be payable to Insured's estate.
The Insurance Company will be fully discharged of liability for any action taken
by the Insured and for all amounts paid to, or at the direction of, the insured
and will have no obligation as to the use of the amounts. In all dealings with
the Insured, the Insurance Company will be fully protected against the claims of
every other person. The Insurance Company will not be charged with notice of a
change of beneficiary unless written evidence of the change is received at the
Insurance Company's Home Office.
OWNERSHIP
(3) The owner of the Policy shall be the Insured. The Insured alone may exercise
all the rights and privileges specified in the Policy, except the Insured may
not assign or borrow on the Policy as long as this Collateral Assignment is in
effect. Corporation may assign or borrow against the Policy loan value only with
the prior written approval of the Insured.
MODIFICATION OF ASSIGNMENT PROVISIONS
Upon death of the Insured, the interest of any collateral assignee of
Corporation will be limited to the portion of the proceeds described in (1)
above.
MICROAGE, INC., a Delaware corporation
By /s/Xxxxxxx X. XxXxxxxx
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Officer
/s/ Xxxx X. Xxxx
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XXXX X. XXXX
