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EXHIBIT 10(b)
INSURANCE AGREEMENT
This Agreement is made as of the 1st day of August, 1980 by
and between XXXXXX INC., a Delaware corporation (hereafter referred to as
"Xxxxxx"), and Xxxxxx X. Xxxxxx, a resident of Montgomery, Alabama, (hereafter
referred to as the "Executive").
The Executive is currently employed by Xxxxxx or one of its
wholly owned subsidiaries, and Xxxxxx intends to sponsor a program to insure
the life of the Executive under a policy (the initial policy as well as any
additional policies issued shall hereafter be referred to collectively as the
"Policy") of life insurance in a form to be issued by an insurance company
selected by Xxxxxx (hereafter referred to as the "Insurer"). Xxxxxx also
intends to make payment of the premiums due on the Policy subject to the
provisions of this Agreement. In consideration of the mutual covenants
contained herein, it is agreed between the parties that:
1. Application of Insurance. Xxxxxx and the Executive
will apply to the Insurer for the Policy in the face amount indicated on
Appendix A attached, and each shall do everything necessary and reasonable to
have the Policy issued by the Insurer. When the Policy is issued, the Policy
number and face amount shall be recorded on Appendix A attached, and the policy
shall then be subject to the terms of this Agreement.
2. Ownership of Insurance. Xxxxxx shall have ownership
rights in the Policy as set forth in this Agreement and may exercise all the
rights of ownership with respect to the Policy, except that the Executive shall
have the right to change the beneficiary designation for the amount of the
Death Benefit (as defined hereinafter) set forth in Paragraph 5.
3. Dividends. All dividends declared by the Insurer on
the Policy shall be applied at the option of Xxxxxx to purchase additional
paid-up insurance on the life of the Executive or to reduce premiums on the
Policy. Any such additional paid-up insurance shall be considered as part of
the Policy for all purposes of this Agreement.
X. Xxxxxx shall pay directly to the Insurer each
premium due on the Policy on the date the premium is due or within the grace
period allowed by the Policy for the payment of the premium. A portion of the
premium paid by Xxxxxx will be income to the Executive, the amount being
determined in accordance with the provisions of Paragraph 4B(i).
B. The respective shares of the total annual
premium to be paid on the Policy are as follows:
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(i) The portion of the premium paid by
Xxxxxx that shall be income to the Executive shall be determined using tables
established by the Internal Revenue Service, for this purpose, as the same may
be amended from time to time, based on the amount of insurance required to be
maintained under the provisions of Paragraph 5. In addition to paying the
premium, Xxxxxx shall pay the Executive an amount of additional income which,
after taxes, shall be sufficient to pay taxes on the portion of the premium
paid by Xxxxxx that is income to the Executive plus the taxes on such
additional income (assuming a 50% total tax rate for the Executive's top
increment of personal service income).
(ii) Xxxxxx'x share of the premium shall
be equal to the difference in the amount determined as set out in (i) above and
the balance of the total premium.
5. Proceeds. Except as set forth in the last sentence
of this Paragraph 5, Xxxxxx will take appropriate measures to assure that
proceeds payable from the Policy to the beneficiary or beneficiaries (see
Paragraph 6A) of the Executive in the event of the Executive's death while
employed by Xxxxxx or one of its wholly owned subsidiaries as a full-time
permanent employee, shall be in an amount equal to two and one-half times his
Annual Earnings at the time of his death (the "Death Benefit"). For purposes
of this Agreement, "Annual Earnings" is defined as the Executive's base annual
salary as of August 1 of each year as shown on the records maintained by the
Director, Personnel Administration of Xxxxxx, plus the amount of the most
recent bonus paid under Xxxxxx'x Management Incentive Plan. The amount of the
Death Benefit will not be decreased from that previously established by Xxxxxx
due to diminution of "Annual Earnings" of the Executive.
Annual Earnings shall be ascertained and verified each August 1 by the
Director, Personnel Administration of Xxxxxx. Subject to the next sentence,
additional insurance coverage, if any, shall then be applied for and purchased
by Xxxxxx paid for in the manner described in Paragraph 4B. In coverage cannot
be obtained at reasonable rates as determined by Xxxxxx, the Death Benefit will
remain at the amount then in effect and Xxxxxx shall have no obligation to
increase the amount of the Policy or to assure that the Death Benefit is 2 1/2
times Annual Earnings that were certified as of the last date insured.
6. Payment of Proceeds. Upon the death of the Executive
while he is a permanent full-time employee of Xxxxxx or one of its wholly owned
subsidiaries and while the Policy is in force, the proceeds of the Policy will
be payable as follows:
A. The amount referred to in Paragraph 5 shall
be paid to such beneficiary or beneficiaries as shall have been designated by
the Executive in the Policy or by an endorsement thereto (or, if no such
beneficiary designation is in effect upon the Executive's death, to the
Executive's estate); and
B. The balance shall be paid to Xxxxxx.
7. Supplemental Retirement Benefits.
A. If the Executive retires directly from
permanent full-time employment with Xxxxxx or one of its wholly owned
subsidiaries pursuant to the terms of a
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pension plan qualified under Section 401 of the Internal Revenue Code of 1954,
as amended, sponsored by Xxxxxx or a Supplemental Executive Retirement Plan
("SERP") agreed to by Xxxxxx and if the Policy has been in effect for seven (7)
full consecutive years, and subject to the election of the Executive set forth
in Paragraph 7B, Xxxxxx will assign all its rights in the Policy to the
Executive under the provisions of Paragraph 15. If the Policy has not been in
force for at least seven (7) full consecutive years and the Executive retires
as set forth in the first sentence of Paragraph 7A, Xxxxxx will continue the
Policy in force (with payment of premiums as set forth in Paragraph 4B) and at
the end of the period when the Policy has been in force for at least seven (7)
full consecutive years, Xxxxxx will assign its rights in the Policy to the
Executive under the provisions of Paragraph 15.
B. If the Executive retires as set forth in the
first sentence of Paragraph 7A and if the Policy has been in force seven (7)
full consecutive years, in lieu of Xxxxxx'x assignment of its rights in the
Policy as described in Paragraph 7A, the Executive may elect to receive an
optional supplementary retirement benefit payable by Xxxxxx in lieu of all or a
portion of any interest he or his beneficiary or beneficiaries may otherwise be
entitled to under the Policy and the Death Benefit will terminate. The annual
total supplementary retirement benefit shall be an amount equal to 28% of the
Executive's Annual Earnings for the year ending August first on or immediately
preceding his retirement date, payable in monthly or quarterly installments (as
selected by the Executive) for fifteen (15) years certain beginning at the
later of age 65 or actual retirement. The Executive may elect to receive an
optional annual supplementary retirement benefit of less than 28% of his Annual
Earnings and to the extent he elects to receive such lesser amount he shall be
entitled to assignment of a pro rata interest in the Policy in accordance with
the terms of Paragraph 15. If the Policy has been in force for seven (7) full
consecutive years and if the Executive retires as set forth in the first
sentence of Paragraph 7A prior to age 65, he may elect a supplemental
retirement benefit commencing upon such retirement date based on the provisions
of the preceding sentence, but which will be reduced by a formula (see Appendix
B) based on the pro rate payments made by the Executive at the time of early
retirement.
8. Disability. If an Executive becomes disabled as
defined in the Xxxxxx Inc. Long-Term Disability Plan, the Policy shall continue
as if the Executive were (and the Executive shall be treated for purposes of
this Agreement as if he were) a full-time permanent employee of Xxxxxx or one
of its wholly owned subsidiaries until the earlier of (1) retirement as set
forth in the first sentence of Paragraph A, or (2) cessation of disability.
9. Additional Policy Amendments. Xxxxxx may amend the
Policy for its own benefit provided that any such amendment shall not interfere
with the performance of, or be in conflict with, this Agreement or impair the
economic interest of the Executive covered by this Agreement. Any additional
premium for any such amendment which is added to the policy shall be paid by
Xxxxxx.
10. Termination.
A. Except as set forth in this Paragraph 10,
this Agreement may be terminated by written notice given by either party to the
other without any obligation of either party to the other after termination
except that if the Policy has been in effect for seven (7) full
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consecutive years, at the election of the Executive, Xxxxxx will assign all its
rights in the Policy to the Executive under the provisions of Paragraph 15.
Such termination shall be effective upon the giving of notice in accordance
with the terms of Paragraph 13.
B. Except as provided in the last paragraph of
this Paragraph 10B, if the Executive's employment is terminated by Xxxxxx for
any reason except for cause, then Xxxxxx shall continue to fulfill the terms of
this Agreement unless Xxxxxx elects to terminate all similar agreements with
its other executives having similar agreements in which event at the election
of the Executive, Xxxxxx will assign all its rights in the Policy to the
Executive under the provisions of Paragraph 15.
If this Agreement is continued pursuant to this
Paragraph 10B:
(1) The Executive will be deemed to have
retired "directly from permanent full-time employment with Xxxxxx or one of
its wholly owned subsidiaries", if he retires immediately following termination
of employment pursuant to the terms of a pension plan qualified under Section
401 of the Internal Revenue Code of 1954, as amended, sponsored by Xxxxxx or
SERP agreed to by Xxxxxx.
(2) The Policy will be maintained at its
face value in effect on the date of termination of the Executive's employment
and if the Executive should die prior to having the Policy assigned to him in
accordance with an applicable provision of this Agreement, the proceeds of the
Policy shall be paid in accordance with the terms of Paragraph 6A and 6B.
(3) If the Policy was not in force for
seven (7) full consecutive years at the time of termination of the Executive's
employment, the Executive shall not have the election set forth in Paragraph 7B
and shall only be entitled to have Xxxxxx assign all its rights in the Policy
to the Executive under the provisions of Paragraph 15.
If an Executive does not have a vested
benefit under either a pension plan qualified under Section 401 of the Internal
Revenue Code of 1954, as amended, sponsored by Xxxxxx or a SERP agreed to by
Xxxxxx, then upon termination of employment of the Executive under this
Paragraph 10B, the Executive's only right shall be to have Xxxxxx assign all
its rights in the Policy to the Executive under the provisions of Paragraph 15.
C. If the Executive's employment terminates at
the election of the Executive or is terminated for cause by Xxxxxx, this
Agreement shall terminate and Xxxxxx shall have no obligation to Executive or
his beneficiaries hereunder, and Xxxxxx shall not be obligated to assign the
Policy to the Executive even if it has been in force for seven (7) full
consecutive years.
11. Effect on Other Agreements. The benefits payable
under this Agreement shall be independent of, and in addition to any other
compensation payable by Xxxxxx to the Executive or his assigns whether as
salary or otherwise.
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This Agreement shall not be deemed to constitute a
contract of employment between the parties, nor shall any provision restrict
the right of Xxxxxx to discharge the Executive or restrict the right of the
Executive to terminate his employment.
12. State Law. This Agreement shall be subject to and
shall be construed under the laws of the State of Alabama.
13. Notice. All notices, requests, demands, or other
communications under this Agreement shall be in writing and shall be deemed to
have been given when delivered personally or when deposited in the United
States mail, registered or certified, return receipt requested, postage prepaid
and addressed as follows:
a) if to the Executive:
b) if to Xxxxxx: Xxxxxx Inc.
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Director,
Personnel Administration
Either party may change its address by written notice
to the other party.
14. Assignment. The Executive may, with the prior
written consent of Xxxxxx, assign all his rights, options and privileges under
this Agreement and the Policy; however, any effort to assign such rights,
options and privileges without obtaining Xxxxxx'x prior written consent shall
be null and void.
15. Definition. Wherever in this Agreement reference is
made to Xxxxxx assigning all its rights in the Policy to the Executive, such
assignment will be made only on the following terms:
a) To the extent possible, Xxxxxx will withdraw
from the cash value of the Policy an amount equal to the difference between
(1) the total of its share of the annual
premiums paid on the policy, and
(2) (i) any outstanding Policy loan
taken by Xxxxxx, plus (ii) any accrued and unpaid interest on any such Policy
loan.
b) Such withdrawal shall be in the form of a
Policy loan.
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c) The Executive shall accept assignment of the
Policy subject to all Policy loans and shall be responsible thereafter.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of August 1, 1980.
XXXXXX INC.
By: /s/ X. X. XXXX
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Its: President
EXECUTIVE
/s/ XXXXXX X. XXXXXX
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APPENDIX A
Name of Insured: Xxxxxx X. Xxxxxx, Xx.
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Policy Number: New England Mutual #6660874
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Face Amount: $1,406,816
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Effective Date: August 1, 1980
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Benefit Due Executive's Beneficiary
in Event of Executive's Death: $900,000
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Policy Number: New England Mutual #6707590
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Face Amount: $101,460
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Effective Date: August 1, 1981
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Benefit Due Executive's Beneficiary
in Event of Executive's Death: $62,500
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1982
ADDENDA TO APPENDIX A
Name of Insured: X. X. Xxxxxx, Xx.
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Policy Number: 6808400
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Face Amount: $398,365
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Effective Date: August 1, 1982
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Benefit Due Executive's
Beneficiary in Event of
Executive's Death: $212,500
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APPENDIX B
EARLY RETIREMENT
The formula to determine the amount payable for early
retirement shall be to subtract the balance of the Executive's payments that he
will not make due to his early retirement. Divide this amount by 15 and
subtract on a yearly basis from the 15-year payout under the supplemental
pension option. For example: If an Executive has contributed $10,000 on the
Executive Statement and he would have contributed $25,000, we divide the
difference of $15,000 by 15 and reduce the payment at early retirement by
$1,000 a year.
In order for the Executive to receive the early retirement
benefits under this Agreement, the Death Benefit terminates and Xxxxxx becomes
the sole beneficiary of the Policy. The Executive must designate Xxxxxx as his
beneficiary under the Policy.
