EXECUTIVE LIFE INSURANCE AGREEMENT
This
AGREEMENT is made as of the 28th day of December, 2006, by and between XXXX X. XXXXXX
(the “Executive”) and XXXXXXXX CORPORATION (the “Company”), a New York corporation (collectively,
the “Parties”).
RECITALS
WHEREAS, the Parties have entered into a Split Dollar Insurance Agreement effective as of
March 1, 2001 and dated April 2, 2001, as amended and modified, pursuant to which the Executive
owns a certain life insurance policy insuring the life of the Executive attached hereto as
Exhibit A (the “Policy”) and the Company holds an Assignment of Life Insurance Policy as
Collateral effective as of March 1, 2001 and dated April 2, 2001 (the “Collateral Assignment”) in
the Policy granting it the right to receive a portion of the death benefits payable thereunder (the
“Split Dollar Program”);
WHEREAS, the Parties have determined that the Split Dollar Program no longer meets the
business purposes of the Company; and
WHEREAS, the Parties desire to terminate the Split Dollar Program, release the Collateral
Assignment and enter into this Agreement providing for the one-time lump sum cash payment by the
Company to the Executive in the amount needed to sustain the Policy for the anticipated lifetime of
the Executive at a cost of $300 per year for the Executive’s lifetime with a death benefit equal to
the Executive’s projected base salary at age 65 multiplied by two.
NOW, THEREFORE, in consideration of the promises and other valuable consideration between the
Parties it is agreed as follows:
ARTICLE I
TERMINATION OF SPLIT DOLLAR PROGRAM
TERMINATION OF SPLIT DOLLAR PROGRAM
The Split Dollar Program shall be terminated and all rights, benefits and obligations derived
from such instruments or any other documents (including any related correspondence) by or of the
Executive shall be cancelled. The Collateral Assignment held by the Company shall be released upon
the Company’s receipt of all amounts due it thereunder. Upon the release of the Collateral
Assignment, the Executive shall become the sole owner of the Policy and exercise in the Executive’s
sole discretion all rights of ownership granted to the policyholder by the terms of the Policy.
Each Party agrees to take such further action, do such other things and execute such other written
instruments as shall be necessary and proper to carry out the termination of the Split Dollar
Program and release of the Collateral Assignment and recovery of the amounts due the Company
thereunder. The Executive agrees that the Company’s obligations pursuant to this Agreement shall
not become effective unless and until all such actions to terminate the Split Dollar Program,
release the Collateral Assignment and recover the amounts due the Company thereunder are complete.
The Company and the Executive agree that the termination of the Split Dollar Program and the
transfer of the ownership of the Policy in accordance with Article II shall occur simultaneously.
ARTICLE II
COMPANY OBLIGATIONS
COMPANY OBLIGATIONS
2.1 Subject to the terms and conditions of this Agreement, the Company shall release the
Collateral Assignment held by the Company.
2.2 Subject to the terms and conditions of this Agreement, the Company shall pay directly to
the Executive a one-time lump sum cash payment in the amount needed to sustain the Policy for the
anticipated life of the Executive with a death benefit equal to level of benefit provided in
Section 2.3. The Executive shall be eligible to enroll in the Company’s group term life insurance
program, subject to the terms and conditions of such program.
2.3 The Policy and the one-time lump sum payment are based on projections by the Company so
that, after assuming the Executive’s base salary compounds by 3.5% growth per annum until age 65,
the Executive will hold a life insurance policy with a death benefit equal to the Executive’s
projected base salary at age 65 multiplied by two, which death benefit amount equals $1,140,000.00.
The projections prepared by the Company are final, and may not be challenged by the Executive as
of the time this Agreement is executed or at any time in the future.
2.4 The Company shall increase the Executive’s compensation for services rendered by an amount
determined by the Company which, net of its federal, state and local income tax effects, is
approximately sufficient to enable the Executive to pay any federal, state and local income taxes
payable by the Executive because of taxable income resulting from this Agreement (the “Tax Gross
Up”).
ARTICLE III
EXECUTIVE’S RIGHTS AND OBLIGATIONS
EXECUTIVE’S RIGHTS AND OBLIGATIONS
The Executive shall become the sole owner of the Policy and may exercise all rights of
ownership granted to the policyholder by the terms of the Policy, including but not limited to the
right to borrow against the Policy, the right to assign his interest in the Policy, the right to
change the beneficiary(ies) of the Policy, the right to exercise settlement options and the right
to surrender or cancel the Policy. The Executive acknowledges that any exercise of any such
ownership rights with respect to the Policy shall not increase in any way the obligations of the
Company pursuant to this Agreement.
ARTICLE IV
AMENDMENT OR TERMINATION
AMENDMENT OR TERMINATION
This Agreement shall not be modified, amended or terminated except by a written agreement of
the Company and the Executive. This Agreement and any amendment hereto shall inure to the benefit
of and shall be binding upon the heirs, personal representatives, successors and assigns of each
party to this Agreement.
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ARTICLE V
FURTHER PERFORMANCE
FURTHER PERFORMANCE
5.1 Each of the Parties, for itself and its heirs, beneficiaries, personal representatives,
trustees, successors and assigns, agrees to take such further action, do such other things, and
execute such other writings as shall be necessary and proper to carry out the terms and provisions
of this Agreement.
5.2 The Executive shall provide, or shall take action to cause the issuing insurance company
or other appropriate party to provide, information as may be reasonably requested by the Company or
its designated agent with respect to the Policy which is necessary or desirable in order to permit
the Company or its designated agent to verify the Company’s on-going obligation with respect to
this Agreement or to comply with any financial reporting or disclosure obligations or reporting,
disclosure or other obligations under applicable law.
ARTICLE VI
MISCELLANEOUS
MISCELLANEOUS
6.1 This Agreement shall be personal to the Executive and shall not be construed to grant or
imply any right of any employee or other executive of the Company to enter into any similar
arrangement.
6.2 All notices required to be given shall be in writing and sent by regular, overnight,
certified or registered mail to the last known address of the Party. Notice shall be deemed given
within five business days after the notice is provided to the delivery service for service.
6.3 This Agreement shall be subject to and construed in accordance with the laws of North
Carolina; provided, that the conflicts of laws principles shall not apply to the extent that they
would operate to apply the laws of another State or Commonwealth.
IN WITNESS WHEREOF, the Parties have executed this Executive Life Insurance Agreement as of
the day and year first written above.
| EXECUTIVE | XXXXXXXX CORPORATION | |||||
| By: | ||||||
XXXX X. XXXXXX |
||||||
| Its: | ||||||
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Exhibit A
LIFE INSURANCE POLICY
| Insured | Carrier | Policy Number | ||
Xxxx X. Xxxxxx |
Principal Life Insurance Company | 44442354 |
