EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
XXXXXXX LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and XXXXXXX XXXXXXX, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
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cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
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necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
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time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
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15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than XXXXXXX XXXXXXX or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
XXXXXXX LEISURE LIMITED
By:/S/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx, Chairman
of the Board and Chief
Executive Officer
/S/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
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