EXECUTIVE LIFE INSURANCE AGREEMENT
This AGREEMENT is made as of the 28th day of December, 2006, by and between
XXXXXXXX X. XXXXXXX (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 dated March 1, 1998
pursuant to which the Company purchased a certain life insurance policy insuring the life of the
Executive attached hereto as Exhibit A (the “Policy”) and endorsed to the Executive’s
designated beneficiary or beneficiaries a 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, cancel the endorsement and
enter into this Agreement providing for the transfer of all rights of ownership of the Policy to
the Executive and the one-time lump sum cash payment by the Company to the insurer 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 Company shall become the sole owner and beneficiary of the
Policy and exercise, in its 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 transfer of all rights of ownership of the Policy to
the Executive. 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
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 transfer all
rights of ownership of the Policy to the Executive.
2.2 Subject to the terms and conditions of this Agreement, the Company shall pay directly to
the insurer 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 the 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 $1,129,000.00.
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 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: | ||||||
XXXXXXXX X. XXXXXXX |
||||||
| Its: | ||||||
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Exhibit A
LIFE INSURANCE POLICY
| Insured | Carrier | Policy Number | ||
Xxxxxxxx X. Xxxxxxx |
Principal Life Insurance Company | 4499823 |
