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Exhibit 10.17
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT made and entered into as of this 28th day of February,
2001, by and among Xxxxxx Xxxxxxx Living Omnimedia, Inc., a Delaware
corporation, having an address of 00 Xxxx 00xx Xx., Xxx Xxxx, Xxx Xxxx 00000
("Corporation"), Xxxxxx Xxxxxxx, an individual residing in the state of
Connecticut ("Employee"), and The Xxxxxx Xxxxxxx Family Limited Partnership, a
Connecticut limited partnership ("Owner").
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Corporation; and
WHEREAS, the Employee wishes to provide life insurance protection in
the event of her death under two policies of life insurance insuring her life
(each a "Policy" and collectively, the "Policies"), which are described in
attached Exhibit A and by this reference made a part of this Agreement, and
which are being issued by Security Life of Denver and Metropolitan Life,
respectively (each an "Insurer" and collectively the "Insurers"); and
WHEREAS, the Corporation is willing to pay a portion of the premiums
due on each Policy as an additional employment benefit for the Employee, on the
terms and conditions set forth in this Agreement; and
WHEREAS, Owner is the owner of each Policy and, as such, possesses all
incidents of ownership in and to each Policy; and
WHEREAS, the Corporation wishes to have the Policies collaterally
assigned to it by the Owner to secure the repayment of the amounts which the
Corporation will pay toward policy premiums; and
WHEREAS, the parties intend that by these collateral assignments the
Corporation shall receive only the right to its repayment, with the Owner
retaining all other ownership rights in a Policy, as specified herein;
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, the parties agree as follows:
1. PURCHASE OF POLICY. The Owner will purchase a Policy from each Insurer in the
face amount of THIRTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($13,500,000). The
parties agree that they will take all necessary action to cause each Insurer to
issue a Policy, and shall take any further action necessary to cause each Policy
to conform to the provisions of this Agreement. The parties agree that each
Policy shall be subject to this Agreement and the collateral assignments filed
with the Insurers relating to the Policies.
2. OWNERSHIP OF POLICIES.
a. The Owner shall be the sole and absolute owner of each
Policy, and may exercise all ownership rights granted to the owner thereof by
the terms of each Policy, except as may otherwise be provided in this Agreement.
b. Pursuant to this Agreement and the concomitant collateral
assignments, the parties intend that the Owner shall retain all rights which
each Policy grants to its owner and that the Corporation shall only be entitled
to be repaid the amounts set forth below. Specifically, but without limitation,
the Corporation shall neither have nor exercise any right as collateral assignee
of a Policy which could in any way defeat or impair the Owner's right to receive
the cash surrender value or the death proceeds of a Policy in excess of the
amount due the Corporation with respect to that Policy hereunder. All provisions
of this Agreement and the collateral assignments shall be so construed.
3. POLICY DIVIDENDS. In accordance with the election made by the Owner, any
dividend declared on a Policy shall be applied to purchase paid-up additional
insurance on the life of the Employee. The parties agree that the dividend
election provisions of a Policy shall conform to the provisions of this
Agreement.
4. PAYMENT OF PREMIUMS.
a. Thirty (30) days prior to the due date of a premium on a
Policy (or thirty (30) days prior to the scheduled payment date for any
scheduled premium on a Policy as the case may be), the Corporation shall notify
the Owner of the exact amount
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due from the Owner under this Agreement with respect to that Policy. For each
Policy, the amount due from the Owner shall equal the annual cost of current
life insurance protection on the life of the Employee provided under that
Policy, calculated using the lower of (1) the Table 2001 rate, set forth in
Internal Revenue Service Notice 2001-10 (or the corresponding applicable
provision of any future Internal Revenue Service authority), or (2) the
Insurer's current published premium rate for annually renewable term insurance
for standard risks. Either the Owner, or the Employee on behalf of the Owner,
shall pay the required contribution to the Corporation prior to a premium due
date. If neither the Employee nor the Owner timely pays a contribution, the
Corporation, in its sole discretion, may elect to pay the Owner's portion of a
premium, which shall be recovered by the Corporation as provided in this
Agreement. Any contribution towards a premium payment actually paid by the Owner
or the Employee shall be considered to be a payment by the Owner or the Employee
of a portion (equal to that contribution) of that premium for purposes of
calculating the amount to be repaid the Corporation under Sections 6, 7 and 9 of
this Agreement.
b. While this Agreement is in force, the premiums on both
Policies shall total ONE MILLION ONE HUNDRED SEVENTY-FOUR THOUSAND SIXTY-NINE
DOLLARS ($1,174,069) annually. On or before the due date of each Policy premium
(or the date of the premium payment for any scheduled policy premium as the case
may be), or within the grace period provided therein, the Corporation shall pay
the full amount of the premium to the Insurer, and shall, upon request, promptly
furnish the Owner evidence of timely payment of that premium. Subject to the
contribution provided above, the Corporation shall pay all premiums due on the
Policy (or all payments for scheduled policy premiums as the case may be) while
this Agreement is in force. The Corporation shall annually furnish the Employee
a statement of the amount of income reportable by the Employee, if any, for
federal and state income tax purposes as a result of the insurance protection
provided the Owner as the policy beneficiary.
5. RESTRICTED COLLATERAL ASSIGNMENT. To secure the repayment to the Corporation
of the amount to which it is entitled under this Agreement with respect to a
Policy, the Owner has assigned, as of the date of this Agreement, that Policy to
the Corporation as collateral. This collateral assignment provides that the sole
right of the Corporation is to be repaid that amount. This repayment shall be
made (1) from the cash surrender value of that Policy (as defined therein) if
this Agreement is terminated or if the Owner surrenders or cancels that Policy,
or (2) from the death proceeds of that Policy if the Employee dies while that
Policy and this Agreement remain in force. In no event shall the Corporation
have any right to borrow against or make withdrawals from a Policy, to surrender
or cancel a Policy, or to take any other action which would impair or defeat the
rights of the Owner in and to a Policy. The collateral assignment of a Policy to
the Corporation shall not be terminated, altered or amended by the Owner while
this Agreement is in effect, and the Corporation shall not assign its interest
under a collateral assignment to anyone other than the Owner or the Owner's
nominee(s). The parties agree to take all action necessary to cause the
collateral assignments to conform to the provisions of this Agreement.
6. LIMITATIONS ON OWNER'S RIGHTS IN POLICY.
a. The Owner shall take no action with respect to a Policy
which would in any way compromise or jeopardize the Corporation's right to be
repaid the amounts it has paid toward premiums on that Policy while this
Agreement is in effect.
b. Subject to the terms of this Agreement, the Owner may
pledge or assign a Policy to secure a loan from the Insurer or from a third
party, in an amount not to exceed the cash surrender value of that Policy (as
defined therein) as of the date to which premiums have been paid less the
aggregate amounts paid toward premiums on that Policy by the Corporation.
Interest charges on such a loan shall be the responsibility of and be paid by
the Owner.
c. The Owner shall have the sole right to surrender or cancel
a Policy, and to receive the full cash surrender value of that Policy directly
from the Insurer. Nonetheless, upon the surrender or cancellation of that
Policy, the Corporation shall have the unqualified right to receive a portion of
the cash surrender value of that Policy equal to the lesser of (1) the aggregate
amount of premiums paid by the Corporation with respect to that Policy or (2)
the then cash surrender value of that Policy. Immediately upon receipt of the
cash value of that Policy, the Owner shall pay to the Corporation the portion of
cash value to which the Corporation is entitled and shall retain the balance, if
any. Upon that receipt and payment, that Policy shall no longer be subject to
this Agreement, and when both Policies are no longer subject to this Agreement,
this Agreement shall terminate.
7. COLLECTION OF DEATH PROCEEDS.
a. Upon the death of the Employee, the Corporation and the
Owner shall cooperate to take whatever action is necessary to collect the death
benefits provided under the Policies. When those benefits have been collected
and paid as provided in this Agreement, this Agreement shall terminate.
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b. Upon the death of the Employee, the Corporation shall have
the unqualified right to receive a portion of the death benefit of each Policy
that remains subject to this Agreement equal to the aggregate amount of the
premiums paid by the Corporation with respect to that Policy. The balance of the
death benefit, if any, shall be paid directly to the Owner, in the manner and in
the amount or amounts provided in the beneficiary designation provision of that
Policy. In no event shall the amount payable to the Corporation exceed the
proceeds payable at the death of the Employee. No amount shall be paid from a
Policy's death benefit to the Owner until the full amount due the Corporation
with respect to that Policy has been paid. The parties agree that the
beneficiary designation provision of each Policy shall conform to the provisions
of this Agreement.
c. Notwithstanding any provision to the contrary, in the event
that, for any reason whatsoever, no death benefit is payable under a Policy upon
the death of the Employee and in lieu thereof the Insurer refunds all or any
part of the premiums paid for that Policy, the Corporation and the Owner shall
have the unqualified right to share that refund based on their respective
cumulative contributions to that Policy.
8. TERMINATION OF THE AGREEMENT DURING THE EMPLOYEE'S LIFETIME.
a. This Agreement shall terminate, during the Employee's
lifetime, without notice, upon the occurrence of any of the following events:
(1) the second day of the sixteenth year of the Policies; (2) total cessation of
the Corporation's business; (3) bankruptcy, receivership or dissolution of the
Corporation; or (4) failure of both the Employee and the Owner to pay timely to
the Corporation the Owner's portion of a premium when due, if any, unless the
Corporation elects to make that payment on behalf of the Employee, as provided
under this Agreement.
b. In addition, the Owner may terminate this Agreement, while
no premium under a Policy is overdue, by written notice to the other parties. In
no event shall the Corporation have any right to terminate this Agreement. A
termination shall be effective as of the date of the notice.
9. DISPOSITION OF THE POLICIES ON TERMINATION OF THE AGREEMENT DURING THE
EMPLOYEE'S LIFETIME.
a. For sixty (60) days after the date of the termination of
this Agreement during the Employee's lifetime, the Owner shall have the option
of obtaining the release of the collateral assignment of a Policy to the
Corporation. To obtain the release, the Owner shall repay to the Corporation the
lesser of (1) the aggregate premium payments made by the Corporation with
respect to that Policy or (2) the then cash surrender value of that Policy.
After that repayment, the Corporation shall release the collateral assignment of
that Policy, by the execution and delivery of an appropriate instrument of
release.
b. If the Owner fails to exercise that option within that
sixty (60) day period, then, at the request of the Corporation, the Owner shall
execute any documentation required by the Insurer to transfer the Owner's
interest in that Policy to the Corporation. Alternatively the Corporation may
enforce, pursuant to the collateral assignment of that Policy, the Corporation's
right to be repaid an amount equal to the aggregate premiums paid by the
Corporation on that Policy out of its cash surrender value; provided that if the
cash surrender value of that Policy exceeds the amount due the Corporation, that
excess shall be paid to the Owner. Thereafter, neither the Owner nor the Owner's
successors, assigns or beneficiaries shall have any further interest in and to
that Policy, either under the terms thereof or under this Agreement.
10. INSURER NOT A PARTY. An Insurer shall be fully discharged from its
obligations under a Policy by payment of that Policy's death benefit to the
beneficiary or beneficiaries named in that Policy, subject to its terms and
conditions. In no event shall the Insurer be considered a party to this
Agreement, or any modification or amendment. No provision of this Agreement, or
any modification or amendment, shall enlarge, change, vary, or in any other way
affect the obligations of an Insurer as expressly provided in a Policy, except
as the provisions of this Agreement are made a part of that Policy by the
collateral assignment executed by the Owner and filed with the Insurer.
11. NAMED FIDUCIARY, DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND
ADMINISTRATION.
a. The Corporation is designated as the named fiduciary under
this Agreement. The named fiduciary shall have authority to control and manage
the operation and administration of this Agreement, and it shall be responsible
for establishing and carrying out a funding policy and method consistent with
this Agreement.
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b. (1) Claim.
A person who believes that he or she is
being denied a benefit to which he or she is entitled under this Agreement
("Claimant") may file a written request for such benefit with the Corporation,
setting forth his or her claim. The request must be addressed to the Chief
Financial Officer of the Corporation at its then principal place of business.
(2) Claim Decision.
Upon receipt of a claim, the Corporation
shall advise the Claimant that a reply will be forthcoming within ninety (90)
days and shall, in fact, deliver such reply within such period. The Corporation
may, however, extend the reply period for an additional ninety (90) days for
reasonable cause.
If the claim is denied in whole or in part,
the Corporation shall adopt a written opinion, using language calculated to be
understood by the Claimant, setting forth: (a) the specific reason or reasons
for such denial; (b) the specific reference to pertinent provisions of this
Agreement on which such denial is based; (c) a description of any additional
material or information necessary for the Claimant to perfect his or her claim
and an explanation why such material or such information is necessary; (d)
appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and (e) the time limits for requesting a review
under subsection (3) and for review under subsection (4) below.
(3) Request for Review.
With sixty (60) days after the receipt by
the Claimant of the written opinion described above, the Claimant may request in
writing that the Secretary of the Corporation review the determination of the
Corporation. The request must be addressed to the Secretary of the Corporation,
at its then principal place of business. The Claimant or his or her duly
authorized representative may, but need not, review the pertinent documents and
submit issues and comments in writing for consideration by the Corporation. If
the Claimant does not request a review of the Corporation's determination by the
Secretary of the Corporation within such sixty (60) day period, he or she shall
be barred and estopped from challenging the Corporation's determination.
(4) Review of Decision.
Within sixty (60) days after the Secretary's
receipt of a request for review, he or she will review the Corporation's
determination. After considering all materials presented by the Claimant, the
Secretary will render a written opinion, written in a manner calculated to be
understood by the Claimant, setting forth the specific reasons for the decision
and containing specific references to the pertinent provisions of this Agreement
on which the decision is based. If special circumstances require that the sixty
(60) day time period be extended, the Secretary will so notify the Claimant and
will render the decision as soon as possible, but no later than one hundred
twenty (120) days after receipt of the request for review.
12. AMENDMENT. This Agreement may not be amended, altered or modified, except by
a written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as provided
herein.
13. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns, and the Employee, the
Owner, and their respective successors, assigns, heirs, executors,
administrators and beneficiaries.
14. NOTICE. Any notice, consent or demand required or permitted to be given
under this Agreement shall be in writing, and shall be signed by the party
giving or making the same. If any notice, consent or demand is mailed to a
party, it shall be sent by United States certified mail, postage prepaid,
addressed to such party's last known address as shown on the records of the
Corporation. The date of mailing shall be deemed the date of notice, consent or
demand.
15. GOVERNING LAW. This Agreement, and the rights of the parties hereunder,
shall be governed by and construed in accordance with the laws of the State of
New York.
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The parties have executed this Agreement as of the day and year first
above written.
XXXXXX XXXXXXX LIVING OMNIMEDIA, INC.
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, Chief Financial Officer
/s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
XXXXXX XXXXXXX FAMILY LIMITED PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, General Partner
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EXHIBIT A
The following life insurance policies are subject to the attached
Split-Dollar Agreement:
POLICY 1
Insurer: Standard Life of Denver
Insured: Xxxxxx Xxxxxxx
Policy Number: 610024604
Face Amount: $13,500,000
Dividend Option: purchase additional paid-up insurance
Date of Issue: February 28, 2001
POLICY 2
Insurer: Metropolitan Life
Insured: Xxxxxx Xxxxxxx
Policy Number: 201970167UV
Face Amount: $13,500,000
Dividend Option: purchase additional paid-up insurance
Date of Issue: February 28, 2001
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EXHIBIT B - Restricted Collateral Assignment (Policy 1)
Reference is made to the Agreement among Xxxxxx Xxxxxxx Living
Omnimedia, Inc., a Delaware corporation, having an address of 00 Xxxx 00xx Xx.,
Xxx Xxxx, Xxx Xxxx 00000 ("Corporation"), Xxxxxx Xxxxxxx, an individual residing
in the State of Connecticut ("Employee"), and Xxxxxx Xxxxxxx Family Limited
Partnership, a Connecticut limited partnership ("Owner") (the "Agreement")
executed at the same time as this Restricted Collateral Assignment. All
definitions in this Restricted Collateral Assignment shall have the same meaning
as in the Agreement.
To: Standard Life of Denver
Re: Insured: XXXXXX XXXXXXX
Policy Number: 610024604
1. The Owner of the Policy hereby assigns to the Corporation as collateral
security for the return of its aggregate premium payments under the Agreement:
(a) On any termination of the Agreement or surrender of the Policy, a
portion of the Policy's cash surrender value equal to the lesser of -
(1) The cash surrender value; or
(2) The Corporation's aggregate premium payments under the
Agreement.
(b) On the death of the Insured, a portion of the Policy's death
benefit equal to the Corporation's aggregate premium payments under the
Agreement
2. This is a limited assignment and confers on the Corporation none of the
Policy's incidents of ownership, all of which are retained by the Owner as
provided in the plan.
3. The Insurer shall be bound only by the provisions of and endorsements on the
Policy (including this Restricted Collateral Assignment), and payments made or
actions taken by it in accordance therewith shall fully discharge it from all
claims, suits and demands of all persons whatsoever.
4. This Restricted Collateral Assignment may be amended at any time and from
time to time by the mutual written agreement of the parties.
The Owner has signed this Restricted Collateral Assignment this 28th
day of February, 2001.
XXXXXX XXXXXXX FAMILY LIMITED PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, General Partner
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EXHIBIT B - Restricted Collateral Assignment (Policy 2)
Reference is made to the Agreement among Xxxxxx Xxxxxxx Living
Omnimedia, Inc., a Delaware corporation, having an address of 00 Xxxx 00xx Xx.,
Xxx Xxxx, Xxx Xxxx 00000 ("Corporation"), Xxxxxx Xxxxxxx, an individual residing
in the State of Connecticut ("Employee"), and Xxxxxx Xxxxxxx Family Limited
Partnership, a Connecticut limited partnership ("Owner") (the "Agreement")
executed at the same time as this Restricted Collateral Assignment. All
definitions in this Restricted Collateral Assignment shall have the same meaning
as in the Agreement.
To: Metropolitan Life
Re: Insured: XXXXXX XXXXXXX
Policy Number: 201970167UV
1. The Owner of the Policy hereby assigns to the Corporation as collateral
security for the return of its aggregate premium payments under the Agreement:
(a) On any termination of the Agreement or surrender of the Policy, a
portion of the Policy's cash surrender value equal to the lesser of -
(3) The cash surrender value; or
(4) The Corporation's aggregate premium payments under the
Agreement.
(b) On the death of the Insured, a portion of the Policy's death
benefit equal to the Corporation's aggregate premium payments under the
Agreement
2. This is a limited assignment and confers on the Corporation none of the
Policy's incidents of ownership, all of which are retained by the Owner as
provided in the plan.
3. The Insurer shall be bound only by the provisions of and endorsements on the
Policy (including this Restricted Collateral Assignment), and payments made or
actions taken by it in accordance therewith shall fully discharge it from all
claims, suits and demands of all persons whatsoever.
4. This Restricted Collateral Assignment may be amended at any time and from
time to time by the mutual written agreement of the parties.
The Owner has signed this Restricted Collateral Assignment this 28th
day of February, 2001.
XXXXXX XXXXXXX FAMILY LIMITED PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, General Partner
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