EXHIBIT 10.36
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement made and entered into the 23rd day of January, 2002,
between GROUP 1 AUTOMOTIVE, INC., a Delaware Corporation (hereinafter called the
"Corporation") and XXXXXX XXXXXXXXXXXXX and XXXXX XXXXXXXXXXXXX XXXXXXXX, as
Trustees of the Xxxxxxxxxxxxx 2000 Children's Trust dated June 28, 2000 (the
"Trustee"), with respect to insurance on the joint lives of X.X. XXXXXXXXXXXX,
XX. (the "Employee") and XXXXXXXX XXXXXX XXXXXXXXXXXXX (the "Employee's spouse),
referred to collective as the "Insureds."
WHEREAS, the services of the Employee, the Employee's experience and
knowledge of the affairs of the Corporation, and the Employee's reputation and
contacts in the industry are extremely valuable to the Corporation; and
WHEREAS, the Corporation desires that the Employee remain in its
service and wishes to receive the benefit of the Employee's knowledge,
experience, reputation and contacts; and
WHEREAS, the Corporation is willing to encourage the Employee's
continued service to the Corporation by joining with the Trustee for the mutual
benefit of the parties hereto in an investment of life insurance on the lives of
the Insureds; and
WHEREAS, the Trustee will be the owner of the insurance policies on
the Insureds' lives acquired pursuant to the terms of this Agreement, and the
policies will be assigned to the Corporation as security for repayment of the
amounts which the Corporation will contribute towards payment of premiums due on
such policies;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the Corporation and the Trustee agree
as follows:
ARTICLE I
Insurance Policies
The Trustee has insured the lives of the Insureds under the policy
or policies shown on the attached Schedule A in the amounts as shown on such
schedule (such policy, together with any other policies that may be added to
this Agreement, are hereinafter called the "insurance policies").
ARTICLE II
Premium Payments
2.1 The Corporation shall pay the entire premium on the policies
each year. Premium payments shall be made by the Corporation for a minimum of
seven years.
2.2 With respect to each policy, the Employee shall report as
compensation each year, an amount equal to the one-year term cost of the
insurance protection to which the Trustee is entitled under such policy pursuant
to the terms of this Agreement, including any insurance purchased by dividends,
as such cost is determined in Rev. Rul. 64-328 and Rev. Rul. 66-110, which shall
be the lesser of the following: (1) an amount determined in accordance with the
tables set forth in Rev. Rul. 55-747 (called the "P.S. 58 Cost"), or in
corresponding U.S. Treasury Department rulings and regulations hereafter in
effect; or (2) the published one-year term rates of the insurance company
issuing such coverage, pursuant to the guidelines set forth in Rev. Rul. 66-110
and Rev. Rul. 67-154.
ARTICLE III
Corporation's Investment
3.1 The Corporation's investment ("Corporation's investment") in
each insurance policy shall be the amounts paid by the Corporation as premiums
on such policy, over and above the amounts reported as compensation by the
Employee under the terms of Article II on such policy, and less the amount of
any indebtedness which may exist against said policy and any interest
due on such indebtedness if said indebtedness was incurred by the Corporation or
for the purpose of paying premiums on such policy.
3.2 The Trustee will collaterally assign the insurance policies on
the Insureds' lives, acquired pursuant to the terms of this agreement, to the
Corporation as security for the Corporation's investment. This collateral
assignment will not be altered or changed without consent of the Corporation.
3.3 The rights of the Corporation under the collateral assignment
are restricted to the following: (a) borrowing against the insurance policy, up
to the extent of the cash surrender value, but not in excess of the
Corporation's investment, and (b) assigning the Corporation's interest in the
insurance policy to the Trustee upon payment of the Corporation's investment.
3.4 The Corporation is prohibited from taking any action that would
endanger either the interest of the Trustee or the payment of the proceeds in
excess of the Corporation's investment to the beneficiary designated by the
Employee upon the death of the Insureds. The Corporation is specifically
prohibited from surrendering the insurance policies for cancellation and from
assigning its rights to anyone other than the Trustee.
3.5 The Trustee specifically has the power to assign all rights of
the Trustee in the insurance policies and under this agreement, change the
beneficiary designation of each policy and exercise settlement option. The
Trustee has all rights to the insurance policies not specifically granted to the
Corporation by this agreement.
3.6 It is agreed that the Corporation shall have the right to
custody of the insurance policies covered by this agreement as long as there is
any Corporation's investment in such policies; provided, however, that it is
agreed that the Corporation shall make such policies available to the life
insurance companies when it shall be necessary to endorse changes of beneficiary
thereon in accordance with the Trustee's right to appoint beneficiaries as
provided in this agreement or to exercise any other rights of the Trustee to
such policies.
ARTICLE IV
Term of Agreement
4.1 This agreement shall continue in full force and effect during
the term set forth in section 4.2(b), and during any further period that the
Employee is an officer, director, consultant or employee of the Corporation;
provided, further that if the Employee becomes totally and permanently disabled
(as defined below), and if he is an officer, director, consultant or employee of
the Corporation at the time he becomes so disabled, this agreement shall also
continue in full force and effect during the period of such disability to the
same extent as if the Employee were still actively engaged in such capacity. For
purposes of this agreement, total and permanent disability shall mean the
inability of the Employee, by reason of illness, disability or incapacity (due
to accident or otherwise), to perform the duties and render the services
required in this employment for a continuous period of one year. If the Employee
becomes disabled as defined herein and subsequently recovers from such
disability, the provisions of this section relating to disability shall cease to
be operative.
4.2 Except as may be mutually agreed in writing by the Corporation
and the Employee, this agreement shall terminate upon the later to occur of the
following:
(a) The Employee ceases to be an officer, director, consultant or
employee of the Corporation for any reason other than total and permanent
disability; or
(b) Fifteen years from the date hereof.
4.3 Upon the death of both the Insureds, the beneficiary designated
by the Corporation shall be entitled to receive from the proceeds of the policy
the amount described in
section 3.1. The balance of the policy proceeds shall be payable to such
beneficiary as may be designated by the Trustee.
4.4 At any time, the Trustee shall have the option to purchase the
Corporation's interest in one or more of the policies subject hereto, with the
purchase price to be lesser of the Corporation's investment or the cash
surrender value of the policies. In the event of such purchase, the Corporation
shall execute all documents required by the insurance company to accomplish a
transfer of all the Corporation's interest in the policy or policies purchased
to the Trustee. If the Trustee does not exercise such option, the Trustee shall
execute all documents required by the insurance company to effectively release
all of its interest in the policy to the Company.
ARTICLE V
Insurance Companies
The insurance companies shall not be deemed to be parties to this
agreement for any purpose, nor are they in any way to be responsible for its
validity or enforcement. The insurance companies shall not be obligated to
inquire as to the distribution or application of any monies, payable or paid by
them under insurance policies issued on the lives of the Insureds, if they make
payment or otherwise perform their contract obligations in accordance with the
terms of the insurance policies.
ARTICLE VI
Amendments and Binding Effect
This agreement shall not be modified or amended except by a writing
signed by the Corporation and the Trustee. This agreement shall be binding upon
the heirs, administrators, executors, assigns and successors of the parties to
this agreement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first above written.
GROUP 1 AUTOMOTIVE, INC.
By
/s/ Xxxx X. Xxxxxx
-------------------------------------
/s/ X.X. Xxxxxxxxxxxxx, Xx.
-------------------------------------
Chairman, President, CEO
XXXXXXXXXXXXX 2000 CHILDREN'S TRUST
By: /s/ Xxxxxx Xxxxxxxxxxxxx
---------------------------------
XXXXXX XXXXXXXXXXXXX, Trustee
By: /s/ Xxxxx Xxxxxxxxxxxxx Xxxxxxxx
---------------------------------
XXXXX XXXXXXXXXXXXX XXXXXXXX,
Trustee
SCHEDULE A
The insurance policies subject to the foregoing Split Dollar Life
Insurance Agreement entered into the 23rd day of January, 2002, with GROUP 1
AUTOMOTIVE, INC. are as follows:
FACE
COMPANY POLICY NO. AMOUNT
------- ---------- ------
Pacific Life Insurance VP62522200 $7,799,697
GROUP 1 AUTOMOTIVE, INC.
By
/s/ Xxxx X. Xxxxxx
-------------------------------------
/s/ X.X. Xxxxxxxxxxxxx, Xx.
-------------------------------------
Chairman, President, CEO
XXXXXXXXXXXXX 2000 CHILDREN'S TRUST
By: /s/ Xxxxxx Xxxxxxxxxxxxx
---------------------------------
XXXXXX XXXXXXXXXXXXX, Trustee
By: /s/ Xxxxx Xxxxxxxxxxxxx Xxxxxxxx
---------------------------------
XXXXX XXXXXXXXXXXXX XXXXXXXX,
Trustee
SPLIT_DOLLAR
ASSIGNMENT OF LIFE INSURANCE
DEATH BENEFIT AS COLLATERAL
A. FOR VALUE RECEIVED, the undersigned hereby assigns to GROUP
1 AUTOMOTIVE, INC., a Delaware corporation, its successors and assigns (herein
called the "Assignee"), the death benefit under Policy No. VP62522200, issued by
Pacific Life Insurance(herein called the "Insurer") and any supplementary
contracts issued in connection therewith (said policy and contracts being herein
called the "Policy"), upon the lives of X.X. XXXXXXXXXXXXX, XX. and XXXXXXXX
XXXXXX XXXXXXXXXXXXX, of Houston, Texas, subject to all the terms, and
conditions of the policy and to all superior liens, if any, which the Insurer
may have against the policy. The undersigned by this instrument agrees and the
Assignee by the acceptance of this assignment agrees to the conditions and
provisions herein set forth.
B. This assignment of the life insurance death benefit under
the Policy is made as collateral security for all liabilities of the
undersigned, or any of them, to the assignee, either now existing or that may
hereafter arise with respect to premiums advanced for or paid on the Policy by
the Assignee (all of which liabilities secured or to become secured are herein
called "Liabilities").
C. It is understood and agreed that the only rights of the
Assignee are (1) to collect from the Insurer the net proceeds of the Policy when
it becomes a claim by death or maturity, (2) to make policy loans or advances
from the Insurer not in excess of the Liabilities and (3) to assign the
Assignee's rights in the Policy only to the undersigned upon payment of the
Liabilities. The Assignee is prohibited from taking any action that would
endanger either the interest of the undersigned or the payment of proceeds in
excess of cash surrender value (less policy loans and interest thereon) to the
beneficiary designated by the undersigned upon the death of the Insured. The
Assignee is specifically prohibited from surrendering the Policy for
cancellation and from assigning its rights to anyone other than the undersigned.
D. It is expressly agreed that all other rights under the
Policy not reserved to the Assignee pursuant to Paragraph C, including, by way
of illustration and not limitation, the right
to surrender the Policy, the right to designate and change the beneficiary, and
the right to elect and receive dividends, are reserved exclusively to the owner
of the Policy and are excluded from the assignment and do not pass by virtue
hereof and may be exercised by the owner on the sole signature of the owner.
Nothing herein shall affect funds, if any, now or hereafter held by the insurer
for the purpose of paying future premiums under the Policy.
E. The Assignee covenants and agrees with the undersigned as
follows:
1. That any balance of sums received hereunder from the
Insurer remaining after payment of the then existing Liabilities,
matured or unmatured, shall be paid by the Assignee to the persons
entitled thereto under the terms of the Policy had this assignment not
been executed;
2. That the Assignee will upon request forward without
unreasonable delay to the Insurer the policy for endorsement of any
designation or change of beneficiary or any election of an option mode
of settlement; provided, however, that any such designation, change or
election shall be made subject to this assignment and to the rights of
the Assignee hereunder.
F. The Insurer is hereby authorized to recognize the
Assignee's claims to rights hereunder without investigating the validity or the
amount of the Liabilities, or the application to be made by the Assignee of any
amount to be paid to the Assignee. The sole receipt of the Assignee for any sums
received shall be a full discharge and release therefor to the Insurer. Checks
for all or any part of the sums payable under the Policy and assigned herein,
shall be drawn to the exclusive order of the Assignee if, when, and in such
amounts as may be required by the Assignee.
G. The Assignee may take or release other security, may
release any party primarily or secondarily liable for any of the Liabilities,
may grant extensions, renewals or indulgences with respect to the Liabilities,
or may apply to the Liabilities in such order as the Assignee shall determine,
the proceeds of the Policy hereunder assigned or any amount received on account
of the Policy by the exercise of any right permitted under this
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assignment, without resorting or regard to other security.
H. In the event of any conflict between the provisions of this
assignment and the provisions of other evidence of any liability, with respect
to the Policy or rights of collateral security therein, the provisions of this
assignment shall prevail.
I. The undersigned declares that no proceedings in bankruptcy
are pending against him and that his property is not subject to any assignment
for the benefit of creditors.
SIGNED this 29 day of March, 2002.
/s/ Xxxxxx Xxxxxxxxxxxxx
----------------------------------------
XXXXXX XXXXXXXXXXXXX, Trustee of the
Xxxxxxxxxxxxx 2000 Children's Trust
/s/ Xxxxx Xxxxxxxxxxxxx Xxxxxxxx
----------------------------------------
XXXXX XXXXXXXXXXXXX XXXXXXXX, Trustee of
the Xxxxxxxxxxxxx 0000 Xxxxxxxx'x Xxxxx
XXX XXXXX XX XXXXX ss.
ss.
COUNTY OF XXXXXX xx.
BEFORE ME, the undersigned authority, on this day personally
appeared XXXXXX XXXXXXXXXXXXX, known to me to be the person whose name is
subscribed to the foregoing instrument, and acknowledged to me that she executed
the same for the purposes and consideration therein expressed.
GIVEN under my hand and seal of office this 29th day of March,
2002.
/s/ Xxxxx X. Xxxxx
----------------------------
Notary Public in and for
the State of Texas
THE STATE OF TEXAS ss.
ss.
COUNTY OF XXXXXX xx.
BEFORE ME, the undersigned authority, on this day personally
appeared XXXXX XXXXXXXXXXXXX, known to me to be the person whose name is
subscribed to the foregoing instrument, and acknowledged to me that she executed
the same for the purposes and consideration therein expressed.
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GIVEN under my hand and seal of office this 29th day of March,
2002.
/s/ Xxxxx X. Xxxxx
----------------------------
Notary Public in and for
the State of Texas
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