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EXHIBIT 10.39
SPLIT DOLLAR
LIFE INSURANCE AGREEMENT
AGREEMENT made as of the 15th day of April, 1997 by and between VMARK
SOFTWARE, INC., a Delaware corporation ("VMARK") and James D. Foy (the
"Insured").
WHEREAS, the Insured is an executive officer and key employee of VMARK;
and
WHEREAS, VMARK wishes to provide an incentive for the Insured's continued
performance of services to VMARK by making available to him a split-dollar life
insurance program; and
WHEREAS, the Insured wishes to participate in such program; and
WHEREAS, the Insured and VMARK have arranged for the purchase of Policy
No. 11510556 in the face amount of $1,542,082 on the life of the Insured (the
"Policy") issued by Massachusetts Mutual Life Insurance Company (the "Insurance
Company"); and
WHEREAS, the Policy is a whole-life policy which will be fully paid upon
the payment of 10 consecutive annual premiums of $84,355.62 each (if the annual
installment option is elected).
Now, THEREFORE, the parties agree as follows:
1. $63,081.00 of each annual premium due on the Policy (or a
proportionate amount of any other premium installment) shall be paid when due by
VMARK until such obligation shall terminate in accordance with the provisions of
paragraph 2 or 13 below, provided that VMARK shall have no obligation to any pay
premiums in respect of benefits hereafter added to the Policy by the Insured.
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2. VMARK's obligation to make premium payments pursuant to paragraph
1 above shall be subject to the following:
(a) In the event the employment of the Insured by VMARK is terminated
for any reason, VMARK's obligation to make premium payments shall
terminate immediately unless, prior to such termination of employment,
there has been a Change of Control (as defined in paragraph 17(c) below),
in which event VMARK's obligation to make premium payments shall
terminate on the fifth anniversary of such termination of employment,
subject to (b) below.
(b) In the event the Insured voluntarily terminates his employment
with VMARK following a Change of Control and, within the 24 month period
immediately following such termination, directly or indirectly engages in
any activity which is in competition with the business of VMARK, VMARK's
obligation to make premium payments shall immediately terminate.
(c) In the event, and to the extent, the board of directors of VMARK
determines, in its sole reasonable judgement, that any premium payment
would have a materially detrimental effect upon its financial condition,
such payment or a portion thereof may be deferred until such time or
times as the payment of all or a portion of the deferred amount may be
paid without such effect. Payment of deferred amounts shall be applied,
as appropriate, to (i) make the premium payment, (ii) repay the amount
borrowed against the Policy to make such payment, or (iii) reimburse the
Insured for making such payment. Any such deferrals and subsequent
payments shall be effected pro rata in
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respect of the Policy and other policies issued in connection with
similar executive split-dollar life insurance programs.
3. VMARK acknowledges that ownership of the Policy is held by the
Insured, including without limitation the rights to transfer such ownership,
designate beneficiaries and borrow against the Policy, subject only to the
Collateral Assignment (as defined in paragraph 5 below) and other limitations
specifically described herein.
4. The Insured acknowledges that VMARK makes no representations or
warranties regarding the Policy, including without limitation regarding the
amounts which may become available for borrowing against the Policy or the tax
treatment of any proceeds of or other matters in connection with the Policy.
5. The Insured has executed and delivered to VMARK an assignment (the
"Collateral Assignment") of certain rights in the Policy in order to secure the
right of VMARK to receive, not later than the death of the Insured, an amount
equal to the aggregate of all premiums thereon paid by VMARK, including any
amounts paid or reimbursed pursuant to paragraph 2(c)(ii) or (iii) above ("2-c
Amounts"). A copy of the Collateral Assignment is attached, as amended, as
Exhibit A hereto.
6. In the event either party wishes to exercise a right which under
the Policy, subject to the provisions hereof and of the Collateral Assignment,
may be exercised by such party alone, the other party shall co-sign any
documents and take such other steps as may be required by the Insurance Company
to effect the exercise of such right.
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7. VMARK acknowledges that any borrowing by it against the Policy
could materially reduce the intended benefits to the Insured pursuant to this
Agreement. Any such borrowing shall be subject to the following:
(a) No such borrowings shall be made except to the extent that the
board of directors of VMARK determines, in its sole reasonable judgment,
that alternative sources of funds are not available on reasonably
satisfactory terms and that the failure to make such borrowing would have
a materially detrimental effect upon VMARK.
(b) VMARK shall pay all interest due on any such borrowings in such
timely manner that the intended benefits to the Insured pursuant hereto
are, to the extent possible by reason of prompt interest payments,
preserved.
(c) Any such borrowings shall be made substantially pro rata, in
accordance with the aggregate premiums paid by the Company, against the
Policy and all other similar policies of the Company on the lives of its
executive officers. Any repayment of principal on such borrowings against
the Policy and other such policies shall be allocated in such manner as
the Company, in its reasonable discretion, deems will ensure, to the
extent possible by reason of such allocation, that the intended benefits
to the respective insureds are preserved, and otherwise pro rata as set
forth above.
8. The Insured shall not surrender the Policy unless the cash value
thereof at the time of surrender, net of any then outstanding borrowings against
the Policy, exceeds the aggregate amount of all premiums thereon paid by VMARK
through such time, including any 2-c Amounts.
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9. The Insured shall not borrow against the Policy if the aggregate
amount of (a) such borrowing and any other borrowings against the Policy by the
Insured or his assigns other than VMARK, including interest accrued and expected
to be accrued thereon ("Borrowings") and (b) all premiums thereon paid by VMARK
through such time, including any 2-c Amounts, shall exceed (i) prior to January
1, 2012, the cash value of the Policy without regard to any Borrowings, or (ii)
on or after said date, the death benefit of the Policy (including any additions
thereto) without regard to any Borrowings, provided that the foregoing shall not
prevent any borrowing to pay premiums not paid by VMARK pursuant to paragraph
2(c) above.
10. The Insured shall elect to have premiums paid on an annual
installment basis unless VMARK agrees in writing to the election of another
installment option.
11. Upon the death of the Insured while the Policy is in effect, but
prior to the exercise by either the Insured or VMARK of his or its respective
rights to acquire full ownership of the Policy pursuant to paragraph 12 below,
VMARK shall promptly furnish the Insurance Company an affidavit specifying the
amount of proceeds payable to it pursuant to the Collateral Assignment.
12. The Insured shall have the right after April 15, 2002 to reacquire
from VMARK the rights assigned pursuant to the Collateral Assignment. Such right
may be exercised (a) at any time, by payment to VMARK in cash or by certified or
bank check of an amount equal to the aggregate of all premiums on the Policy
paid by VMARK through such time, including any 2-c Amounts, or (b) on or after
April 15, 2007 if VMARK's obligation to make premium payments has not terminated
pursuant to paragraph 2(a) or (b) above due to the Insured's voluntary
termination of his employment (as limited by paragraph 17(a) below), by delivery
to VMARK
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of a non-interest bearing promissory note in such amount payable not later than
the death of the Insured and secured by a pledge of collateral, provided that
the board of directors of VMARK at the time may reject such method of exercise
if, in its sole reasonable discretion, it deems such note and collateral to
provide repayment arrangements less secure or otherwise not commercially
equivalent to the arrangements otherwise provided herein. Against receipt of
such payment or delivery, VMARK shall execute and deliver to the Insured a full
release of the Collateral Assignment satisfactory in form to the Insurance
Company. In the event that (i) VMARK's obligation to make premium payments has
terminated pursuant to paragraph 2(a) or (b) above due to the Insured's
voluntary termination of his employment (as limited by paragraph 17(a) below),
and (ii) the Insured does not exercise his rights under this paragraph 12 within
sixty days following such termination of VMARK's obligation, then his rights
under this paragraph 12 shall lapse. Upon the lapse of such rights, VMARK shall
have the right from time to time to acquire from the Insured all rights and
other incidents of ownership in and under the Policy upon payment of ten dollars
to the Insured. Against receipt of such payment the Insured shall execute and
deliver such documents and take such other steps to effect the transfer of such
ownership to VMARK as may be satisfactory in form to the Insurance Company.
13. VMARK's obligation to make premium payments pursuant to paragraph
1 above shall, if not previously terminated pursuant to the provisions of
paragraph 2 above, terminate upon the exercise of the Insured's rights or the
lapse thereof under paragraph 12 above.
14. Nothing herein shall be construed to obligate VMARK to continue
the employment of the Insured or to pay any benefits under the Policy under any
circumstances.
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15. In the event VMARK shall sell or otherwise dispose of
substantially all its business and assets, it shall (a) cause the acquiring
party to deliver to the Insured a written assumption of all the respective
obligations of VMARK hereunder and under the Policy and Collateral Assignment or
(b) retain sufficient assets to pay premiums on the Policy to the extent
required. In the event of an assumption under (a) above, the word "VMARK" shall
mean or include, as the context indicates, any such acquiring party.
16. The Insured may assign all its rights hereunder and under the
Policy and Collateral Assignment, provided that the assignee shall deliver to
VMARK a written assumption of all the respective obligations of the Insured
hereunder and thereunder. In the event of such assignment and assumption, the
word "Insured" shall mean or include, as the context indicates, any such
assignee, provided that the Policy shall insure the life of the initial Insured
only and not of any assignee or other successor.
17. For purposes of paragraph 2 above:
(a) The Insured shall not be deemed to have voluntarily
terminated his employment with VMARK if the termination occurs within
nine months following (i) a reduction of his salary other than a
reduction applicable to executives generally, (ii) a material demotion in
the level of his duties, or (iii) a material change of the location of
his employment;
(b) "Cause" shall mean (i) commission by the Insured of a
willful, wrongful act, such as embezzlement, against VMARK, (ii)
conviction of the Insured of a felony involving moral turpitude, (iii)
willful, gross and repeated neglect by the Insured of his executive
employment duties, or (iv) intentional and repeated failure of the
Insured to
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observe specific directives or policies of the board of directors of
VMARK applicable to his executive employment duties; and
(c) "Change of Control" shall mean (i) the direct or indirect
acquisition by any person, entity or group acting in concert of more than
35% of the aggregate voting power of the outstanding securities of VMARK
having the right to vote at elections of directors, (ii) a majority of
the board of directors of VMARK ceasing to consist of individuals who are
currently members of such board or for whose nomination for such
membership a majority of such current members voted in favor, or (iii)
the disposition by VMARK of substantially all its business, other than in
connection with a mere change of place of incorporation or similar mere
change in form.
18. This Agreement shall be construed and enforced under the laws of
Massachusetts. Except as provided by paragraphs 15 and 16 above, no rights or
obligations hereunder or under the Policy or Collateral Assignment shall be
voluntarily assigned without the prior written consent of the other party, which
consent shall not be unreasonably withheld. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors, assigns, heirs and legal representatives. This
Agreement may not be amended or otherwise modified without the prior written
consent of the parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
VMARK Software, Inc.
/s/ R.N. Hoehn By /s/ Robert M. Morrill
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(Witness) Its Chairman
/s/ R.N. Hoehn /s/ James D. Foy
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(Witness) James D. Foy
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EXHIBIT A
POLICY NO. 11510556
INSURER: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
ASSIGNOR: JAMES D. FOY
ASSIGNEE: VMARK SOFTWARE, INC.
For Value Received, the Assignor hereby assigns to the Assignee certain
rights in the policy issued by the Insurer numbered as set forth above (the
"Policy"), subject to any superior liens which the Insurer may have against the
Policy, and the Assignor and the Assignee hereby agree as follows:
1. This assignment is made to secure certain rights, either now
existing or that may hereafter arise, of the Assignee to receive
payments pursuant to a split dollar life insurance agreement with
regard to the Policy (the "Agreement").
2. The Assignee shall have the following rights in the Policy:
a. The right to receive from the death proceeds an amount
equal to all premiums on the Policy paid by the Assignee
until the date of the Insured's death;
b. The right to receive the cash values of the Policy, up to
an amount equal to all premiums paid by the Assignee, if
the policy is surrendered or lapses;
c. The right to release this assignment; and
d. The right to borrow against the Policy for the Assignee's
own account, in amounts which do not exceed in the
aggregate the aggregate amount of premiums paid on the
Policy at the time of any such borrowing.
3. All other rights in the Policy, including the rights to designate
beneficiaries, to borrow against the Policy any amounts available
therefor in excess of amounts which have been or may be borrowed
by the Assignee, to surrender the Policy, and to transfer
ownership thereof, are excluded from this assignment
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and, subject to the terms of the Agreement, reserved to and
exercisable by the Assignor alone.
4. Nothing herein shall affect the right of the Insurer to charge
interest on any loan under the Policy and, if interest is not paid
thereon pursuant to the Policy, to add such interest to the unpaid
balance of the loan and secure such amounts with corresponding
cash values, even if such security shall reduce amounts available
for payment to the Assignee hereunder.
5. The Insurer shall be entitled to rely conclusively and without any
further investigation upon an affidavit of an officer of the
Assignee regarding the amount of proceeds due it from any death or
surrender proceeds of the Policy, and payment of such amount shall
be a full discharge of the Insurer's obligations hereunder in
respect thereof.
6. Subject to the Agreement, the rights and obligations of the
parties hereunder shall be binding upon and inure to the benefit
of their respective successors, assigns, heirs and legal
representatives.
DATE: April 15, 1997 ----------------------------------------
JAMES D. FOY
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VMARK SOFTWARE, INC.
ACCEPTED BY ----------------------------------------
ON:__________________ MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY