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EXHIBIT 10.23
SEVERANCE AND RELEASE AGREEMENT
THIS SEVERANCE AND RELEASE AGREEMENT (the "Agreement") is made and
entered into this 28th day of August, 1997, to be effective as of the 31st day
of August, 1997 (the "Effective Date"), by and between AGCO CORPORATION, a
Delaware corporation ("AGCO"), and JEAN-PAUL RICHARD a resident of Fulton
County, Georgia ("Richard"). For purposes of this Agreement, the term "AGCO"
shall be deemed to include all subsidiaries and affiliates of AGCO Corporation.
RECITALS
A. AGCO and Richard are parties to an Employment and
Severance Agreement, dated as of November 18, 1996 (the "Employment
Agreement"); and
B. AGCO and Richard mutually desire to terminate the
Employment Agreement and Richard's employment with AGCO, all subject to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual
promises, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Resignation. Contemporaneously with the execution of this
Agreement, Richard shall execute and deliver to AGCO a letter of resignation
substantially in the form of Exhibit A attached hereto, which provides that
Richard is voluntarily resigning as an officer, director and employee of AGCO
as of the Effective Date. Richard shall continue to perform his obligations as
an officer, director and employee of AGCO through the Effective Date or any
earlier date determined by AGCO.
2. Termination of Existing Agreements. The Employment
Agreement and, except as otherwise provided in this Agreement, all other
agreements and arrangements (whether written or oral) between AGCO and Richard
shall be terminated as of the Effective Date, and all of such terminated
agreements shall thereafter be null and void and of no further force or effect
after the Effective Date.
3. Severance. As severance compensation, AGCO shall continue
to pay Richard's annual base salary of Five Hundred Thousand Dollars ($500,000)
from the Effective Date through November 18, 2001, in accordance with AGCO's
normal payroll policies and procedures and subject to all required
withholdings.
4. Benefits.
(a) Incentive Compensation. AGCO shall pay to
Richard all amounts earned by Richard as incentive compensation under AGCO's
Incentive Compensation Plan with respect
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to the full 1997 year as and when in 1998 such amounts are paid by AGCO in the
ordinary course of its business, consistent with past practices, under its
Incentive Compensation Plan.
(b) Health Insurance. AGCO shall continue to
provide to Richard, at AGCO's expense, until November 18, 2001, the group
health insurance coverage provided to him immediately prior to the Effective
Date or such substitute group health insurance coverage as is provided from
time to time by AGCO to its senior management executives; provided, however,
that AGCO's obligations to provide and pay for such coverage shall cease if and
when Richard becomes employed elsewhere and first becomes eligible for
comparable group health insurance coverage at such other place of employment.
(c) Disability Insurance. Upon the written
request of Richard, at Richard's expense AGCO shall continue to provide to
Richard for any period ending on or prior to November 18, 2001, the disability
insurance coverage provided to him immediately prior to the Effective Date;
provided, however, that AGCO's obligations to provide such coverage shall cease
if and when Richard becomes employed elsewhere and first becomes eligible for
comparable disability insurance coverage at such other place of employment.
(d) Long Term Incentive Plans. Exhibit B attached
hereto accurately reflects all shares of AGCO common stock earned by Richard
pursuant to any long-term incentive plan and any director's stock plan
maintained by AGCO (the "Earned Shares"), and Richard shall retain all of such
Earned Shares. All of the Earned Shares which have not vested under the terms
of such long-term incentive and director's stock plans prior to the Effective
Date shall vest over time and in accordance with the terms of such plans as if
Richard had remained employed by AGCO during such vesting period; provided,
however, that any Earned Shares which are unvested shall be subject to
forfeiture either (i) in the event of a material breach by Richard of any of
his obligations under any of the Business Protection Covenants set forth in
paragraph 7 herein or (ii) a willful failure to provide the consulting services
as provided in paragraph 11 herein. In addition, as and when such Earned
Shares vest, and to satisfy a portion of Richard's Federal and state income tax
obligations arising therefrom, AGCO shall make cash bonus payments required
under such plans consistent with its current practices with other participants.
Richard shall have no further rights with respect to any shares awarded,
granted or allocated to, but not yet earned by, him as of the Effective Date
under any such long term incentive or director's stock plan.
(e) Split Dollar Life Insurance. The parties
acknowledge that AGCO has made certain premium payments required prior to the
date hereof under that certain Executive Life Insurance Program (Split
Dollar) between AGCO and Richard (the "Split Dollar Program"), pursuant to which
the life insurance policy scheduled on Exhibit F has been purchased.
Contemporaneously with this Agreement, AGCO and Richard shall terminate and
cancel such Split Dollar Program and the split dollar insurance arrangement
reflected thereby. AGCO shall have the right to receive and/or retain all
refunds and other payments resulting from the cancellation of the life
insurance policy scheduled on Exhibit F and any other issued life insurance
policies and from the termination and cancellation of the split dollar
insurance arrangement; and Richard shall have no further interest in, or
benefits under, such split dollar arrangement.
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(f) Deferred Compensation and 401(k) Contributions.
Richard shall be entitled to receive any deferred compensation accrued during
his employment with AGCO and the disposition of Richard's 401(k) account with
AGCO. As of the Effective Date, AGCO shall cease making any contributions to
Richard's 401(k) account.
(g) No Other Benefits. Except as specifically set
forth in this Agreement, all other benefits provided to Richard by AGCO
pursuant to the Employment Agreement or otherwise, including, without
limitation, all country club dues, automobile and aircraft privileges, shall
cease as of the Effective Date.
(b) The benefits afforded to Richard under
paragraph 3 and subparagraph 4(d) herein shall survive the death of Richard and
shall accrue to the benefit of Richard's estate.
5. Forgiveness of Loan. In connection with a special
relocation program provided by AGCO, Richard borrowed $500,000 (the "Employee
Loan") from AGCO, and the Employee Loan remains unpaid and outstanding as of
the date hereof. The Employee Loan is evidenced by a Promissory Note in the
principal amount of $500,000, dated November 22, 1996 (the "Note").
Notwithstanding anything else contained in the Note to the contrary, the
indebtedness evidenced by the Employee Loan shall be, as of the Effective Date,
forgiven and canceled.
6. Purchase of Residence by AGCO: Assumption of Automobile
Lease.
(a) Upon the consummation of the transactions
provided for herein, AGCO and Richard shall enter into that certain Real Estate
Purchase Contract (the "Sales Contract") in the form attached hereto as Exhibit
C, which provides that AGCO shall purchase from Richard his residence in
Memphis, Shelby County, Tennessee, which is more particularly described on an
exhibit to the Sales Contract (the "Property"), for a purchase price of
$716,250 (the "Purchase Price") less existing indebtedness to be assumed by
AGCO of approximately $445,657, for a net purchase price of approximately
$270,593. The closing under the Sales Contract shall be held at the offices of
AGCO on or before 30 days subsequent to the Effective Date. At the closing
under the Sales Contract, AGCO shall reimburse Richard for any amount in any
escrow account (maintained to fund annual property taxes and homeowners
insurance premiums) upon an irrevocable assignment to AGCO of any such escrow
account. AGCO further agrees to assume the real estate agent listing contract
with Judy Piovarcy, which contract has a remaining term of less than 6 months.
Richard represents to AGCO that the Purchase Price represents the average of
four recently obtained independent residential real estate appraisals of the
Property.
(b) Upon the consummation of the transactions
provided for herein, AGCO shall assign to Richard, who shall assume and agree
to pay and perform, that certain Motor Vehicle Lease Agreement covering the
1996 Jeep Grand Cherokee used by Richard, the vehicle information page of such
Motor Vehicle Lease Agreement being attached hereto as Exhibit D. Such
assignment shall provide that AGCO shall be released from the obligations under
such Motor Vehicle Lease Agreement.
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7. Business Protection Covenants.
(a) Definitions. For purposes of this Agreement,
the following terms shall have the following respective meanings:
(i) "Confidential Information" shall
mean all valuable, proprietary and confidential information in any
way relating to, belonging to or pertaining to AGCO that does not
constitute a "Trade Secret" (as hereinafter defined) and that is not
generally known by or available to AGCO's competitors.
(ii) "Trade Secrets" shall mean all
"trade secrets" of AGCO as defined under applicable law.
(iii) "Competing Business" shall mean
any business that, directly or indirectly, engages in the
development, manufacture, distribution or sale of agricultural
equipment or related products or parts.
(iv) "Restricted Territory" shall mean
North America, South America, Europe, Africa, Asia and Australia.
(b) Non-Disclosure. Richard hereby covenants and
agrees that he shall not, without the prior written consent of AGCO in each
instance, use, disclose, transfer, assign, disseminate, reproduce, copy or
otherwise communicate, directly or indirectly, in any way for himself or for
any other person or entity: (i) any Confidential Information for a period of
three (3) years after the Effective Date; or (ii) any Trade Secret at any time
during which such information shall constitute a trade secret under applicable
law. Richard hereby represents and warrants to AGCO that he has not, prior to
the execution of this Agreement, disclosed any Confidential Information or
Trade Secrets in a manner which would have constituted a breach of this Section
7(b) had it occurred after the execution hereof.
(c) Non-Competition. Richard hereby covenants and
agrees that he shall not, without the prior written consent of AGCO in each
instance, directly or indirectly, engage in (whether as an owner, investor,
manager, operator, partner, consultant, creditor, advisor, independent
contractor or otherwise) or assist any other person or entity in engaging in a
Competing Business in the Restricted Territory for a period of two (2) years
after the Effective Date; provided, however, that it shall not constitute a
violation of this Section 7(c) for Richard to own for investment purposes only
less than one percent (1%) of the issued and outstanding shares of common stock
of any entity engaged in a Competing Business if such common stock is publicly
traded on a national or international stock market or exchange.
(d) Non-Solicitation of Company Personnel.
Richard hereby covenants and agrees that he shall not, without the prior
written consent of AGCO in each instance, directly or indirectly, for a period
of two (2) years after the Effective Date: (i) hire any "key" (as defined in
the next sentence) employee of AGCO; or (ii) solicit or attempt to solicit any
"key" employee, consultant, contractor or other personnel of AGCO to terminate,
alter or lessen such party's affiliation or relationship with AGCO or to
violate the terms of any agreement or
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understanding between such party and AGCO. For purposes of the preceding
sentence, "key" employees, consultants, contractors and other personnel of AGCO
are those who have access to Confidential Information or Trade Secrets.
(e) Non-Solicitation of Dealers and Customers.
Richard hereby covenants and agrees that he shall not, without the prior
written consent of AGCO in each instance, directly or indirectly, for a period
of three (3) years after the Effective Date, solicit or attempt to solicit for
or on behalf of any person or entity engaged in a Competing Business any
dealer, customer or actively sought prospective dealer or customer of AGCO with
whom he had significant contact within twelve (12) months prior to the
Effective Date.
(f) Acknowledgement. Richard hereby acknowledges
and agrees that he has sufficient skills to find alternative commensurate work
in his field of expertise that would not involve a violation of this Section 7.
Additionally, Richard hereby acknowledges and agrees that the covenants set
forth in this Section 7 are reasonable as to time, scope, territory and
otherwise given AGCO's need to protect its legitimate business interests and
given the substantial benefits Richard is receiving hereunder. Richard further
acknowledges and agrees that monetary damages may not be an adequate remedy for
any breach of the provisions of this Section 7 and that AGCO may (in its sole
discretion) apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relieve in order to enforce or prevent
any violation (or threatened violation) of this Section 7. In the event any
covenant or agreement contained in this Section 7 shall be determined by a
court of competent jurisdiction to be unenforceable by reason of its extending
for too great a period of time or over too great a geographical area or by
reason of its being too extensive in any other respect, it is the intention of
the parties hereto that this Section 7 be interpreted to extend only over the
maximum period of time for which it may be enforceable and/or over the maximum
geographical area as to which it may be enforceable and/or to the maximum
extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
8. Return of AGCO Property. On or before the Effective Date,
Richard shall return to AGCO all AGCO property in his possession or under his
control, including, without limitation, all keys to AGCO premises, the
automobiles and computer equipment provided by AGCO for his use, all AGCO
corporate credit cards, and all Confidential Information, Trade Secrets, and
documents and files containing any non-public information regarding AGCO. In
the event any additional AGCO property comes into Richard's possession or under
his control after the Effective Date, he will promptly return such property to
AGCO. Richard also hereby agrees to reimburse AGCO for any personal expenses
charged on any AGCO corporate credit card. AGCO agrees to promptly reimburse
Richard, in accordance with its current policies, for any bona fide business
expenses incurred by Richard in the conduct of AGCO's business prior to the
Effective Date.
9. Mutual Release. Richard hereby releases and discharges
AGCO and all of AGCO's officers, directors, shareholders, employees and agents
from and against any and all claims, demands, liabilities, rights, remedies,
causes of action, damages and suits under any federal or state law (each a
"Claim"), whether known or unknown, which Richard has, has ever
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had or may ever have arising from or in any way related to Richard's employment
relationship with AGCO or the termination thereof, except for the specific
obligations of AGCO arising under this Agreement. AGCO hereby releases and
discharges Richard from and against any and all Claims, whether know or
unknown, which AGCO has, has ever had or may ever have arising from or in any
way related to Richard's employment relationship with AGCO or the termination
thereof, except for the specific obligations of Richard arising under this
Agreement.
10. Confidentiality. Richard hereby agrees not to disclose
any of the terms of this Agreement or any of the details of the negotiations
thereof to any person or entity, except for his attorney, his tax advisor,
financial advisor, and the members of his immediate family (provided each such
individual agrees in advance to keep such information confidential), and
Richard hereby represents and warrants to AGCO that he has not prior to the
execution of this Agreement disclosed any of such information in a manner which
would have constituted a breach of this Section 10 had it occurred after the
execution hereof.
11. Consulting.
(a) AGCO agrees to engage Richard, and Richard
agrees to accept such engagement in further consideration of the various
payments to be made to Richard herein, as a consultant to AGCO for a period
ending June 30, 2002 (the "Consulting Term"). As a consultant, Richard shall
report to AGCO's chief executive of fleer and shall perform consulting services
during the Consulting Term for AGCO as may be reasonably requested from time to
time by AGCO's chief executive officer, with such consulting services to be
principally related to providing advice with respect to the strategic
development of AGCO's international non-U.S. business and the implementation of
non-U.S. acquisitions. Richard shall make himself available to perform the
consulting services during the Consulting Term at times to be mutually agreed
upon by AGCO's chief executive officer and Richard (provided that such times
shall not unreasonably interfere with Richard's employment obligations to a
successor employer), and it is the understanding of the parties that such
consulting services shall not exceed five (5) hours per month.
(b) In furnishing such consulting services
hereunder, Richard shall not be an employee of AGCO but shall be an independent
contractor; and, as such, Richard is not authorized to assume, incur or create
any obligation or liability, expressed or implied, on behalf of, or in the name
of, AGCO or to bind AGCO in any manner.
12. Public Statements. Richard hereby agrees that he will not
make any disparaging public remarks about AGCO or any of its officers,
directors or employees. AGCO hereby agrees that it will not make any
disparaging public remarks about Richard. Further, attached hereto as Exhibit E
is a press release which has been issued by AGCO regarding Richard's
termination, which press release was submitted to Richard for his review and
approval.
13. Consequence of Breach. In the event of any breach by
Richard of any provision contained in Sections 7, 8, 10, 11 or 12 hereof, AGCO
shall have, and may avail itself of, all appropriate and available remedies at
law or in equity.
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14. Notices.
(a) All notices, consents, requests and other
communications hereunder shall be in writing and shall be sent by hand
delivery, by certified or registered mail (return-receipt requested), or by a
recognized national overnight courier service as set forth below:
If to AGCO: AGCO Corporation
4830 River Green Parkway
Duluth, Georgia 30136
Attention: Michael F. Swick, Esq.
Vice President and General Counsel
If to Richard: Jean-Paul Richard
1295 Heards Ferry Road
Atlanta, GA 30328
(b) Notices delivered pursuant to this Section 14
shall be deemed given: (i) at the time delivered, if personally delivered; (ii)
at the time received, if mailed; and (iii) one (1) business day after timely
delivery to the courier, if by overnight courier service.
(c) Either party hereto may change the address to
which notice is to be sent by written notice to the other party in accordance
with this Section 14.
15. Dispute Resolution. Except as otherwise provided in
Section 7(f) hereof, all disputes arising out of or in connection with the
interpretation, application or enforcement of this Agreement shall be settled
by final and binding arbitration. Such arbitration shall be conducted in
Atlanta, Georgia, pursuant to the commercial arbitration rules of the American
Arbitration Association in effect at the time the arbitration is commenced,
before a panel of three (3) arbitrators. The decision of the arbitrators, which
may include interest, shall be final and binding on the parties hereto and may
be entered and enforced in any court of competent jurisdiction by either party.
The arbitration shall be pursued and brought to conclusion as rapidly as
possible. The prevailing party in the arbitration proceeding shall be awarded
reasonable attorneys' fees, expert witness costs and expenses, and all other
costs and expenses incurred in connection with such proceeding, unless the
arbitrators shall for good cause determine otherwise.
Acknowledged, accepted and initialed by:
/s/ J-PR /s/ RJR
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J-PR AGCO
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16. Miscellaneous.
(a) Entire Agreement. This Agreement, including
all Exhibits hereto (all of which are incorporated herein by this reference),
contains the entire agreement and understanding concerning the subject matter
hereof between the parties hereto and specifically supersedes the Employment
Agreement.
(b) Waiver; Amendment. No waiver, termination or
discharge of this Agreement, or any of the terms or provisions hereof, shall be
binding upon either party hereto unless confirmed in writing. No waiver by
either party hereto of any term or provision of this Agreement or of any
default hereunder shall affect such party's rights thereafter to enforce such
term or provision or to exercise any right or remedy in the event of any other
default, whether or not similar. This Agreement may not be modified or amended
except by a writing executed by both parties hereto.
(c) Severability. If any provision of this
Agreement shall be held void, voidable, invalid or inoperative, no other
provision of this Agreement shall be affected as a result thereof, and,
accordingly, the remaining provisions of this Agreement shall remain in full
force and effect as though such void, voidable, invalid or inoperative
provision had not been contained herein.
(d) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Georgia.
(e) Assignment. Neither party hereto may assign
this Agreement, in whole or in part, without the prior written consent of the
other party hereto, and any attempted assignment not in accordance herewith
shall be null and void and of no force or effect.
(f) Binding Effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns.
(g) Interpretation. This Agreement was fully
negotiated by both parties hereto and shall not be construed more strongly
against either party hereto regardless of which party is responsible for its
preparation.
(h) Further Assurances. Upon the reasonable
request of the other party, each party hereto shall take any and all actions
necessary or appropriate to give effect to the terms and conditions set forth
in this Agreement.
(i) Counterparts; Fax Signatures. This Agreement
may be executed in one or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute the same Agreement.
Any signature page of any such counterpart, or any electronic facsimile
thereof, may be attached or appended to any other counterpart to complete a
fully executed counterpart of this Agreement, and any telecopy or other
facsimile transmission of any signature shall be deemed an original and shall
bind such party.
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IN WITNESS WHEREOF, the undersigned have executed, or caused their
respective duly authorized representatives to execute, this Agreement as of the
day and year first above written to be effective as of the Effective Date.
"AGCO"
AGCO CORPORATION
By: /s/ R.J. Ratliff
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Title: Chairman
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RICHARD HEREBY ACKNOWLEDGES THAT HE HAS CAREFULLY READ AND FULLY UNDERSTANDS
ALL THE PROVISIONS OF THIS AGREEMENT, THAT HE HAS BEEN GIVEN ADEQUATE TIME
WITHIN WHICH TO CONSIDER SIGNING THIS AGREEMENT, THAT HE HAS CONSULTED WITH AN
ATTORNEY REGARDING THIS AGREEMENT, AND THAT HE KNOWINGLY AND VOLUNTARILY HAS
ENTERED INTO THIS AGREEMENT IN EXCHANGE FOR VALUABLE CONSIDERATION.
"Richard"
/s/ Jean-Paul Richard
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Jean-Paul Richard
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EXHIBIT A
FORM OF LETTER OF RESIGNATION
August _____, 1997
AGCO Corporation
4830 River Green Parkway
Duluth, Georgia 30136
Gentlemen:
I hereby resign effective as of August 31, 1997, as an officer,
director and employee of, and from all other positions held in, AGCO
Corporation and its subsidiaries and affiliates.
Very truly yours,
Jean-Paul Richard
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EXHIBIT B
SHARES EARNED BY RICHARD UNDER LONG-TERM INCENTIVE PLANS
Thirty Thousand (30,000) shares under the Amended and Restated Long-Term
Incentive Plan, and
Two Thousand Five Hundred (2,500) shares under the [directors' plan]
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EXHIBIT C
FORM OF REAL ESTATE SALES CONTRACT
The parties agree to use the Memphis, Tennessee realtors board
standard form of residential sales contract.
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EXHIBIT D
ORIGINAL
MOTOR VEHICLE LEASE AGREEMENT
LEASE INFORMATION
MATERIAL TERMS
Parties: Automotive Rentals, Inc. ("ARI")
AGCO
Assignment: Assignment by ARI of right, title and interest to
Corestates Bank NA Agent
Date: December 16, 1996
Vehicle: 1996 Jeep/Eagle
ZJJL74 Grand Cherokee
Total Cost: $31,376
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EXHIBIT E
AGCO FOUNDER AND CHAIRMAN ROBERT RATLIFF
RESUMES ROLE OF PRESIDENT AND CEO
ATLANTA, August 29, 1997 AGCO Corporation (NYSE:AG) today announced that
Robert J. Ratliff, AGCO's founder and Chairman of the Board, will play an
expanded role in the management of the Company, resuming the role of President
and Chief Executive Officer. Mr. Ratliff will remain Chairman of the Board.
Mr. Ratliff founded AGCO in a management buyout in 1990. Since that time,
the company has grown from $200 million in sales to a global manufacturer and
distributor of agricultural equipment with 1996 revenue of $2.3 billion. Mr.
Ratliff has an employment contract through 2003.
J-P Richard, a member of AGCO's Board of Directors who assumed the role of
President and Chief Executive Officer in November 1996, has submitted his
resignation from AGCO Corporation and its board effective immediately. Mr.
Ratliff stated, "J-P Richard served with distinction during his tenure as a
director and executive and contributed to the achievement of profitable growth
and global expansion that has marked AGCO's history".
(AGCO Corporation Description paragraph)
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EXHIBIT F
JEAN PAUL RICHARD
INSURANCE SUMMARY
July, 1997
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FACE
CARRIER POLICY # DATE TYPE AMOUNT PREMIUM FREQUENCY
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Life Insurance
Mass Mutual 9 907 164 04/01/97 WL $6,920,000 $500,000.00 Annual
Liability Insurance
Paul Revere 1028497030 02/01/97 Disability 5,500/mo. 401.03 Monthly
MassMutual 9 576 218 04/16/97 Disability 9,500/mo. 18,002.10 Annual
Metropolitan Group Dis. 9,500/mo. Monthly
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CASH
CARRIER VALUE ASSIGNED OWNER BENEFICIARY
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Life Insurance
Mass Mutual $314,617.70 AGCO Trust Trust
Liability Insurance
Paul Revere Benefits payable to age 65 JPR JPR
after 180 day wait
MassMutual Benefits payable for 5 yrs. JPR JPR
after 180 day wait.
Metropolitan Benefits payable to age 65 AGCO JPR
after 180 day wait.