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Sample Business Contracts

Split Dollar Life Insurance Agreement - Enron Corp. and the Kenneth L. Lay (KLL) & Linda Phillips Lay (LPL) Family Partnership Ltd.

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             SPLIT DOLLAR LIFE INSURANCE AGREEMENT


          THIS AGREEMENT is made as of the 22nd day of
April, 1994, between Enron Corp. ("Enron"), a Delaware
corporation having its headquarters at 1400 Smith Street,
Houston, Texas 77002, and the KLL & LPL Family Partnership,
Ltd., a Texas limited partnership.

     WHEREAS, Kenneth L. Lay (the "Participant"), Chairman
and Chief Executive Officer of Enron, has contributed
substantially to the success of Enron, and is employed by
Enron pursuant to an employment agreement first entered into
between Enron and the Participant as of September 1, 1989
(the "Employment Agreement").

     WHEREAS, contemporaneously with the execution of this
Agreement, the Participant and Enron entered into and
executed the Sixth Amendment To Employment Agreement
pursuant which (as amended, the "Employment Agreement") the
Participant and Enron agreed to enter into this Agreement to
establish a program for split dollar life insurance.

     WHEREAS, the owner of life insurance policy number
92474662 (the "Insurance Contract") issued by TransAmerica
Occidental (the "Insurance Company") on the joint lives of
the Participant and his wife, Linda Phillips Lay (the
"Participant's Spouse") shall be the KLL & LPL Family
Partnership, Ltd., a Texas limited partnership (the
"Owner"); and

     WHEREAS, Enron is willing to assist in the payment of
premiums under the Insurance Contract as provided in this
Agreement; and

     WHEREAS, the Owner contemporaneous herewith is
assigning an interest in the Insurance Contract to Enron as
collateral security for such premium payments (the
"Collateral Agreement");

     NOW, THEREFORE, in consideration of the mutual
covenants and agreements described herein, Enron and the
Owner hereby agree as follows:

     1.   Payment of Premiums.

          (a)  By Enron:  Enron shall pay to the Insurance
               Company an amount equal to Two Hundred Eighty
               Thousand Two Hundred Sixty-Five Dollars
               ($280,265), which shall hereinafter sometimes
               be referred to as the "Agreed Premium
               Amount," as its share of the initial premium
               for the Insurance Contract and shall continue
               to pay to the Insurance Company the same
               Agreed Premium Amount as its share of the
               annual premium for the Insurance Contract
               during the eight (8) successive years
               following the initial premium payment
               (meaning a total of nine (9) payments of the
               Agreed Premium Amount shall be paid by Enron
               to the Insurance Company), unless this
               Agreement terminates earlier as provided
               below, in which event Enron shall only be
               obligated to continue to pay to the Insurance
               Company the Agreed Premium Amount on an
               annual basis until the date on which this
               Agreement terminates.  Provided that this
               Agreement shall not have terminated earlier,
               Enron shall have no further obligation to pay
               any amounts to the Insurance Company after
               Enron has made the nine (9) payments to the
               Insurance Company of the Agreed Premium
               Amount in the manner described herein.  A
               portion of each such payment of the Agreed
               Premium Amount by Enron to the Insurance
               Company may be reported as imputed income
               includable as compensation in the
               Participant's gross income in accordance with
               federal, state, or local income tax laws.

          (b)  By the Owner.  The Owner may, but shall not
               be required, to pay the portion of the annual
               premium (if any) on the Insurance Contract
               that is in excess of the Agreed Premium
               Amount to be paid by Enron.

     2.   Insurance Contract Beneficiary Designation.  The
          right to designate and change the beneficiary of
          the Insurance Contract and to elect an optional
          mode of settlement is reserved to the Owner.  Such
          Owner shall have the right to designate and change
          the beneficiaries and contingent beneficiaries and
          to elect an optional mode of settlement subject to
          the interest of Enron as Assignee under the
          Collateral Agreement, and Enron will make the
          Insurance Contract available to the Owner, if
          required for endorsement or a change of
          beneficiary.

     3.   Payment of Insurance Contract Proceeds in Event of
          Death Prior to Termination of this Agreement by
          Any Other Event.  If the Participant and the
          Participant's Spouse die while the Insurance
          Contract and this Agreement are in force, then the
          proceeds of the Insurance Contract will be payable
          as follows:

          (a)  Enron shall be entitled to the amount of the
               death benefit proceeds equal to the sum of
               the Agreed Premium Amounts paid by Enron
               pursuant to this Agreement.

          (b)  The beneficiary designated by the Owner shall
               be entitled to the amount of the death
               benefit proceeds, if any, in excess of the
               amount payable to Enron.

          Enron shall not be responsible for payments by the
          Insurance Company to the Owner of the Insurance
          Contract or for the benefits payable under the
          Insurance Contract to the beneficiaries thereof.
          Neither Participant nor the Owner (including any
          person or entity claiming through the Participant
          or the Owner) shall have any claim against Enron
          for any benefits to be provided under the
          Insurance Contract.

     4.   Payment of Insurance Contract Proceeds In Event of
          Death After Termination of this Agreement.  If the
          Participant and the Participant's Spouse die while
          the Insurance Contract is in force and after this
          Agreement has previously terminated (other than
          due to deaths of the Participant and the
          Participant's Spouse), then the proceeds of the
          Insurance Contract will be payable as follows:

          (a)  Enron shall not be entitled to receive any
               amount of the death benefit proceeds of the
               Insurance Contract.

          (b)  The beneficiary designated by the Owner shall
               be entitled to all of the death benefit
               proceeds of the Insurance Contract.

          Enron shall not be responsible for payments by the
          Insurance Company to the Owner of the Insurance
          Contract or for benefits payable under the
          Insurance Contract to the beneficiaries thereof.
          Neither the Participant nor the Owner (including
          any person or entity claiming through the
          Participant or the Owner) shall have any claim
          against Enron for any benefits to be provided
          under the Insurance Contract.

     5.   Company's Exercise of Rights as Assignee.  While
          this Agreement is in force, Enron shall have no
          incidents of ownership with regard to the
          Insurance Contract.  The power to surrender,
          terminate or cancel the Insurance Contract and the
          right to borrow or withdraw against the Insurance
          Contract, subject to the provisions of Paragraph 6
          below, shall remain in Owner.  The Insurance
          Contract shall be held by Enron until the
          termination of this Agreement.

     6.   Limitation on Rights of Owner.  The Owner agrees
          not to withdraw, surrender, borrow against, or
          pledge as security for a loan any portion of the
          Insurance Contract cash value while this Agreement
          is in effect.  Should this Agreement be terminated
          for any reason, prior to the expiration of nine
          (9) years and thirty (30) days following the issue
          date of the Insurance Contract, or should the
          Owner surrender the Insurance Contract to the
          Insurance Company, prior to the expiration of nine
          (9) years and thirty (30) days following the issue
          date of the Insurance Contract, the Owner agrees
          that the Insurance Company shall reimburse Enron
          for all Agreed Premium Amounts paid to Enron prior
          to any portion of the cash surrender value being
          paid to the Owner.  The Owner agrees that, in the
          situation described in the preceding sentence,
          should the Owner receive from the Insurance
          Company any portion of the cash surrender value
          representing the Agreed Premium Amounts paid by
          Enron, then the Owner shall be constructive
          trustee for Enron and shall pay such sums to Enron
          upon receipt.

     7.   Termination of Agreement.  This Agreement shall
          terminate upon the occurrence of one of the
          following:

          (a)  the date of payment to Enron by the Owner (or
               some other source) of the aggregate of the
               Agreed Premium Amounts paid by Enron to the
               Insurance Company pursuant to this Agreement;

          (b)  the date of surrender of the Insurance
               Contract;

          (c)  the date of death of the second to die of the
               Participant and the Participant's Spouse;

          (d)  thirty (30) days following the ninth (9th)
               anniversary of the issue date of the
               Insurance Contract (meaning the month and day
               in the year 2003 on which the Insurance
               Contract was issued) or in January after
               Participant retires from Enron, whichever is
               later.

          In the event of termination of this Agreement
          pursuant to (a), (b) or (c) above, the aggregate
          of the Agreed Premium Amounts paid by Enron
          pursuant to this Agreement shall become due and
          payable to Enron.  Upon payment of such amount to
          Enron from the Insurance Contract, the Owner, or
          whatever other source, Enron shall execute a
          release of the Collateral Agreement and deliver
          such release and the Insurance Contract to the
          Owner.  In the event of termination of this
          Agreement pursuant to (d) above, Enron shall no
          longer be entitled to receive from the Insurance
          Contract, the Owner, or any other source any of
          the Agreed Premium Amounts paid by Enron pursuant
          to this Agreement, and Enron shall execute a
          release of the Collateral Agreement and shall
          deliver such release and the Insurance Contract to
          the Owner.

     8.   Amendment and Assignment of Agreement.

          (a)  This Agreement shall not be modified or
               amended except in writing signed by Enron and
               the Owner.

          (b)  This Agreement is binding upon Enron, the
               Participant (and the Participant's
               successors, executors, administrators, and
               transferees), the Owner (and the Owner's
               successors and transferees) and any Insurance
               Contract beneficiary.

     9.   Taxes.  Enron makes no guarantees and assumes no
          obligation or responsibility with respect to the
          Participant's or the Owner's federal, state, or
          local income, estate, inheritance and gift tax
          obligations, if any, under this Agreement, or the
          Collateral Agreement, or the Insurance Contract.

     10.  State Law.  This Agreement shall be subject to and
          construed in accordance with the laws of the State
          of Texas.

     IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.

ENRON CORP.



By:   JOHN H. DUNCAN                 
Name: John H. Duncan
Title:  Chairman, Executive Committee of
        Board of Directors



By:   CHARLES A. LeMAISTRE           
Name: Charles A. LeMaistre
Title:  Chairman, Compensation Committee
        of Board of Directors
                                     


KLL & LPL Family Partnership, Ltd.


By:   KENNETH L. LAY                 
Name: Kenneth L. Lay, General Partner



Agreed to and ratified by:


KENNETH L. LAY                       
Kenneth L. Lay


<PAGE>

                     COLLATERAL AGREEMENT


     THIS AGREEMENT is made and entered into by the
undersigned as owner (the "Owner") of Insurance Contract
Number 92474662 ("Insurance Contract") issued by
TransAmerica Occidental (the "Insurance Company") on the
joint lives of Kenneth L. Lay (the "Participant") and his
wife Linda Phillips Lay (the "Participant's Spouse"), which
Insurance Contract shall herein be assigned to Enron Corp.
("Enron"), as collateral security for those liabilities
which may arise under the terms of the Split Dollar
Agreement between the Owner and Enron dated as of April 22,
1994 (the "Split Dollar Agreement"), subject to the terms
and conditions in the Insurance Contract.

     WHEREAS, in consideration of Enron's agreement to make
certain premium payments (the "Agreed Premium Amounts")
under the Insurance Contract, the Owner agrees to grant
Enron a security interest in the Insurance Contract as
collateral security for the repayment of the aggregate
Agreed Premium Amounts paid under the Split Dollar Agreement
by Enron for the Insurance Contract, until the Split Dollar
Agreement terminates in accordance with its provisions.

     NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to Enron the following specific
rights in the Insurance Contract subject to the following
terms and conditions:

     1.   This Agreement is made, and the Insurance Contract
is to be held as collateral security, for all liabilities of
the Owner to Enron, either now existing or that may
hereafter arise, pursuant to the terms of the Split Dollar
Agreement.

     2.   Enron's interest in the Insurance Contract, while
the Split Dollar Agreement is in force, shall be strictly
limited to the right to collect from the Insurance Company
when the Insurance Contract becomes a claim by death or
surrender an amount equal to the aggregate of the Agreed
Premium Amounts paid by Enron pursuant to the Split Dollar
Agreement.

     3.   Subject to the terms and conditions of the Split
Dollar Agreement, the Owner shall retain all incidents of
ownership in the Insurance Contract, including, but not
limited to, the sole and exclusive right to:

          (a)  designate and change the beneficiary of the
               Insurance Contract; and

          (b)  exercise settlement options.

     4.   If, at any time, Enron has possession of the
original of the Insurance Contract, Enron shall make the
Insurance Contract available to the Owner, at any time and
from time to time, to enable the Owner to exercise any right
reserved by the Owner.

     5.   Enron covenants and agrees with the Owner that any
amounts, which may be paid to Enron by the Insurance Company
pursuant to the terms of the Insurance Contract and this
Agreement and which are in excess of the then existing
liabilities of the Owner under the Split Dollar Agreement,
shall be paid by Enron to the persons who would have been
entitled thereto under the Insurance Contract had this
Agreement not been executed.

     6.   Upon the full payment of all liabilities, which
are then due and owing to Enron under the Split Dollar
Agreement, Enron shall execute an appropriate instrument of
release of this Agreement.  However, notwithstanding
anything to the contrary contained above, if the Split
Dollar Agreement shall terminate in accordance with its
provisions on the 30 days following the ninth (9th)
anniversary of the issue date of the Insurance Contract, or
the January following the retirement of Owner from Enron,
whichever is later, then in such situation, Enron shall have
no further right to receive any payment under the Split
Dollar Agreement, and Enron shall execute an appropriate
instrument of release of this Agreement.

     7.   The Insurance Company shall be fully protected and
discharged from further obligation by paying in reliance
upon the terms of the Insurance Contract and/or the terms of
this Agreement.

     IN WITNESS WHEREOF, the Owner and Enron have executed
this Agreement effective this 22nd day of April, 1994.


KLL & LPL Family Partnership, Ltd.


By:  KENNETH L. LAY
     Kenneth L. Lay, General Partner


ENRON CORP.


By:       JOHN H. DUNCAN
Name:     John H. Duncan
Title:    Chairman, Executive Committee of Board of
          Directors



By:       CHARLES A. LEMAISTRE
Name:     Charles A. LeMaistre
Title:    Chairman, Compensation Committee of Board of
          Directors