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Sample Business Contracts

Split Dollar Agreement - Enron Corp., Jeffrey K. Skilling and Jeffrey Keith Skilling Family 1996 Trust

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                     SPLIT DOLLAR AGREEMENT

     THIS SPLIT DOLLAR AGREEMENT (this "Agreement") is made
and entered into effective as of May 23, 1997, by and among
ENRON CORP., a Delaware corporation, with principal offices
and place of business in Houston, Texas (hereinafter
referred to as the "Company"), JEFFREY K. SKILLING, an
individual residing in Houston, Texas (hereinafter referred
to as the "Employee"),  and MARK DAVID SKILLING, an
individual residing in the State of California, in his
capacity as the Trustee of the Jeffrey Keith Skilling Family
1996 Trust under irrevocable trust agreement dated
December 31, 1996 (hereinafter referred to as the "Owner"),

                      WITNESSETH THAT:

     WHEREAS, the Employee is currently employed by the
Company; and

     WHEREAS, the Employee wishes to provide life insurance
protection for his family under a policy of life insurance
(hereinafter referred to as the "Policy") insuring the life
of the Employee, which Policy is described in Exhibit A
attached hereto and by this reference made a part hereof,
and which is being issued by Massachusetts Mutual Life
Insurance Company (hereinafter referred to as the
"Insurer"); and

     WHEREAS, the Company is willing to pay a portion of the
premiums due on the Policy as an additional employment
benefit for the Employee, on the terms and conditions
hereinafter set forth; and

     WHEREAS, the Owner will be the owner of the Policy and,
as such, will possess all incidents of ownership in and to
the Policy; and

     WHEREAS, the Company wishes to have the Policy
collaterally assigned to it by the Owner, in order to secure
the repayment of the amounts which it will pay toward the
premiums on the Policy;

     NOW, THEREFORE, in consideration of the premises and of
the mutual promises contained herein, the parties hereto
agree as follows:

     1.    Acquisition of Policy.  The Owner will
contemporaneously purchase the Policy from the Insurer in
the total face amount of $8,000,000.  The parties hereto
agree that they shall take all reasonable action necessary
to cause the Insurer to issue the Policy, and shall take any
further reasonable action which may be necessary to cause
the Policy to conform to the provisions of this Agreement.
The parties hereto agree that the Policy shall be subject to
the terms and conditions of this Agreement and of the
collateral assignment filed with the Insurer relating to the
Policy.

     2.   Ownership of Policy.  The Owner shall be the sole
and absolute owner of the Policy, and may exercise all
ownership rights granted to the owner thereof by the terms
of the Policy, except as may otherwise be provided herein.

     3.   Payment of Premiums; Provision of Information.

          a.   On or before the due date of each annual
Policy premium, or within the grace period provided therein,
the Owner shall pay to the Insurer an amount equal to the
annual cost of current life insurance protection on the life
of the Employee, measured by the Insurer's current published
minimum premium rate for standard risks.  Upon request, the
Owner shall promptly furnish the Company evidence of timely
payment of such premium.  If the Owner fails to make such
timely payment, the Company, in its sole discretion, may
elect to make the Owner's portion of the premium payment,
which payment shall be recovered by the Company as provided
herein.

          b.   On or before the due date of each annual
Policy premium, or within the grace period provided therein,
the Company shall pay to the Insurer the difference between
(1) $115,250 and (2) the amount of such annual Policy
premium paid by the Owner pursuant to Section 3(a) above.
Upon request, the Company shall promptly furnish the Owner
evidence of timely payment of such premium.  Notwithstanding
any provision herein to the contrary, the Company shall have
no obligation (i) to make more than four annual premium
payments in the amount specified in the preceding provisions
of this paragraph or (ii) to make any premium payments on or
after the date the Employee's employment with the Company
terminates for any reason whatsoever.

          c.   The Company shall annually furnish to the
Employee a statement of the amount of income, if any,
reportable by the Employee for federal and state income tax
purposes as a result of the payment of Policy premiums by
the Company.  The Owner and the Employee shall promptly
furnish the Company with (1) copies of any information or
notices provided by the Insurer from time to time with
respect to the Policy and (2) any other material or
information relating to the Policy and reasonably requested
by the Company from time to time.

     4.   Collateral Assignment.  To secure the repayment to
the Company of the amount of the premiums on the Policy paid
by it hereunder, the Owner has, contemporaneously herewith,
assigned the Policy to the Company as collateral under a
separate assignment instrument.  The collateral assignment
of the Policy to the Company shall not be terminated,
altered or amended by the Owner, without the express written
consent of the Company.  The parties hereto agree to take
all action necessary to cause such collateral assignment to
conform to the provisions of this Agreement and to be
accepted by the Insurer.  Without limiting the scope of the
preceding provisions of this section, the parties hereto
agree that the Company shall have an interest in the cash
surrender value and the death benefits under the Policy to
secure the amounts due to the Company hereunder, which
interest shall in no event be less than the aggregate
premium payments made with respect to the Policy by the
Company pursuant to section 3 above.

     5.   Limitations on Owner's Rights in Policy.  The
Owner shall not sell, assign, transfer, borrow against or
withdraw from the cash surrender value of the Policy,
surrender, or cancel the Policy without, in any such case,
the express written consent of the Company.  Further, the
Owner shall not change the beneficiary designation provision
of the Policy, change the elected death benefit option
provisions thereof, decrease or increase the face amount of
insurance, fail to make premium payments, take any other
action, or fail to take any action if, as a result of any
such action or inaction, (a) the aggregate death benefits
payable under the Policy at any given time would be less
than the portion of the death benefits payable to the
Company pursuant to the first sentence of section 6(b) below
if the Employee's death was to occur at such time or (b) the
cash surrender value of the Policy would be reduced
(provided, however, that this clause shall not prevent the
Owner from taking any action, or failing to take any action,
if, as a result thereof, the cash surrender value of the
Policy is reduced to an amount that is at least equal to the
aggregate amount of premium payments made by the Company
hereunder).

     6.   Collection of Death Proceeds.

          a.   Upon the death of the Employee prior to the
termination of this Agreement during the Employee's
lifetime, the Company and the Owner shall cooperate with the
beneficiary or beneficiaries designated by the Owner to take
whatever action is necessary to collect the death benefit
provided under the Policy.  When such benefit has been
collected and paid as provided herein, this Agreement shall
thereupon terminate.

          b.   Upon the death of the Employee prior to the
termination of this Agreement during the Employee's
lifetime, the Company shall have the unqualified right to
receive a portion of such death benefit in a single lump sum
cash payment in an amount equal to the aggregate amount of
premium payments made by the Company hereunder.  The balance
of the death benefit provided under the Policy, if any,
shall be paid directly to the beneficiary or beneficiaries
designated by the Owner, in the manner and in the amount or
amounts provided in the beneficiary designation provision of
the Policy.  In no event shall the amount payable to the
Company hereunder exceed the insurance benefits payable
under the Policy at the death of the Employee. No amount
shall be paid from such insurance benefits to the
beneficiary or beneficiaries designated by the Owner until
the full amount due the Company hereunder has been paid.
The parties hereto agree that, upon the request of the
Company, the beneficiary designation provision of the Policy
shall conform to the provisions hereof.

          c.   Notwithstanding any provision hereof to the
contrary, in the event that, for any reason whatsoever, no
death benefit is payable under the Policy upon the death of
the Employee prior to the termination of this Agreement
during the Employee's lifetime and in lieu thereof the
Insurer refunds all or any part of the premiums paid for the
Policy, the Company and the Owner's designated beneficiary
or beneficiaries shall have the unqualified right to share
such premiums based on the respective cumulative
contributions by the Company and the Owner thereto.

     7.   Termination of the Agreement During the Employee's
Lifetime.

          a.   This Agreement may be terminated by the Owner
at any time during the Employee's lifetime upon written
notice to the Company and payment to the Company by the
Owner at the time of such notice of a single lump sum cash
payment in an amount equal to the aggregate premium payments
made by the Company pursuant to section 3 above on or before
the date of such termination.  Upon receipt of such amount,
the Company shall release the collateral assignment of the
Policy by the execution and delivery of an appropriate
instrument of release.

          b.   This Agreement shall automatically terminate,
during the Employee's lifetime, without notice, upon the
occurrence of any of the following events: (1) total
cessation of the Company's business; (2) bankruptcy,
receivership or dissolution of the Company;  (3) termination
of the Employee's employment with the Company for any reason
whatsoever; (4) failure of the Owner to timely pay to the
Insurer the Owner's portion of the premium, if any, due
hereunder, unless the Company elects to make such payment on
behalf of the Owner as provided herein; or (5) mutual
written consent of the parties.  If this Agreement
terminates for a reason described in the preceding sentence,
then for sixty (60) days after the date of the termination
of this Agreement, the Owner shall have the option of
obtaining the release of the collateral assignment of the
Policy to the Company.  To obtain such release, the Owner
shall repay to the Company the total amount of the premium
payments made by the Company hereunder, less any
indebtedness secured by the Policy which was incurred by the
Company and remains outstanding as of the date of such
termination, including any interest due on such
indebtedness.  Upon receipt of such amount, the Company
shall release the collateral assignment of the Policy by the
execution and delivery of an appropriate instrument of
release.  If the Owner fails to exercise such option within
such sixty (60) day period, then, at the request of the
Company, the Owner shall execute any document or documents
required by the Insurer to transfer the interest of the
Owner in the Policy to the Company.  Alternatively, the
Company may enforce its right to be repaid the amount due it
hereunder from the cash surrender value of the Policy under
the collateral assignment of the Policy; provided that in
the event the cash surrender value of the Policy exceeds the
amount due the Company, such excess shall be paid to the
Owner.  Thereafter, neither the Owner nor any person
claiming under the Owner shall have any further interest in
and to the Policy, either under the terms thereof or under
this Agreement.

     8.   Insurer Not a Party.  The Insurer shall be fully
discharged from its obligations under the Policy by payment
of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy, subject to the terms and
conditions of the Policy.  In no event shall the Insurer be
considered a party to this Agreement, or any modification or
amendment hereof.  No provision of this Agreement, nor of
any modification or amendment hereof, shall in any way be
construed as enlarging, changing, varying, or in any other
way affecting the obligations of the Insurer as expressly
provided in the Policy, except insofar as the provisions
hereof are made a part of the Policy by the collateral
assignment executed by the Owner and filed with the Insurer
in connection herewith.

     9.   Named Fiduciary. Determination of Benefits, Claims
Procedure and Administration.

          a.   Named Fiduciary.  The Company is hereby
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 the objectives of
this Agreement.

          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 (hereinafter referred to as a
"Claimant") may file a written request for such benefit with
the Company, setting forth his or her claim.  The request
must be addressed to the Company at its then principal place
of business.

               (2)  Claim Decision.  Upon receipt of a
claim, the Company 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 Company
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 Company shall adopt a written opinion, using
language calculated to be understood by the Claimant,
setting forth: (i) the specific reason or reasons for such
denial; (ii) the specific reference to pertinent provisions
of this Agreement on which such denial is based; (iii) 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; (iv) appropriate information as to the steps to
be taken if the Claimant wishes to submit the claim for
review; and (v) the time limits for requesting a review
under subsection (3) and for review under subsection (4)
hereof.

               (3)  Request for Review.  Within sixty (60)
days after the receipt by the Claimant of the written
opinion described above, the Claimant may request in writing
that the Company review its determination.  Such request
must be addressed to the Company, 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 Company.  If the Claimant
does not request a review of the Company's determination
within such sixty (60) day period, he or she shall be barred
and estopped from challenging the Company's determination.

               (4)  Review of Decision.  Within sixty (60)
days after the Company's receipt of a request for review, it
will review the determination. After considering all
materials presented by the Claimant, the Company 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 Company 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.

     10.  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.

     11.  Binding Effect.  This Agreement shall be binding
upon and inure to the benefit of the Company and its
successors and assigns, and the Employee, the Owner, and
their respective  successors,  assigns, heirs, executors,
administrators, and beneficiaries.

     12.  Notice.   Any notice, consent or demand required
or permitted to be given under the provisions of this
Agreement shall be in writing, and shall be signed by the
party giving or making the same.  If such notice, consent or
demand is mailed to a party hereto, 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 Company.  The date of such mailing shall be deemed the
date of notice, consent or demand.

     13.  Taxes.  The Company makes no guarantees and
assumes no obligations or responsibilities with respect to
the Employee's or the Owner's federal, state, or local
income, estate, inheritance, and gift tax obligations, if
any, under this Agreement, the Policy, or the collateral
assignment of the Policy to the Company.

     14.  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 Texas.

     IN WITNESS WHEREOF, the parties hereto have executed
this Agreement in triplicate on this the 23rd day of May,
1997.

                          ENRON CORP.

                          By:  /s/  KENNETH L. LAY
                          Name:   Kenneth L. Lay
                          Title:  Chairman and Chief
                                  Executive Officer
                                                   "COMPANY"

                          /s/  JEFFREY K. SKILLING
                               Jeffrey K. Skilling
                                                  "EMPLOYEE"

                          /s/  MARK DAVID SKILLING
                               Mark David Skilling, Trustee
                               of the Jeffrey Keith Skilling
                               Family 1996 Trust
                                                     "OWNER"

                           EXHIBIT A


     The following life insurance policy is subject to the
attached Split Dollar Agreement:


Insurer:            Massachusetts Mutual Life Insurance
Company

Insured:            Jeffrey K. Skilling

Policy Number:      11 502 764

Face Amount:        $8,000,000

Effective Date of Policy:     May 23, 1997


       ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL


     A.   FOR VALUE RECEIVED, the undersigned (hereinafter
the "Owner") hereby assigns, transfers and sets over to
Enron Corp., with principal offices and place of business in
Houston, Texas, its successors and assigns (hereinafter the
"Assignee"), Policy No.11 502 764 issued by Massachusetts
Mutual Life Insurance Company (hereinafter the "Insurer"),
and any supplementary contracts issued in connection
therewith (said policy and contracts hereinafter the
"Policy"), insuring the life of Jeffrey K. Skilling, and all
claims, options, privileges, rights, title and interest
therein and thereunder (except as otherwise provided
herein), 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 Owner, by this Assignment,
and the Assignee, by acceptance of the assignment of the
Policy to it hereunder, agree to the terms and conditions
contained herein.

     B.   This Assignment is made and the Policy is to be
held as collateral security for any and all liabilities and
obligations of the Owner to the Assignee, either now
existing or that may hereafter arise, under and pursuant to
that certain Split Dollar Agreement by and among the Owner,
the Assignee, and Jeffrey K. Skilling, dated and effective
as of May 23, 1997 (hereinafter the "Split Dollar
Agreement").  The liabilities and obligations described in
the preceding sentence are hereinafter referred to as the
"Liabilities."

     C.   It is expressly agreed that, without detracting
from the generality of the foregoing, the following specific
rights are included in this Assignment and pass to the
Assignee by virtue hereof:

          1.   The sole right to collect from the Insurer
     the net proceeds of the Policy when it becomes a claim
     by death or maturity;

          2.   The sole right to surrender the Policy and
     receive the surrender value thereof at any time
     provided by the terms of the Policy and at such other
     times as the Insurer may allow; and

          3.   The sole right to obtain one or more loans or
     advances on the Policy, either from the Insurer or, at
     any time, from other persons, and to pledge or assign
     the Policy as security for such loans or advances.

     D.   It is expressly agreed that the following specific
rights, so long as the Policy has not been surrendered and
to the extent permitted under the Split Dollar Agreement,
are reserved by the Owner and excluded from this Assignment
and do not pass by virtue hereof:

          1.   The right to designate and change the
     beneficiary; and

          2.   The right to elect any optional mode of
     settlement permitted by the Policy or allowed by the
     Insurer.

However, the reservation of these rights by the Owner shall
in no way impair the right of the Assignee to surrender the
Policy nor impair any other right of the Assignee hereunder.
Further,  any exercise of these rights shall be made subject
to this Assignment and to the rights of the Assignee
hereunder.

     E.   Notwithstanding the foregoing, the Assignee
covenants and agrees with the Owner as follows:

          1.   Any balance of sums received hereunder from
     the Insurer remaining after payment of the then
     existing Liabilities shall be paid by the Assignee to
     the persons entitled thereto under the terms of the
     Policy, had this Assignment not been executed;

          2.   The Assignee will not exercise the right to
     surrender the Policy, nor the right to obtain policy
     loans from the Insurer, unless and until there has been
     default in any of the Liabilities or the Split Dollar
     Agreement has been terminated, pursuant to its terms;
     in any event, the Assignee will not exercise any such
     right until twenty (20) days after the Assignee shall
     have mailed notice of intention to exercise such right,
     by first class mail, to the Owner at the address last
     supplied in writing to the Assignee specifically
     referring to this Assignment; and

          3.   The Assignee will, upon request, forward the
     Policy to the Insurer without unreasonable delay, for
     endorsement of any designation or change of beneficiary
     or any election of an optional mode of settlement that
     has been elected by the Owner.

     F.   The Insurer is hereby authorized to recognize the
Assignee's claims to rights hereunder without investigating
the reason for any action taken by the Assignee, the
validity or the amount of the Liabilities, the existence of
any default therein, termination of the Split Dollar
Agreement, the giving of any notice hereunder, or the
application to be made by the Assignee of any amounts to be
paid to the Assignee.  The sole signature of the Assignee
shall be sufficient for the exercise of any rights under the
Policy assigned hereby and the sole receipt of the Assignee
for any sums received shall be a full discharge and release
therefor to the Insurer. Payment for all or any part of the
sums due under the Policy and assigned herein shall be drawn
to the exclusive order of or as directed by the Assignee if,
when, and in such amounts as may be requested by the
Assignee.

     G.   The Assignee shall be under no obligation to pay
any premium on the Policy nor the principal of or interest
on any loans or advances on the Policy, whether or not
obtained by the Assignee, or any other charges on the
Policy.

     H.   The exercise of any right, option, privilege or
power given herein to the Assignee shall be at the option of
the Assignee, and (except as provided herein) the Assignee
may exercise any such right, option, privilege or power
without notice to, or assent by, or affecting the liability
of, or releasing any interest hereby assigned by the Owner.

     I.   If applicable, 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 the proceeds of the Policy hereby
assigned or any amount received on account of the Policy by
the exercise of any right permitted under this Assignment to
the Liabilities in such order as the Assignee shall
determine, without resorting to or regard to other security.

     J.   As applied to the duties and responsibilities of
the Insurer, in the event of any conflict between the
provisions of this Assignment and the provisions of the
Split Dollar Agreement with respect to the Policy or the
Assignee's rights of collateral security therein, the
provisions of this Assignment shall prevail.  As applied
between the Owner and the Assignee, in the event of any such
conflict, the provisions of the Split Dollar Agreement shall
prevail.

     K.   The Owner declares that no proceedings in
bankruptcy are pending against the Owner and that the
Owner's property is not subject to any assignment for the
benefit of creditors of the Owner.

     SIGNED this 25th day of June, 1997, effective as of
     May 23, 1997.



                          /s/  MARK DAVID SKILLING
                          Mark David Skilling, Trustee
                          of the Jeffrey Keith Skilling
                          Family 1996 Trust
                                                "OWNER"

This Assignment is hereby accepted and agreed to by the
Assignee.

                          ENRON CORP.


                          By:  /s/  KENNETH L. LAY
                          Name:  Kenneth L. Lay
                          Title: Chairman and Chief
                                 Executive Officer

                                                "ASSIGNEE"


STATE OF CALIFORNIA
                        
SAN FRANCISCO COUNTY


     On the 25th day of June, 1997, before me personally
came MARK DAVID SKILLING, trustee of the Jeffrey Keith
Skilling Family 1996 Trust, to me known to be the individual
who executed the Assignment on the preceding pages hereof
and acknowledged to me that he executed the same.


                                   /s/  SUSAN C. LEE
                                   Susan C. Lee
                                   Notary Public in and for
                                   THE STATE OF CALIFORNIA
My Commission Expires:

February 24, 1999