1
EXHIBIT 10.21
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS PLAN is adopted by agreement between the Company and the Owner:
DEFINITIONS:
A. "Company": Telect, Inc., a Washington corporation, of Liberty Lake,
Washington.
B. "Insureds": Xxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx.
C. "Insurer": Jefferson Pilot
D. "Owner": Xxxxx and Xxxxxx Xxxxxxxx Family Irrevocable Trust
E. "Policy": The policy of insurance on the lives of the Insureds
issued by the Insurer and listed on Exhibit "A" annexed
hereto together with any supplementary contracts issued by
the Insurer in conjunction therewith.
F. "Premium
Advance": The Company's Premium Advance shall be an amount equal to
the cumulative total of its share of premiums paid on the
Policy.
RECITALS:
A. The Owner is the owner of the Policy, and the Insured Xxxxx X. Xxxxxxxx
is a valuable employee of the Company. The Company wishes to continue
this employment relationship and, as an inducement thereto, is willing
to assist the Owner in the payment of premiums on the Policy as an
additional form of compensation to such Insured as its employee.
B. In exchange for such premium assistance, the Owner is willing to return
to the Company its Premium Advance as provided herein.
C. This Plan is intended to qualify as a life insurance employee benefit
plan as described in Revenue Ruling 64-328.
THEREFORE, for value received, it is agreed as follows:
1. PREMIUM PAYMENTS
(a) Each annual premium on the Policy shall be paid as follows:
(1) The Owner -
(A) shall pay a portion of each premium equal to the
current term rate for the Insureds' ages
multiplied by the excess of the current death
benefit over the Company's current Policy
Interest. The "current term rate" shall mean the
lesser of the Insurer's annual term insurance
rate or the rates specified in Revenue Rulings
64-328 and 66-110; and
(B) may elect to pay part or all of any additional
premium by policy loan or other borrowing, and
shall deliver notice of such election to the
Company on or before the premium due date.
(2) The Company shall pay all premium amounts not paid by
the Owner.
(b) The Owner's premium share (other than that paid with policy
loans) and the Company's premium share shall be remitted to the
Insurer before expiration of the grace period.
(c) Dividends on the Policy shall be applied as elected by the
Owner.
1
2
(d) The Policy may, at the Owner's discretion, provide for the
waiver of premium on the Insureds' disability. If it does so
provide, the cost thereof shall be borne by the Owner, the prior
provisions of this Section 1 to the contrary notwithstanding.
2. RIGHTS OF PARTIES
(a) The Owner shall be the sole and exclusive owner of the Policy.
This includes all the rights of "Owner" under the terms of the
Policy including, but not limited to, the right to designate
beneficiaries, select settlement and dividend options, borrow on
the security of the Policy and to surrender the Policy. All such
rights may be exercised by the Owner without the Company's
consent.
(b) In exchange for the Company's payment of its premium
contribution under Section 1, the Owner agrees to return to the
Company the amount of its Premium Advance on the earlier of:
(1) Termination of this Plan as provided in Section 4; or
(2) The surviving Insured's death.
Provided, however, that nothing herein shall give the Company
any interest whatsoever in any of the assets of the Owner,
including but not limited to, the Policy.
3. THE OWNER -- The Owner shall have the right to assign any part or all of
the Owner's retained interest in the Policy and this Plan to any person,
entity or trust by execution of a written assignment delivered to the
Insurer.
4. TERMINATION OF PLAN -- This Plan shall terminate on the first to occur
of the following:
(a) The date of death of the first of the Insureds to die.
(b) Surrender of the Policy by the Owner, who has the sole and
exclusive right of surrender.
(c) Delivery by the Owner of written notice of termination to the
Company.
(d) Failure of the Owner to make a premium contribution as required
by Section 1.
5. THE INSURER -- The Insurer shall be bound only by the provisions of and
endorsements on the Policy, and any payments made or actions taken by it
in accordance therewith shall fully discharge it from all claims, suits
and demands of all persons whatsoever. It shall in no way be bound by or
be deemed to have notice of the provisions of this Plan.
6. AMENDMENT OF PLAN-- The Owner and the Company can mutually agree to
amend this Plan and such amendment shall be in writing and signed by the
Owner and the Company.
7. SPECIAL PROVISION -- The following provisions are part of this Plan and
are intended to meet the requirements of the Employee Retirement Income
Security Act of 1974:
2
3
(a) The named fiduciary of this Plan is the Secretary of the
Company.
(b) The funding policy under this Plan is that all premiums on the
Policy be remitted to the Insurer when due.
(c) Direct payment by the Insurer is the basis of payment of
benefits under this Plan, with those benefits in turn being
based on the payment of premiums as provided in this Plan.
(d) For claims procedure purposes, the "Claims Manager" of this Plan
is the Secretary of the Company.
(1) If for any reasons a claim for benefits under this Plan
is denied by the Company, the Claims Manager shall
deliver to the claimant a written explanation setting
forth the specific reasons for the denial, pertinent
references to the Plan section on which the denial is
based, such other data as may be pertinent and
information on the procedures to be followed by the
claimant in obtaining a review of his or her claim,
written in a manner calculated to be understood by the
claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented orally or in writing to the Claims
Manager.
(B) The Claims Manager's explanation shall be in
writing delivered to the claimant within 90 days
of the date the claim is filed.
(2) The claimant shall have 60 days following his or her
receipt of the denial of the claim to file with the
Claims Manager a written request for review of the
denial. For such review, the claimant or his or her
representative may submit pertinent documents and
written issues and comments.
(3) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days of
receipt of the claimant's request for review of his or
her claim. The decision on review shall be in writing
and shall include specific reasons for the decision
written in a manner calculated to be understood by the
claimant, as well as specific references to the
pertinent Plan provisions on which the decision is
based. If a copy of the decision is not so furnished to
the claimant within such 60 days, the claim shall be
deemed denied on review.
IN WITNESS WHEREOF the parties have signed this Plan this 28th day of
December, 1995.
COMPANY
TELECT, INC.
By:
-------------------------------
President
3
4
OWNER
XXXXX AND XXXXXX XXXXXXXX FAMILY
IRREVOCABLE TRUST
By:
-------------------------------
Trustee
4
5
EXHIBIT "A"
LIFE INSURANCE
POLICY NUMBER FACE AMOUNT
1. Jefferson Pilot Survivorship Universal Life, Policy #JP4383703 $1,500,000
5
