EXHIBIT 10.14
SPLIT DOLLAR AGREEMENT
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This Agreement is made as of the 6th day of March, 2000 ("Effective Date"),
at Cleveland, Ohio, between TECHNICAL CONSUMER PRODUCTS, INC. ("Corporation"),
an Ohio corporation, and XXXXXXX XXXX ("Owner").
BACKGROUND
1. Owner is the owner and beneficiary of Insurance Policy No. VP6095975-0
(the "Policy") issued by PACIFIC LIFE INSURANCE COMPANY presently with
a death benefit in the amount of $1,622,234 on the life of XXXXXXX
XXXX who is an employee of the Corporation ("Employee").
2. Employee has performed duties for the Corporation in an efficient and
capable manner.
3. Corporation desires to retain the services of the Employee and desires
to assist the Employee in the payment of premiums for life insurance
issued on his life.
4. Corporation has determined that this assistance can be best provided
under a "collateral-assignment split dollar" arrangement.
5. Owner desires to enter into a split dollar arrangement with the
Corporation and the Corporation and the Owner agrees to make the
Policy subject to this Split Dollar Agreement.
6. Owner shall assign the Policy to the Corporation as collateral for
amounts to be advanced by the Corporation under this Agreement by an
instrument of assignment, dated March 6, 2000 (the "Assignment").
7. It is understood and agreed that this Split Dollar Agreement is to be
effective as of the date on which the Policy is assigned to the
Corporation.
Accordingly, the parties agree as follows:
TERMS OF AGREEMENT
ARTICLE 1. DEFINITIONS. For the purpose of this Agreement, the following
terms have the meanings set forth below:
1. "Cash Surrender Value of the Policy" means the Cash Value of the
Policy; plus the cash value of any paid up additions.
2. "Cash Value of the Policy" means the cash value as illustrated in the
table of value shown in the Policy.
3. "Corporation's Interest in the Policy" is defined in ARTICLE 5.
4. "Current Loan Value of the Policy" means the Loan Value of the Policy
reduced by any outstanding Policy Loan Balance.
5. "Loan Value of the Policy" means the amount with which loan interest
will equal the Cash Value of the Policy and of any paid-up additions
on the next loan interest due date or on the next premium due date
whichever is the smaller amount.
6. "Policy Loan Amount" means policy loans outstanding plus interest
accrued to date.
ARTICLE 2. ALLOCATION OF PREMIUMS. The Corporation will pay the amount of
the premium due on the Policy. The economic benefit that is taxable to the
Employee will be computed by the Corporation in accordance with I.R.S. Revenue
Rulings 64-328, 1964-2 C.B. 11, and 66-110, 1966-1 C.B. 12, as in effect on the
Effective Date. Each year, the Corporation shall prepare a written statement of
the economic benefit and deliver the statement to Employee on or before April
1st. All such payments of premium by Corporation shall be treated as an
advancement to Employee, which advancement shall be repaid to Corporation only
under the terms of this Agreement, without interest.
ARTICLE 3. OTHER RIDERS AND SUPPLEMENTAL AGREEMENTS. The Owner may add to
the Policy one or more riders or supplemental agreements that are available from
PACIFIC LIFE INSURANCE COMPANY ("Insurer"). The Corporation will pay any
additional premium attributable to such rider or supplemental agreement.
Notwithstanding the provisions of ARTICLE 6, the Owner will pay any additional
death benefits provided by such rider or supplemental agreement.
ARTICLE 4. RIGHTS IN THE POLICY. The Owner may exercise all rights, options
and privileges of ownership in the Policy except those granted to the
Corporation in the Assignment. The Corporation will have those rights in the
Policy given to it in the Assignment except as expressly modified in this
Agreement. The Corporation may not assign its rights in the Policy to anyone
other than the Owner. The Corporation may not take any action in dealing with
Insurer that would impair any right or interest of the Owner in the Policy. THE
CORPORATION HAS LIMITED RIGHTS TO OBTAIN POLICY LOANS FROM THE INSURER, LIMITED
TO THE EXTENT OF CORPORATION'S INTEREST IN THE POLICY AND SUBJECT TO, IN ALL
EVENTS, THE POLICY'S MAXIMUM LOAN VALUE. The Corporation's Interest in the
Policy will be the liability of the Owner for which the Policy is held as
collateral security under the Assignment. "Corporation's Interest in the Policy"
means, at any time at which the value of such interest is to be determined under
this Agreement, the lesser of (a) the Cash Surrender Value of the Policy at such
time, or (b) the total of premiums that are paid
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on the Policy by the Corporation. If the Corporation has paid additional
premiums attributable to a rider providing for the waiver of premiums in the
event of the Employee's disability, then "premiums" as used in the preceding
sentence does not include any premiums waived pursuant to the terms of such
rider while this Agreement is in force.
ARTICLE 5. CORPORATION'S RIGHTS TO THE PROCEEDS AT DEATH. Upon the death of
the Employee, while this Agreement is in force, the Corporation, without delay,
shall take whatever action is necessary and required of it to collect the
proceeds of the Policy from Insurer. Upon collection of the Policy proceeds, the
Corporation will promptly pay the excess proceeds over the Corporation's
Interest in the Policy to the Owner.
ARTICLE 6. DISABILITY. If, at any time, (i) the Policy contains a rider
providing for the waiver of premiums in the event of disability, and (ii) there
has occurred an event of Total Disability (as defined in the rider, which begins
while the rider is in force and which continues for at least six months), then
the Owner will pay to the Corporation the Corporation's Interest in the Policy.
Upon the release by the Corporation of all of its interest in the Policy, the
Owner will thereafter own the Policy free from the Assignment and from this
Agreement but subject to any Policy loans and interest thereon.
ARTICLE 7. TERMINATION OF AGREEMENT. This Agreement shall terminate upon
the occurrence of any one of the following events:
A. Termination by either party upon submission of a 30 day written notice
to the other party; or
B. Termination of the Employee's employment, with or without cause; or
C. The Owner's failure to pay its proportionate share of premiums, if
any, as mutually agreed upon by Owner and Corporation.
For the 30 days immediately following the date on which termination occurs,
the Owner may obtain a release of the Assignment by paying to the Corporation an
amount equal to Corporation's Interest in the Policy. Upon such payment the
Corporation will release its interest in the Policy to the Owner. Upon release
by the Corporation of all of its interest in the Policy, the Owner will own the
Policy free from the Assignment but subject to any Policy loans and interest
thereon. If Employee's employment is terminated, then Corporation may require,
by written demand delivered within 30 days after termination of employment, that
Owner pay to Corporation an amount equal to Corporation's Interest in the
Policy, which payment Owner shall make within 30 days after receipt of such
demand.
If the Owner fails to make the payment provided for in the first paragraph
of this Article, then the Owner shall transfer all of its right, title and
interest in the Policy to the Corporation, by executing such documents as are
necessary to transfer such right, title and interest to the
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Corporation as of the date of termination. The Corporation may then deal with
the Policy in any way that it deems appropriate.
ARTICLE 8. STATUS OF AGREEMENT VS. COLLATERAL ASSIGNMENT. As between the
Owner and the Corporation, this Agreement will take precedence over any
provisions of the Assignment. The Corporation may not exercise any right
possessed by it under the Assignment except in conformity with this Agreement.
ARTICLE 9. SATISFACTION OF CLAIM. The Owner's rights and interests, and
rights and interests of any person taking under or through the Owner, will be
completely satisfied upon compliance by the Corporation with the provisions of
this Agreement.
ARTICLE 10. POSSESSION OF POLICY. The Corporation may keep possession of
the Policy. The Corporation, from time to time, may make the Policy available to
the Owner or Insurer for the purpose of endorsing or filing any change of
beneficiary on the Policy but the Policy will be promptly returned to the
Corporation.
ARTICLE 11. OWNER'S ASSIGNMENT RIGHTS. Owner, at any time, may assign to
any individual, trust or other organization all right, title and interest in the
subject policy and all rights, options, privileges and duties created under this
Agreement.
ARTICLE 12. INSURANCE COMPANY NOT A PARTY TO AGREEMENT.
The Insurer is not responsible for the legal or tax validity or effect of
this Agreement. Further, the Insurer may not be deemed a party to this Agreement
but will respect the rights of the parties under this Agreement upon receiving
an executed copy of this Agreement. Insurer is not be responsible to account for
the actual premium contributions of the parties but shall rely solely upon the
written declarations of the parties in any distributions or settlement of the
policy's lifetime or death values. Payment or other performance of its
contractual obligations in accordance with the policy provisions shall fully
discharge the Insurer from any and all liability.
ARTICLE 13. NAMED FIDUCIARY AND PLAN ADMINISTRATOR. XXXXX XXX is the "Named
Fiduciary" until resignation or removal by the Board of Directors. As Named
Fiduciary, XXXXX XXX is responsible for the management, control and
administration of the Split Dollar plan as established in this Agreement. XXXXX
XXX may allocate to others certain aspects of the management and operation
responsibilities of the plan including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
ARTICLE 14. FUNDING. The funding policy for the Split Dollar Agreement is
to maintain the subject policy in force by paying, when due, all premiums
required.
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ARTICLE 15. CLAIMS PROCEDURE FOR LIFE INSURANCE AND SPLIT DOLLAR PLAN.
Claim forms or claim information as to the subject policy can be obtained by
contacting CAPITAL ADVISORS, INC. When the Named Fiduciary has a claim that may
be covered under the insurance policy provisions, he or she should contact the
office or the person named above who will either complete a claim form and
forward it to an authorized representative of the Insurer or advise the Named
Fiduciary what further requirements are necessary. The Insurer will evaluate the
claim and make a decision as to payment within 90 days of the date the claim is
received by the Insurer. If the claim is payable, a benefit check will be issued
to the Named Fiduciary and forwarded through the office or person named above.
If a claim is not eligible under the policy, then the Insurer will notify the
Named Fiduciary of the denial. Such notification will be made in writing within
90 days of the date the claim is received and will be transmitted through the
office or person named above. The notification will include the specific reasons
for the denial as well as specific reference to the policy provisions upon which
the denial is based. The Named Fiduciary will also be informed as to the steps
which may be taken to have the claim denial reviewed.
A decision as to the validity of a claim will ordinarily be made within 10
working days of the date the claim is received by the Insurer. Occasionally,
however, certain questions may prevent the Insurer from rendering a decision on
the validity of the claim within the specific 90-day period. If this occurs,
then the Named Fiduciary will be notified of the reasons for the delay as well
as the anticipated length of the delay, in writing and through the office or
person named above. If further information or other material is required, then
the Named Fiduciary will be so informed.
If the Named Fiduciary is dissatisfied with the denial of the claim or the
amount paid, then he or she has 60 days from the date he or she receives notice
of a claim denial or receipt of the amount paid to file his or her objections to
the action taken by the Insurer. If the Named Fiduciary wished to contest a
claim denial, then he or she should notify the person or office named above who
will assist in making inquiry to the Insurer. All objections to the Insurer's
actions should be in writing and submitted to the person or office named above
for transmittal to the Insurer.
The Insurer will review the claim denial or amount paid and render a
decision on such objections. The Named Fiduciary will be informed in writing of
the decision of the Insurer within 60 days of the date the claim review request
is received by the Insurer. This decision will be final.
Once a decision has been rendered as to the distribution of proceeds under
the claim procedure described above as to the policy, claims for any benefits
due under the Plan or the surrender of the policy may be made in writing by the
Owner or the Owner's designated beneficiary and the Employee (or his assignee)
or their designated beneficiary, as the case may be, to the Named Fiduciary.
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If a claim for benefits is wholly or partly denied or disputed, then the
Named Fiduciary, within a reasonable period of time after receipt of the claim,
shall notify Owner or Owner's designated beneficiary and Employee (or his
assignee) or their designated beneficiary, as the case may be, of such total or
partial denial or dispute, listing:
A. The specific reason or reasons for the denial or dispute;
B. Specific reference to pertinent plan provisions upon which the denial
or dispute is based;
C. A description of any additional information necessary for the claimant
to perfect the claim and explanation of why such material or
information is necessary, and;
D. An explanation of the plan's review procedure.
Within 60 days of denial or notice of claim under the plan, a claimant may
request that the claim be reviewed by the Named Fiduciary in a full and fair
hearing. A final decision shall be rendered by the Named Fiduciary within 60
days after receipt of request for review.
ARTICLE 16. SITUS OF AGREEMENT. The situs of this Agreement is Cleveland,
Ohio. All matters pertaining to the validity, construction, and effect of this
Agreement are governed by the laws of Ohio, without giving effect to any
principles or rules of conflict of laws that applies the laws of another
jurisdiction.
ARTICLE 17. PARTIAL INVALIDITY. If any provision of this Agreement is
invalid, is held illegal, or is unenforceable, then notwithstanding any
invalidity, illegality, or unenforceability of the provision, the remainder of
this Agreement will subsist and will be in full force and effect as though the
invalid, illegal or unenforceable provision had been omitted from this
Agreement.
ARTICLE 18. ENTIRE AGREEMENT. This Agreement, together with the Assignment,
embodies the entire agreement of the parties as to the subject matter contained
in this Agreement. There are no promises, terms, conditions, or obligations
between the parties regarding the subject matter of this Agreement other than
those contained in this Agreement. This Agreement supersedes all previous
communications, representations, or agreements, either verbal or written,
between the parties. Without limiting the generality of foregoing, no letter,
telegram, or other communication passing between the parties, concerning any
matter during the negotiation of this Agreement, is a part of this Agreement,
nor does it have the effect of modifying or adding to this Agreement.
ARTICLE 19. ADDITIONAL DOCUMENTS. Each party shall sign and deliver to all
of the other parties after the Closing any other documents or instruments that
are reasonably necessary to effectuate the provisions and purpose of this
Agreement.
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ARTICLE 20. NO AMENDMENT. No amendment, modification, change or discharge
of any term or provision of this Agreement will be valid or binding unless it is
in writing and signed by all of the parties. No waiver of any of the terms of
this Agreement will be valid unless signed by the parties against whom the
waiver is asserted.
ARTICLE 21. RULES OF CONSTRUCTION. All terms and words used in this
Agreement, regardless of the number and gender of their use, shall be construed
to include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the context or sense of this Agreement
requires, as if the words were fully and properly written in the required number
and gender. Section headings are for reference purposes only and do not affect
the meaning of this Agreement, in any manner. Each party has fully considered,
negotiated, and participated in the drafting of this Agreement. Accordingly, if
any ambiguity or question of intent or interpretation arises after the Effective
Date, then no presumption or burden of proof shall arise either favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement. The word "including" means "including, but not limited to" - and is
intended to provide examples without intending to limit the generality of any
preceding phrase. The word "or" is not exclusive. All references to dollar
amounts means United States Dollars unless otherwise clearly expressed in this
Agreement. In computing any time period provided for in this Agreement, the
first day of the time period is not counted but the last day of the time period
is counted. If the last day of a time period is a Saturday, Sunday or legal
holiday, then the time period ends on the next day that is not a Saturday,
Sunday or legal holiday. Any action required to be taken on a particular day
must be taken before 5:00 p.m., Eastern Time on that day. Accordingly, if an
action were required to be taken within 10 days after the Closing Date, and if
the Closing Date were June 10, then the first day of the time period to be
counted is June 11 and the action must be taken before 5:00 p.m., Eastern
Daylight Time on June 20. However, if June 20 is a Saturday, then the action
must be taken before 5:00 p.m., Eastern Daylight Time on June 22.
ARTICLE 22. NO THIRD PARTY BENEFICIARIES. The parties do not intend to
confer any legal or contractual rights or benefits upon any persons or Entities
who are not parties to this Agreement, either directly or incidentally. All
legal rights, duties, and obligations set forth in this Agreement bind and
benefit only the parties, their assigns and successors.
ARTICLE 23. BINDING. This Agreement binds and inures to the benefit of the
parties, and their respective assigns, personal representatives, heirs (where
applicable) and successors.
[end of terms - signatures on the next page]
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The parties have signed this Agreement on the day and year first above
written.
Owner
By: /s/Xxxxxxx X. Xxxx
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Corporation
By: /s/ Xxxxx Xxx
----------------------------
Its: President
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COLLATERAL ASSIGNMENT OF LIFE INSURANCE
A. For value received, the undersigned ("Assignor") assigns, transfers
and sets over to TECHNICAL CONSUMER PRODUCTS, INC., its successors and
assigns ("Assignee") Policy Number VP6095975-0 issued by PACIFIC LIFE
INSURANCE COMPANY ("Insurer") and any supplementary contracts issued
in connection with the policy (said policy and contracts collectively
called the "Policy"), upon the life of XXXXXXX XXXX and 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.
B. The following specific rights are included in this assignment and pass
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; and
2. The sole right to collect and receive all distributions or shares
of surplus, dividend deposits or additions to the Policy now or
hereafter made or appointed thereto; provided, that unless and
until the Assignor notifies the Insurer in writing to the
contrary, the distributions or shares of surplus, dividend
deposits and additions shall continue on the plan in force at the
time of this assignment.
The Assignee does not have the right to surrender the Policy for
cancellation nor does Assignee have the right to assign its rights to
anyone other than the Assignor.
C. The following specific rights, so long as the Policy has not been
surrendered, are reserved and excluded from this assignment and do not
pass by virtue of this Assignment;
1. The right to collect from the Insurer any disability benefit
payable in cash that does not reduce the amount of insurance;
2. The right to designate and change the beneficiary;
3. The right to elect any optional mode of settlement permitted by
the Policy or allowed by the Insurer;
4. The right to obtain one or more advances on the Policy and any
designation or change of beneficiary or election of a mode of
settlement shall be made subject to this assignment and to the
rights of the Assignee hereunder.
D. This Assignment is delivered as the result of a certain Split-Dollar
Agreement, entered into effective March 6, 2000, and signed by the
parties to this Assignment. This assignment is made and the Policy is
held by Assignee as collateral security for the
repayment of the premium advancements made by Assignee in connection
with the Policy and the Split-Dollar Agreement (all of which
advancements secured or to become secured are herein called
"Advancements").
E. The Assignee covenants and agrees with the undersigned as follows:
1. That any balance of sums received hereunder from the Insurer
remaining after payment of the then existing Advancements shall
be paid by the Assignee to the persons entitled thereto under the
terms of the Policy had this assignment not been executed;
2 That the Assignee will upon request forward without unreasonable
delay to the Insurer the Policy for endorsement of any
designation or change of beneficiary or any election of an
optional mode of settlement;
3. The Assignor is granted all rights in the Policy not expressly
given to the Assignee pursuant to the Assignment.
F. The Insurer is authorized to recognize the Assignee's claims to rights
hereunder without investigating the reason for any action taken by the
Assignee, or the validity or the amount of the Advancements or the
existence of any default therein, or otherwise, or the application to
be made by the Assignee shall be sufficient for the exercise of any
rights under the Policy assigned by this Assignment, and the sole
receipt of the Assignee for any sums received shall be a full
discharge and release therefor to the Insurer. Checks for all or any
part of the sums payable under the Policy and assigned herein shall be
drawn to the exclusive order of the Assignee if, when, and such
amounts as may be requested by the Assignee.
G. The Assignee is not under any obligation to pay the principal of or
the interest on any loans or advances on the Policy, or any other
charges on the Policy, but any such amounts so paid by the Assignee
from its own funds shall become a part of the Advancements, shall be
due immediately, and shall draw interest at a rate fixed by the
Assignee from time to time not exceeding 15% per annum.
H. The exercise of any right, option, privilege or power given herein to
the Assignee shall be at the option of the Assignee, but 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 undersigned, or any of them.
I. The Assignee may take or release other security, may release any party
primarily or secondarily liable for any of the Advancements, may grant
extensions, renewals or indulgences with respect to the Advancements,
or may apply to the Advancements in such order as the Assignee shall
determine, the proceeds of the Policy or any amount
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received on account of the Policy by the exercise of any right
permitted under this assignment, without resorting or regard to other
security.
J. Each of the undersigned declares that no proceedings in the bankruptcy
are pending against him and that his property is not subject to any
assignment for the benefit of creditors.
K. All amounts payable to the Assignee shall be paid in a single sum, and
any portion of the proceeds payable under any policy settlement option
or as retirement income shall be reduced by the amount so paid.
Signed and sealed this 6th day of March, 2000.
XXXXXXX XXXX
/s/ [illegible] By: /s/Xxxxxxx X. Xxxx
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Witness
State of Ohio )
)SS.
County of Cuyahoga )
On the 27th day of April, 2000, before me personally came the above XXXXXXX
XXXX described in and who executed this assignment and acknowledged to me that
he executed the same.
/s/Xxxxxxxx X. Xxxxxx
-------------------------------
Notary Public
XXXXXXXX X. XXXXXX
[SEAL] NOTARY PUBLIC, STATE OF OHIO
My Commission expires June 17, 2001
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