EXHIBIT 10.7
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT made and entered into as of the 12th day of July, 1995,
by and among: (a) Decatur Corporation, an Iowa corporation (hereinafter
referred to as the "Corporation"); and (b) Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxx
Xxxxxx, and Xxxxx Xxxxxx Xxxxxxxxx (hereinafter collectively referred to as
the "Owner").
RECITALS
A. Xxxxx X. Xxxxxx (the "Employee"), is employed as President of the
Corporation.
B. The Employee wishes to provide life insurance protection for his
family, under a policy of life insurance (hereinafter referred to as the
"Policy"), insuring his life (the "Insured"), which Policy is described in
Exhibit A attached hereto and by this reference made a part hereof and which
was or will be issued by Phoenix Home Life Insurance Co. (hereinafter
referred to as the "Insurer").
C. The Corporation is willing to pay a portion of the premiums due on
the Policy as an additional employment benefit for the Employee, which the
Owner agrees to repay to the Corporation, on the terms and conditions
hereinafter set forth.
D. Owner is the owner of the Policy and, as such, possesses all
incidents of ownership in and to the Policy.
E. The Owner will assign the death benefit under the policy to the
Corporation as security for the repayment of the amounts which the
Corporation will contribute toward the payment of the premiums due on the
policy.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
promises contained herein, the parties hereto agree as follows:
1. PURCHASE OF POLICY. The Owner has purchased the Policy from the
Insurer in the total face amount of One Million Dollars ($1,000,000.00). The
parties hereto have taken all necessary action to cause the Insurer to issue
the Policy, and shall take any further action which may be necessary to cause
the Policy to conform to the provisions of this Agreement
2. OWNERSHIP OF POLICY. The Owner shall be the sole, exclusive 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 otherwise provided in
this Agreement. This shall include, but not be 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 Corporation's consent.
3. POLICY DIVIDENDS. The dividends declared by the Insurer on the
Policy will be applied to purchase additional paid-up insurance on the life
of the Employee, or surrendered to pay policy premiums.
4. PAYMENT OF PREMIUMS.
a. The annual economic benefit to the Employee shall be an amount
measured by the lower of the Internal Revenue Service Table P.S. 58 rates,
set forth in Revenue Ruling 55-747 (or the corresponding applicable
provision of any future Revenue Ruling), or the Insurer's current published
premium rate for annually renewable term insurance for standard risks
(hereinafter referred to as the "Employee's portion of the premium.")
b. On or before the due date of each Policy premium, or within the
grace period provided therein, the Corporation shall pay the full amount of
the premium to the Insurer, and shall, upon request, promptly furnish the
Employee evidence of timely payment of such premium.
c. The Corporation shall annually furnish the Employee a statement
of the amount of income reportable by the Employee for federal and state
income tax purposes, if any, as a result of the insurance protection
provided the Owner as the Policy beneficiary.
5. REPAYMENT TO THE CORPORATION.
a. The Owner must repay to the Corporation an amount equal to the
total amount of the Corporation's portion of the premiums paid by the
Corporation hereunder, less any amounts previously repaid to the
Corporation by the Owner. This repayment must be made in accordance with
Paragraphs 6 and 8 of this Agreement.
b. The Owner will collaterally assign the death benefit under the
insurance policy to the Corporation as security for repayment of the
Corporation's portion of the premiums paid by the Corporation hereunder,
less any amounts previously repaid to the Corporation by the Owner.
6. DEATH CLAIMS.
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a. When the Employee dies, the Corporation shall receive from the
death benefits provided under the Policy, the total amount paid by the
Corporation hereunder pursuant to Paragraph 4(a) of this Agreement as the
Corporation's portion of the premiums, less any amounts previously repaid
to the Corporation by the Owner. The receipt of this amount by the
Corporation will constitute satisfaction of the obligation to the
Corporation pursuant to Paragraph 5 of this Agreement.
b. When the Employee dies, the Owner shall receive the amount of the
death benefits provided under the Policy in excess of the amount payable to
the Corporation pursuant to subparagraph (a) of this Paragraph. This amount
will be paid under the settlement option elected by the Owner.
7. TERMINATION OF THE AGREEMENT DURING THE EMPLOYEE'S LIFETIME. This
Agreement shall terminate upon the occurrence of any of the following events:
(a) total cessation of the Corporation's business;
(b) upon written notice by any party to the other parties hereto;
(c) bankruptcy, receivership or dissolution of the Corporation;
(d) upon the election of any party, if either the Corporation or the
Owner fails for any reason to make the contribution of or payment of, any
premium due on the Policy, provided that such election must be made within
ninety days after the failure to make the required contribution occurs;
(e) full repayment by the Owner of the contributions made by the
Corporation pursuant to Paragraph 4 of this Agreement, at which time the
Corporation will be required to release the collateral assignment of the
policy death benefit made by the Owner pursuant to Paragraph 5 of this
Agreement.
8. DISPOSITION OF POLICY ON TERMINATION OF AGREEMENT. If this
Agreement is terminated under subparagraphs 7(a), 7(b), 7(c) or 7(d) of this
Agreement, the Owner will have thirty days in which to repay the Corporation
the amount which it has contributed toward payment of the premiums due on the
Policy (less any amounts previously repaid to the Corporation by the Owner).
Upon receipt of this amount, the Corporation shall release the collateral
assignment of the policy death benefit. If the amount to which the
Corporation is entitled hereby has not been repaid within this thirty day
period, the Corporation may enforce its rights against the Owner in any way
it deems fit.
9. 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
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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.
10. NAMED FIDUCIARY, DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND
ADMINISTRATION.
a. The Corporation 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.
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 Corporation, setting forth his or her claim. The request must be
addressed to the Secretary of the Corporation at its then principal place
of business.
(2) CLAIM DECISION. Upon receipt of a claim, the Corporation
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
Corporation 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 Corporation shall
adopt a written opinion, using language calculated to be understood by the
Claimant, setting forth: (a) the specific reason or reasons for such
denial; (b) the specific reference to pertinent provisions of this
Agreement on which such denial is based; (c) 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; (d) appropriate information as to the steps to be taken if
the Claimant wishes to submit the claim for review; and (e) 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 Treasurer of the Corporation
review the determination of the Corporation. Such request must be
addressed to the Treasurer of the Corporation, 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 Corporation. If the Claimant
does not request a review of the Corporation's determination within such
sixty (60) day period, he shall be barred and estopped
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from challenging the Corporation's determination.
(4) REVIEW OF DECISION. Within sixty (60) days after the
Treasurer's receipt of a request for review, a review will be made of the
Corporation's determination. After considering all materials presented by
the Claimant, the Treasurer 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 Secretary 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.
11. 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.
12. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Corporation and its successors and assigns, and to the
Owner and their respective successors and assigns.
13. 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 Corporation. The date of such mailing shall
be deemed the date of notice, consent or demand.
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 Iowa.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
triplicate, as of the 12th day of July, 1995.
Decatur Corporation,
the "Corporation"
By: /s/ Xxxxxx X. Xxxxxx
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Its: Vice President
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ATTEST:
/s/ Xxxxxxxx X. Xxxxx, Xx.
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Secretary
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx Xxxxxxxxx
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Xxxxx Xxxxxx Xxxxxxxxx
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EXHIBIT A
The following life insurance policy is subject to the attached
Spit-Dollar Agreement:
Insurer: Phoenix Home Life Insurance Co.
Insured: Xxxxx X. Xxxxxx
Policy Number: 2679389
Face Amount: $1,000,000.00
Dividend Option: dividends used to purchase paid-up additions
Date of Issue: June 8, 1995
