SPLIT-DOLLAR AGREEMENT
SPLIT-DOLLAR AGREEMENT (this "Agreement") made
and entered into as of this 20th day of December, 1996 by
and between American Biltrite Inc., a Delaware
corporation with principal offices and a principal place
of business in the Commonwealth of Massachusetts (the
"Corporation"), and the Marcus Family 1990 Insurance
Trust (the "Trust").
Xxxxxxx X. Xxxxxx, an individual residing in
the Commonwealth of Massachusetts (the "Employee"), is
employed by the Corporation as an Executive Vice
President.
The Employee desires that his family be
provided life insurance protection under a policy of
survivorship life insurance insuring the Employee's life
and the life of Xxxxxxx X. Xxxxxx, the Employee's wife
(each, an "Insured" and together, the "Insureds"). Such
policy is described in Exhibit A attached hereto and by
this reference made a part hereof (the "Policy"). The
Policy has been issued by Xxxx Xxxxxxx Variable Life
Insurance Company (the "Insurer").
The Trust is the owner of the Policy and, as
such, possesses all incidents of ownership in and to the
Policy, including without limitation the right to
designate the Policy beneficiary.
The Corporation 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.
The Corporation desires to have the Policy
collaterally assigned to it by the Trust in order to
secure the repayment of the amounts which it will pay
toward the premiums on the Policy.
In consideration of the premises and of the
mutual promises contained herein, the parties hereto
agree as follows:
1. PURCHASE OF POLICY. The Trust has
purchased the Policy from the Insurer with
a Total Sum Insured at Issue (as such term
is defined in the Policy) of $1,250,000.
The parties hereto agree that they will
take all necessary action to cause the
Insurer to issue the Policy and will take
any further 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 related
collateral assignment filed with the
Insurer relating to the Policy.
2. OWNERSHIP OF POLICY. The Trust shall be
the sole and absolute owner of the Policy
and shall have and may exercise all
ownership rights granted to the owner
thereof by the terms of the Policy,
including without limitation the right to
designate the Policy beneficiary and the
right to elect and change both the Total
Sum Insured at Issue and the investment
options of the Policy, except as may
otherwise be provided herein.
3. PAYMENT OF PREMIUMS.
a. On or prior to the date which is
30 days prior to the due date of each
Policy premium, the Corporation shall
notify the Employee and the Trust of the
exact amount due from the Trust to the
Corporation hereunder toward payment of
the Planned Premium (as such term is
defined in the Policy). While both
Insureds are alive, such amount shall be
equal to the annual cost of current life
insurance protection on the joint lives of
the Insureds, measured by the lower of the
P.S. 38 rate or the Insurer's current
published premium rate for annually
renewable term insurance for standard
risks. After the death of the first
Insured to die, such amount shall be equal
to the annual cost of current life
insurance protection on the life of the
surviving Insured, measured by the lower
of the P.S. 58 rate, 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. The Trust shall pay such required
contribution to the Corporation prior to
the premium due date. If the Trust fails
to make such timely payment, the
Corporation, in its sole discretion, may
elect to make such portion of the premium
payment, which payment shall be recovered
by the Corporation as provided herein.
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 Planned
Premium to the Insurer and shall, upon
request, promptly furnish the Employee
evidence of timely payment of such
premium. Except with the consent of the
Trust, the Corporation shall not pay less
than the Planned Premium, but it may, in
its discretion, at any time and from time
to time, subject to acceptance of such
amount by the Insurer, pay more than the
Planned Premium or make other premium
payments on the Policy. 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 as a result of
the insurance protection provided to the
Policy beneficiary.
4. COLLATERAL ASSIGNMENT. To secure
repayment to the Corporation of the amount
of the premiums on the Policy paid by it
hereunder, the Trust has contemporaneously
herewith assigned the Policy to the
Corporation as collateral, under a form
acceptable to the Insurer for such
assignments. The collateral assignment of
the Policy to the Corporation hereunder
shall not be terminated, altered or
amended by the Trust without the express
written consent of the Corporation. The
parties hereto agree to take all action
necessary to cause such collateral
assignment to conform to the provisions of
this Agreement.
5. LIMITATIONS ON TRUST'S RIGHTS IN POLICY.
a. Except as otherwise provided
herein, the Trust shall not sell, assign,
transfer, borrow against or withdraw from
the cash surrender value of the Policy,
surrender or cancel the Policy, change the
beneficiary designation provision thereof
or increase or decrease the Total Sum
Insured at Issue without, in any such
case, the express written consent of the
Corporation.
b. Notwithstanding any provision
hereof to the contrary, the Trust shall
have the sole authority to direct the
manner in which amounts in and among the
Subaccounts (as such term is defined in
the Policy) established pursuant to the
terms of the Policy shall be allocated
among the various investment options from
time to time available under the Policy
and to change such allocation from time to
time, as provided for in the Policy;
provided, however, that at least 50% of
the annual premium paid must at all times
be allocated to one or more of the
following: a Fixed Account (as such term
is defined in the Policy); a short-term
government bond fund; or a money market
account.
c. The Corporation shall have the
right to borrow that portion of the loan
value of the Policy equal in amount to the
total amount of the premiums advanced by
the Corporation on behalf of the Trust
hereunder, reduced by any then outstanding
indebtedness secured by the Policy which
was incurred by the Corporation, including
any interest due on such indebtedness (the
"net premiums"). Interest on such Policy
loan shall be the responsibility of the
Corporation as such interest becomes due.
The Trust shall have the right to borrow
that portion of the loan value of the
Policy equal in amount to the net premiums
for the sole purpose of paying such amount
to the Corporation under Section 8(a) of
this Agreement if it is terminated during
the lifetime of either of the Insureds.
In the event of any such borrowing, the
loan proceeds shall be paid by the Insurer
directly to the Corporation, and such
payment shall discharge completely all
obligations owing from the Trust to the
Corporation under this Agreement with
respect to the Policy. Interest on any
such Policy loan shall be the
responsibility of the Trust as such
interest becomes due.
6. COLLECTION OF DEATH PROCEEDS.
a. Upon the death of the last
surviving Insured, the Corporation and the
Trust shall cooperate 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 last
surviving Insured, the Corporation shall
have the unqualified right to receive a
portion of such death benefit equal to the
net premiums paid by it. The balance of
the death benefit provided under the
Policy, if any, shall be paid directly to
the Policy beneficiary 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 Corporation hereunder
exceed the Policy proceeds payable as a
result of the maturity of the Policy as a
death claim. No amount shall be paid from
such death benefit to the Policy
beneficiary until the full amount due the
Corporation hereunder has been paid.
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 last surviving Insured
and in lieu thereof the Insurer refunds
all or any part of the premiums paid for
the Policy, the Corporation shall have the
unqualified right to such premiums in an
amount not to exceed the net premiums paid
by it.
7. TERMINATION OF THIS AGREEMENT DURING THE
LIFETIME OF EITHER OF THE INSUREDS.
a. This Agreement shall terminate
during the lifetime of either of the
Insureds, without notice, upon the
occurrence of any of the following events:
(a) total cessation of the Corporation's
business; (b) liquidation or dissolution
of the Corporation; or (c) termination of
the Employee's employment by the
Corporation for Cause (as defined below).
For the purposes of this Section 7(a),
"Cause" shall mean (i) conviction of the
Employee for any felony or for fraud or
embezzlement; (ii) the Employee's willful
and continued refusal to substantially
perform reasonably assigned duties with
the Corporation (other than any such
refusal resulting from incapacity due to
physical or mental illness or disability)
after a written demand for substantial
performance is delivered to the Employee
identifying the manner in which the
Corporation believes that the Employee has
willfully and continuously refused to
substantially perform his duties; or (iii)
other willful misconduct by the Employee
which is materially injurious to the
Corporation. For the purposes of this
Section 7(a), no act or failure to act
shall be considered "willful" unless done
or omitted to be done not in good faith
and without reasonable belief that such
action or omission was in the best
interest of the Corporation.
b. The Corporation may terminate
this Agreement at any time after the date
which is 14 years after the Date of Issue
(as such term is defined in the Policy) by
written notice to the Trust. Such
termination shall be effective as of the
date of such notice.
c. In addition, the Trust may
terminate this Agreement during the
lifetime of either of the Insureds and
while no premium under the Policy is
overdue by written notice to the
Corporation. Such termination shall be
effective as of the date of such notice.
8. DISPOSITION OF THE POLICY ON TERMINATION
OF THIS AGREEMENT DURING THE LIFETIME OF
EITHER OF THE INSURED.
a. For 60 days after the date of
the termination of this Agreement during
the lifetime of either of the Insureds
under Section 7 of this Agreement, the
Trust shall have the option of obtaining
the release of the collateral assignment
of the Policy to the Corporation. To
obtain such release, the Trust shall repay
to the Corporation an amount equal to the
total amount of the net premiums paid by
the Corporation. Upon receipt of such
amount, the Corporation shall release the
collateral assignment of the Policy by the
execution and delivery of an appropriate
instrument of release.
b. If the Trust fails to exercise
such option within such 60-day period,
then, at the request of the Corporation,
the Trust shall execute any document or
documents required by the Insurer to
transfer all interests of the Trust in the
Policy, including without limitation the
Trust's right to designate the Policy
beneficiary, to the Corporation.
Alternatively, the Corporation 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, however, that in
the event the cash surrender value of the
Policy exceeds the amount due the
Corporation hereunder, such excess shall
be paid to the Trust. Thereafter, neither
the Trust nor the Trust's successors,
assigns or beneficiaries shall have any
further interest in and to the Policy
under the terms thereof or under this
Agreement.
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 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
Trust and filed with the Insurer in
connection herewith.
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, and it shall be responsible for
establishing and carrying out a funding
policy and method consistent with the
objectives of this Agreement. The
Corporation may allocate to others certain
aspects of the management and operational
responsibilities of this Agreement,
including by the employment of advisors
and the delegation of any ministerial
duties to qualified individuals.
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 President 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 90 days and
shall, in fact, deliver such reply within
such 90-day period. Upon written notice
prior to the expiration of the 90-day
reply period, the Corporation may,
however, extend the reply period for an
additional 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) of
this section 10(b). If a notice of denial
is not received within the reply period,
the claim shall be deemed denied and the
Claimant shall be permitted to request
review, as set forth below.
(3) Request for Review.
With 60 days after the receipt by the
Claimant of the written opinion described
above (or, in the case of a deemed denial,
within 60 days after the end of the reply
period), the Claimant may request in
writing that the Secretary of the
Corporation (the "Secretary") review the
determination of the Corporation. Such
request must be addressed to the
Secretary, at the Corporation's 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 Secretary. If the Claimant does
not request a review by the Secretary of
the Corporation's determination within
such 60-day period, he shall be barred and
estopped from challenging the
Corporation's determination, except as may
be otherwise provided herein.
(4) Review of Decision.
Within 60 days after the Secretary's
receipt of a request for review, he or she
will review the Corporation's
determination. After considering all
materials presented by the Claimant, the
Secretary will render a written opinion,
using language 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 60-day time
period be extended, the Secretary will so
notify the Claimant and will render the
written opinion as soon as possible, but
no later than 120 days after receipt of
the request for review. If the written
opinion on review is not rendered within
the 60-day period (or the 120-day period,
if an extension is granted), the claim
shall be deemed denied on review.
(5) Payment of Claim.
If and when a claim is determined to be
payable, the Corporation will promptly
issue a check to the Claimant.
(6) Other Remedies.
After exhaustion of the claims procedures
set forth in this Section 10(b), nothing
shall prevent any person from pursuing any
other legal or equitable remedy otherwise
available, including without limitation
legal action in federal court.
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; NO THIRD-PARTY
BENEFICIARY.
This Agreement shall be binding upon
and inure to the benefit of the
Corporation and its successors and assigns
and the Trust and its respective
successors, assigns and beneficiaries.
This Agreement shall not confer any rights
or remedies upon any person other than the
parties hereto and their respective
successors and assigns, except that the
Employee is a third-party beneficiary of
this Agreement to the extent necessary to
effectuate the intents and purposes of
this Agreement.
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. Any such
notice, consent or demand mailed to a
party hereto shall be sent by United
States certified mail, postage prepaid, or
sent by a nationally recognized overnight
delivery service, charges prepaid, in each
case 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 Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement, in duplicate, as of the day and
year first above written.
MARCUS FAMILY 1990
INSURANCE TRUST
By /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Trustee
ATTEST: AMERICAN BILTRITE INC.
/s/ Xxxxx X. Xxxxxxxxx By /s/ Xxxxxxx X. Xxxxxxx
----------------------- ---------------------------
Secretary Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
EXHIBIT A
The following life insurance policy is subject to
the attached Split-Dollar Agreement:
Insurer: Xxxx Xxxxxxx Variable Life Insurance Company
Insureds: Xxxxxxx X. & Xxxxxxx X. Xxxxxx
Policy Number: 20010120
Total Sum Insured at Issue: $1,250,000
Date of Issue: October 10, 1996
