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EXHIBIT 10.8
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
COLLATERAL ASSIGNMENT METHOD
THIS AGREEMENT is made this 26th day of March, 1996, by and between
Harvard Industries, Inc., (the "Corporation") and Xxxxxxx X. Xxxxxxx, as
Trustee of the Xxxxxxx X. Xxxxxxx 1992 Insurance Trust (the "Trustee").
WHEREAS, the Corporation has entered into an Amended and Restated
Management and Option Agreement with Anchor Industries International ("AII")
dated August 16, 1995, as further amended on January 30, 0000, (xxx "XXX
Xxxxxxxxx"); and
WHEREAS, pursuant to the AII Agreement, AII has agreed to provide the
management services and expertise of Xxxxxxx X. Xxxxxxx (the "Executive"); and
WHEREAS, pursuant to Section 4(b) of the AII Agreement, the Corporation
agrees to purchase and maintain, during the term of the AII Agreement, and any
extensions thereof, a life insurance policy on the life of the Executive in the
amount of $2 million dollars, with the Corporation the beneficiary to its share
of premium contributions (total premiums paid less the economic benefit amount),
and the Trust as beneficiary of the remaining balance; and
WHEREAS, the Executive agrees to participate in such program to the
extent hereinafter provided.
NOW, THEREFORE, the parties named above agree as follow:
(1) Life Insurance Policy
(a) In furtherance of the purposes of this Agreement,
life insurance, hereinafter referred to as the Policy,
has been purchased on the life of the Executive, from
Xxxx Xxxxxxx Mutual Life Insurance Company,
hereinafter called Insurer. See schedule A attached
hereto for particulars on the Policy and any other
life insurance Policies issued in connection with this
Plan.
(b) This Agreement is effective as to a particular Policy
upon execution, or upon issuance and acceptance of
such Policy, whichever is later.
(2) Ownership Rights and Duties under the Policy
(a) The Trustee shall retain and may exercise all
incidents and rights of ownership with respect to the
Policy except as otherwise hereinafter provided.
(b) The Corporation shall have the right to:
1. obtain policy loans or other withdrawals to
the extent of its interest in this Policy as
defined in Paragraph 10 of this Agreement.
This Policy may be assigned as collateral for
such loans or withdrawals. The interest due
on such loans shall be a debt of the
Corporation owed to the Insurer;
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2. collect from the Insurer its interest in the
proceeds of the Policy upon the death of the
Insured, upon the termination of this Agreement for
any reason whatsoever, or upon the surrender or
maturity of the Policy. Proceeds so collected shall
be net of any outstanding Policy loans or
withdrawals made to or by the Corporation.
(c) The Trustee shall be responsible for safeguarding the
Policy.
(d) The Parties to this Agreement shall execute and forward
promptly and without unreasonable delay, changes in
beneficiary designations, forms and documents, including
the Policy, as required by the Insurer, to facilitate the
exercise of any rights of the Parties hereto. The Parties
hereto shall not be required to execute any documents or
take any action that would impair their own interest under
the Policy.
(3) Collateral Assignment
Concurrently with the execution of this Agreement, the Trustee
shall execute a Collateral Assignment of the Policy as security
for the Corporate premium advances made to the Trustee. Such
Collateral Assignment shall not be inconsistent with the rights of
the Parties under this Agreement.
(4) Payment of Premiums
The Corporation shall pay the annual premium each year. The
Executive will be bonused an amount equal to the "economic
benefit" of the life insurance protection enjoyed by the Executive
each year. The "economic benefit" as defined by the lower of the
PS58 cost or the amount equal to the taxable term cost provided by
the Insurer, based upon reference to IRS Rev. Ruls. 64-328 and
66-110, or any rulings which may substitute, supersede, replace or
amend them, governing the federal income tax consequences of split
dollar arrangements.
(5) Use of Dividends
All dividends attributable to the Policy shall be applied to
Option U.
(6) Payment of Proceeds
On the Executive's death, the Corporation shall receive Part One
of the Policy, and the Trustee shall receive Part Two of the
Policy.
(7) Definitions
(a) Part One is an amount payable to the Corporation equal to
the total premiums paid by the Corporation less the total
"economic benefit" as defined in Paragraph 4.
(b) Part Two is the amount payable to the Trustee equal to the
total death benefit payable less the amount calculated
under Part One.
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(8) Termination of Agreement
This Agreement shall terminate for any of the following reasons:
(a) Performance of its terms following death of the Insured;
(b) Termination of the AII Agreement;
(c) A Party's submission of written notice of such intention to
the other party;
(d) Any action by one Party that would defeat or impair the
interest of such other Party other than death or
termination of employment. Such action shall include, but
is not limited to failure to pay premiums as agreed upon;
cancellation of the Policy by any Party thereto.
Termination of Agreement because of death, termination of
the AII Agreement, or termination by notice shall be
effective immediately. All other terminations shall be
effective 30 days from any such action.
(10) Repayment for Reasons Other than Death
(a) In all instances of termination other than death, the
Corporation shall certify as required by the Insurer the
extent of its interest in the Policy, and payment of such
amount shall release the Insurer from any liability to the
Corporation.
(b) Such repayment to the Corporation of the amounts owed it
under this Agreement shall be made from the total cash
values of the Policy. All parties shall execute the
documents necessary to facilitate such use of the total
cash values, regardless of any rights any party may have in
such total cash values.
(c) The amounts owed to the Corporation in the event of
termination other than by death shall be the lesser of the
cash surrender value of the Policy or the total premiums
paid by the Corporation less the PS58 cost.
(11) Disposition of Policy Upon Termination of Agreement
The Trustee may dispose of this Policy upon termination of this
Agreement by sale or otherwise except that no disposition of such
Policy shall take place if the Corporation has not certified to
the Insurer that its interest in such Policy has been satisfied or
released.
(12) Amendment of Agreement
This Agreement may be altered, amended, or modified, including the
addition of any extra Policy provisions, by a written agreement
signed by the Corporation and Trustee. The law of the State of
Florida shall govern this Agreement. It shall be the obligation
of the Corporation to notify the Insurer of any amendments or
changes to this Agreement.
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(13) Interpretation of Agreement
Where appropriate in this Agreement, words used in the singular
shall include the plural and words used in the masculine shall
include the feminine and vice versa.
(14) Liability of Insurer
Xxxx Xxxxxxx Mutual Life Insurance Company is not a party to this
Agreement. With respect to any Policy of insurance issued
pursuant to this Agreement, Xxxx Xxxxxxx Mutual Life Insurance
Company shall have no liability except as set forth in the Policy.
Such Insurer shall not be bound to inquire into or take notice of
any of the covenants herein contained as to Policies of life
insurance, or as to the application of the proceeds of such
Policies.
The Insurer shall be discharged from all liability in making
payments of the proceeds, and in permitting rights and privileges
under a Policy to be exercised pursuant to the provisions of the
Policy.
(15) Binding Agreement
This Agreement shall bind all parties their successors and assigns
and any Policy beneficiary.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year stated earlier.
HARVARD INDUSTRIES, INC.
21-071532 By: /s/ Xxxxxxx X. Xxxxxx
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Employment Identification Number Xxxxxxx X. Xxxxxx, Vice-President
/s/ Xxxx Xxxxx /s/ Xxxxxxx X. Xxxxxxx
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Witness Xxxxxxx X. Xxxxxxx, as Trustee of the
Xxxxxxx X. Xxxxxxx 1992 Insurance
Trust
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SCHEDULE A
XXXX XXXXXXX LIFE INSURANCE COMPANY
Insured Policy Number Face Amount Issue Date
------- ------------- ----------- ----------
Xxxxxxx X. Xxxxxxx 85310001 $2,139,140* January 25, 1995
* Initial Death Benefit
