Exhibit 10-15.5
AMENDED AND RESTATED
SPLIT DOLLAR INSURANCE AGREEMENT
-------------------------------
THIS AMENDED AND RESTATED SPLIT DOLLAR INSURANCE AGREEMENT is
made and entered into this 31st day of July, 1998, by and between XXX SHOPS,
INC. (the "Assignee"), and XXXXX X. XXXXX and XXXXXX XXXXX, Trustees under the
Weiner Family Irrevocable Insurance Trust dated October 27, 1986 (the "Owner").
W I T N E S S E T H:
WHEREAS, the parties entered into a certain Split Dollar
Insurance Agreement dated July 31, 1987 (the "Old Agreement") with respect to a
policy of life insurance in the face amount of Twenty Million Dollars
($20,000,000.00), policy number 3,779,931-9 (the "Policy") issued by
Manufacturer's Life Insurance Company (the "Insurer"); and
WHEREAS, a dispute has arisen between the Insurer, the Owner,
and the Assignee regarding the payment of additional premiums to the Insurer
under the Policy; and
WHEREAS, the dispute has been settled by the Insurer reducing
the face value of the Policy from Twenty Million Dollars ($20,000,000.00) to
Fifteen Million Dollars ($15,000,000.00) and adjusting the illustrated policy
values and eliminating any remaining indebtedness on the Policy, effective
February 1, 1996; and
WHEREAS, the Assignee in consideration for the Insurer
eliminating any indebtedness on the Policy and reducing the premium obligation
to maintain the Policy in force, will agree to pay any additional premiums on
the Policy if they become due; and
WHEREAS, the Owner has agreed to the reduction in the face
value of the Policy from Twenty Million Dollars ($20,000,000.00) to Fifteen
Million Dollars ($15,000,000.00); and
WHEREAS, this Amended and Restated Split Dollar Insurance
Agreement ("Agreement") is intended to replace and supersede the Old Agreement.
NOW, THEREFORE, the Assignee, Owner, and Xxxxxx Xxxxxx and
Xxxxx Xxxxxx (the "Insured") agree to completely amend and restate the Agreement
as hereinafter set forth:
1. The life insurance policy with which this Agreement deals
is the Policy issued by Manufacturer's Life Insurance Company on the life of the
last to die of the Insured.
2. The Owner, or its transferee, shall be the owner of the
Policy, and may exercise all ownership rights inuring to the owner under the
terms of the Policy, except as specifically provided in this Agreement.
(a) Notwithstanding any other provision of this Agreement
and notwithstanding any assignment executed by the Owner or its transferee in
connection with this Agreement, it is the express intention of the Owner and the
Assignee to reserve to the Owner (i) the right to transfer its interest in the
Policy, (ii) the right to change the beneficiary of that portion of the proceeds
to which it is entitled under paragraph 7, and (iii) the right to exercise
settlement options.
(b) The rights in the Policy granted to the Assignee are
limited solely to its security interest in a portion of the cash surrender value
and a portion of the death benefit as defined and limited by this Agreement.
(c) Policy loans may only be made to pay Policy premiums.
3. Effective on the execution of this Agreement, the Assignee
hereby agrees to pay a one-time, lump sum premium to the Insurer in the amount
of One Hundred Forty-Seven
(2)
Thousand Four Hundred Twenty-Three Dollars ($147,423.00). In addition, the
Assignee hereby agrees to pay future premiums, if any, net of any dividends on
the Policy and/or from the surrender of paid-up additions to the Policy. The
Insured, Xxxxxx Xxxxxx, an employee of Assignee, shall include in income each
year for federal income tax purposes, an amount equal to the value of the
"economic benefit" of the life insurance protection enjoyed by the Insured as
provided under applicable Internal Revenue Service Regulations and Revenue
Rulings.
4. In consideration of the payment of the Policy premiums by
Assignee, the Owner has assigned the Policy to the Assignee, which Assignment
solely gives the Assignee the limited power to enforce its rights to be paid the
amount provided in paragraph 4(b) from the cash surrender value or a portion of
the death benefit, as defined and limited by the following terms. Such interest
of the Assignee in the Policy shall be specifically limited to:
(a) the right to pledge or assign its interest in the
Policy, subject to the terms of this Agreement and to any assignment executed in
connection with this Agreement;
(b) the right to be paid its net premium outlay (i.e.
cumulative gross premiums paid less payments made by Owner and less any Policy
loan of the Assignee encumbering the Policy); payable upon (i) the surrender or
cancellation of the Policy, as provided in paragraph 6; (ii) the death of the
Insured, as provided in paragraph 7, or (iii) the termination of this Agreement,
as provided in paragraph 8. In the event the cash surrender value is less than
the net premiums paid, the Assignee's interest shall be limited to the cash
surrender value.
5. Policy dividends shall be applied to the payment of the
premiums, as premiums fall due.
(3)
6. In the event of the surrender or cancellation of the
Policy, the Assignee shall be entitled to receive a portion of the cash
surrender value equal to the amount provided in paragraph 4(b). The balance of
the cash surrender value, if any, shall be paid to the Owner.
7. Upon the death of the Insured, the Assignee shall be
entitled to receive a portion of the death benefit equal to the amount provided
in paragraph 4(b). The balance of the death benefit, if any, shall be paid
directly to the Owner, in the manner and in the amount provided by the
beneficiary designation provision endorsed on the Policy.
8. This Agreement may be terminated by the Owner as follows:
(a) If the Owner intends to terminate this Agreement, it
should notify the Assignee in writing, not less than sixty (60) days prior to
the effective date of such termination.
(b) The Owner shall reimburse the Assignee no later than
the effective date of such termination in an amount equal to the net premium
outlay as defined in Paragraph 4(b). Upon receipt of such payment, the Assignee
shall execute an appropriate instrument to release the Collateral Assignment of
the Policy.
(c) If the Owner fails to reimburse the Assignee within the
time specified, the Owner shall execute any and all instruments that may be
required to vest ownership of the Policy in the Assignee; provided the Assignee
reimburses the Owner for the premium payments made by the Owner, if any.
9. This Agreement may be terminated by the Assignee as
follows:
(a) If the Assignee intends to terminate this Agreement, it
should notify the Owner in writing, not less than sixty (60) days prior to the
effective date of such termination.
(b) Following receipt of notice from the Assignee, the
Owner shall
(4)
reimburse the Assignee no later than the effective date of such termination in
an amount equal to the net premium outlay as defined in Paragraph 4(b). Upon
receipt of such payment, the Assignee shall execute an appropriate instrument to
release the Collateral Assignment of the Policy.
(c) In the event the Assignee shall fail to pay any Policy
premium as required under Paragraph 3, the Owner shall have the option to pay
the premium and keep the Policy in force and shall have the right to recoup the
premium from the Assignee. In the alternative, the Owner shall have the right to
deem the Assignee's failure to pay the premium as a notice of termination. The
Owner shall advise the Assignee in writing of its determination and the sixty
(60) days notice of termination shall be effective on the date such notice is
sent to Assignee.
(d) If the Owner fails to reimburse the Assignee within
sixty (60) days of the date of termination, the Owner shall execute any and all
instruments required to vest ownership of the Policy in the Assignee; provided
that the Assignee shall reimburse the Owner for the premium payments made by the
Assignee, if any.
(e) On receipt of the notice of termination from the
Assignee, the Owner shall reimburse the Assignee in the amount equal to the net
premium outlay as defined in Paragraph 4(b). Upon receipt of such payment, the
Assignee shall execute an appropriate instrument of release of the Collateral
Assignment of the Policy.
10. Notwithstanding anything to the contrary in Paragraph 9
above,
(a) The Owner shall have the right to repay the Assignee
its net premium outlay (i.e. cumulative gross premiums paid less payments made
by Owner, less any Policy loan
(5)
of the Assignee encumbering the Policy) in six (6) equal annual installments,
due on the first and each succeeding anniversary of the termination of the
Policy. The Owner shall also pay interest on the unpaid portion of the net
premium outlay at the applicable federal rate of interest in effect at the time
of termination. The Owner shall have a right to prepay all or any portion of the
net premium outlay at any time in its sole discretion. In the event Owner
defaults for more than ten (10) days after notice in the payment of any
installment, the entire net premium outlay shall become immediately due and
payable. The Policy of insurance shall remain as collateral until the Owner has
paid the Assignee in full.
(b) The provisions of Paragraph 10(a) notwithstanding, in
the event the Policy is terminated by the Assignee (i) as a result of a sale
of more than fifty (50%) percent of the stock of the Corporation or
substantially all of the assets of the Corporation and at least fifty (50%)
percent of the consideration for such sale is in cash, or (ii) in the event
that the Assignee's available cash and cash equivalents are less than Fifteen
Million Dollars ($15,000,000), then the net premium outlay shall be paid by the
Owner to the Assignee on the termination of this Agreement and the Assignee
shall release the Collateral Assignment of the Policy.
11. In the event the Owner transfers all of its interest in
the Policy, then all of Owner's interest in the Policy and in this Agreement
shall be vested in such transferee, and such transferee shall be substituted as
a party hereunder, and the Owner shall have no further interest in the Policy.
12. Except as may otherwise be provided by paragraph 8, this
Agreement may not be canceled, amended, altered or modified, except by a written
instrument signed by all of the parties hereto.
(6)
13. All notices or other instruments or communications shall
be in writing and shall be deemed delivered (and signed receipt obtained
therefor) or sent by postage prepaid, actually delivered by Federal Express or a
comparable private courier service, actually delivered by telecopier or similar
"FAX" equipment. Any notice shall be effective on the date on which it was
delivered or on the date actually delivered by other means. Each party may, by
notice to the other parties specify any other address for the receipt of such
instruments or communications.
14. This Agreement shall bind Owner, Assignee and their
successors and assignees, and any Policy beneficiaries. Owner and Assignee
intend to be legally bound hereby.
15. This Amended and Restated Split Dollar Agreement, and the
rights of the parties hereunder, shall be governed by and construed pursuant to
the laws of the Commonwealth of Pennsylvania.
16. This Agreement and the Collateral Assignment contain the
entire understanding among the parties hereto and supersedes any prior
agreements.
Assignee:
ATTEST: XXX SHOPS, INC.
/s/ Xxxxxx Xxxxxx /s/ Xxxxxx Xxxxxxx
___________________________ By: ________________________________
Xxxxxx Xxxxxx, Secretary Xxxxxx Xxxxxxx, President
Owner:
INSURED: WEINER FAMILY IRREVOCABLE
INSURANCE TRUST
/s/ Xxxxxx Xxxxxx /s/ Xxxxx X. Xxxxx
___________________________ ____________________________________
Xxxxxx Xxxxxx Xxxxx X. Xxxxx, Trustee
/s/ Xxxxx Xxxxxx /s/ Xxxxxx Xxxxx
___________________________ ____________________________________
Xxxxx Xxxxxx Xxxxxx Xxxxx, Trustee
(7)
