SUPPLEMENTAL LIFE INSURANCE AGREEMENT
THIS SUPPLEMENTAL LIFE INSURANCE AGREEMENT is made in Chicago, Illinois; as of
the ____ day of _______, 199_, by and between JOHNSTOWN AMERICA INDUSTRIES, INC.
(the "Corporation"), a Delaware corporation, and ___________________________
(the "Employee").
WHEREAS, the Corporation wishes to reward the Employee with supplemental life
insurance compensation for faithful and productive service with the Corporation;
and
WHEREAS, the parties hereto desire to have the specifics of the supplemental
life insurance compensation and the criteria pursuant to which such supplemental
life insurance compensation will be paid reduced to a written agreement;
NOW, THEREFORE, in consideration of the mutual covenants and promises herein
made, the Corporation and the Employee agree as follows:
1. Compensation
In addition to any and all other compensation paid by the Corporation to
the Employee for services rendered to the Corporation, the Corporation
agrees, subject to Section 2 below, to: (1) pay the annual premium on a
$__________ policy (the "Policy") of life insurance on the life of the
Employee; and (2) "gross-up" the Employee in cash for the approximate
amount of federal, state and local income taxes the Employee must pay on
the imputed income therefrom; and (3) reimburse the Employee additional
cash so that the Employee will have no "out-of-pocket" outlay by virtue of
this reimbursement to pay the tax.
2. Payment Conditions
a. The Policy premiums will be paid directly to the insurer subject to
the following conditions precedent:
i) Subject to Section 4(b) below, the Policy shall be purchased and
wholly owned by the Employee and, without exception, all incidents
of ownership shall vest in the Employee. The Employee shall have
sole discretion in naming the beneficiary of the Policy; provided
that, in no event will the Employee name the Corporation or any
affiliate or subsidiary of the Corporation as a beneficiary
thereof. Subject to Section 4(c), the Employee shall have the
ability to surrender, borrow or to obtain dividends from the
Policy.
ii) The Corporation agrees to pay the premiums on the Policy when due.
The duration and amount of the Policy may be changed at the
Corporation's discretion. Except as otherwise provided in Section
4(a) or in the last sentence of Section 4(b) below, the
Corporation's obligation to continue to pay premiums on the Policy
shall cease upon the earlier of the Employee's death, termination
from service for any reason, or 65th birthday.
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b.Income Tax Reimbursement Provision
i) The Corporation also agrees to pay the Employee a reimbursement
approximately equal to the amount of personal federal, state and
local income taxes that the Employee is obligated to pay on gross
income imputed to the Employee by virtue of each premium paid on
the policy by the Corporation.
3. Term
The term of the Agreement shall commence with the effective date of the
Policy and terminate as provided in Section 4 below.
4. Termination Rights; Surrender of Policy
a.Subject to the last sentence of Section 4(b) below, either party to
this Agreement may terminate the Corporation's continued obligation to
pay premiums on the Policy upon the giving of sixty (60) days written
notice of termination to the other party.
b.Prior to the third anniversary of the date hereof, upon the
termination of the Employee's employment with the Corporation for any
reason, the Employee agrees to assign to the Corporation without
consideration therefor all rights of the Employee to the Policy and
all benefits thereunder effective as of the date of termination of the
Employee's employment with the Corporation. The foregoing shall be
inapplicable to a termination of employment due to the Employee's
death or a termination of employment pursuant to which the Employee is
entitled to any benefits under any severance or employment agreement
then in effect between the Corporation and the Employee. In addition,
the Corporation acknowledges that in the event of a termination of
employment pursuant to which the Employee is entitled to any benefits
under any severance or employment agreement then in effect between the
Corporation and the Employee and notwithstanding any provision in this
Agreement to the contrary, the Corporation shall continue to make
premium payments on the Policy as provided herein for the period
specified in such severance or employment agreement.
On and after the third anniversary of the date hereof, upon the
termination of the Employee's employment with the Corporation for
Cause (as defined below), the Employee agrees to assign to the
Corporation without consideration therefor all rights of the Employee
to the policy and all benefits thereunder effective as of the date of
termination of the Employee's employment with the Corporation. For
purposes of this Agreement, "Cause" shall mean (i) the willful and
continued failure by the Employee to substantially perform the
Employee's duties with the Corporation (other than any such failure
resulting from the Employee's incapacity due to physical or mental
illness) after a written demand for substantial performance is
delivered to the Employee by the Corporation's Board of Directors,
which demand specifically identifies the manner in which the
Corporation's Board of Directors believes that the Employee has not
substantially performed the
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Employee's duties, or (ii) the willful engaging by the Employee in
conduct which is demonstrably and materially injurious to the
Corporation or its subsidiaries, monetarily or otherwise. For purposes
of clauses (i) and (ii) of this definition, no act, or failure to act,
on the Employee's part shall be deemed "willful" unless done, or
omitted to be done, by the Employee not in good faith and without
reasonable belief that the Employee's act, or failure to act, was in
the best interest of the Corporation.
x.Xx long as the Employee continues to be employed by the Corporation,
the Corporation's consent will be required in order for the Employee
to surrender, borrow, or to obtain dividends from the Policy, provided
that consent will be given to obtain Policy values for college
education of the Employee's children or for medical needs of the
Employee and family.
5. Named Fiduciary and Plan Administrator
The Chief Financial Officer of the Corporation is hereby designated
the "named fiduciary". As named fiduciary, the Chief Financial Officer
shall be responsible for the management, control and administration of
the Policy as established herein. The Chief Financial Officer 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.
6. Claims Procedure for Life Insurance
Due proof of death must be submitted to the insurer at its home office
on forms furnished by it. These forms can be obtained from any local
office of the insurer or from its home office.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT on the date
first above written.
JOHNSTOWN AMERICA INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Executive Vice President & CFO
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