SPLIT-DOLLAR AGREEMENT
SPLIT-DOLLAR AGREEMENT (this "Agreement") made
and entered into as of this 9th day of January, 1997 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 Xxxxxx X. Xxxxx, an individual
residing in the State of New Jersey (the "Employee").
The Employee is employed by the Corporation as
a Vice President and General Manager.
The Employee desires that his family be
provided life insurance protection under a policy of life
insurance insuring the Employee's life, described in
Exhibit A attached hereto and by this reference made a
part hereof (the "Policy"). The Policy has been issued
by Massachusetts Mutual Life Insurance Company (the
"Insurer").
The Employee 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 Employee 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. THE POLICY. The Policy has a Selected
Face Amount (as such term is defined in
the Policy) of $320,000. The parties
hereto agree that they will take any
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 Employee is the
sole and absolute owner of the Policy.
The Employee shall have and may exercise
all ownership rights granted to the owner
of the Policy by its terms, including
without limitation the right to designate
the Policy beneficiary and the right to
elect and change both the Selected Face
Amount 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 of the exact amount
due from the Employee to the Corporation
hereunder toward payment of the Planned
Annual Premium (as such term is defined in
the policy), which shall be an amount
equal to the annual cost of current life
insurance protection on the life of the
Employee, 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 Employee shall
pay such required contribution to the
Corporation prior to the premium due date.
If the Employee 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 Annual
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
Employee, the Corporation shall not pay
less than the Planned Annual 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 Annual 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 Employee 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
Employee 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 EMPLOYEE'S RIGHTS IN
POLICY.
a. Except as otherwise provided
herein, the Employee 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 Selected Face Amount without, in any
such case, the express written consent of
the Corporation.
b. Notwithstanding any provision
hereof to the contrary, the Employee shall
have the sole authority to direct the
manner in which the Separate Account (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:
the Guaranteed Principal 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 Employee
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 Employee 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 the
Employee. 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 Employee to the Corporation under
this Agreement with respect to the Policy.
Interest on any such Policy loan shall be
the responsibility of the Employee as such
interest becomes due.
6. COLLECTION OF DEATH PROCEEDS.
a. Upon the death of the Employee,
the Corporation and the Policy beneficiary
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 Employee,
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 Employee 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 THE EMPLOYEE.
a. This Agreement shall terminate
during the lifetime of the Employee,
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 16 years after the Issue Date (as
such term is defined in the Policy) by
written notice to the Employee. Such
termination shall be effective as of the
date of such notice.
c. In addition, the Employee may
terminate this Agreement during the
lifetime of the Employee 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
THE EMPLOYEE.
a. For 60 days after the date of
the termination of this Agreement during
the lifetime of the Employee under Section
7 of this Agreement, the Employee shall
have the option of obtaining the release
of the collateral assignment of the Policy
to the Corporation. To obtain such
release, the Employee 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 Employee fails to
exercise such option within such 60-day
period, then, at the request of the
Corporation, the Employee shall execute
any document or documents required by the
Insurer to transfer all interests of the
Employee in the Policy, including without
limitation the Employee'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 Employee. Thereafter,
neither the Employee nor the Employee'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
Employee 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.
Within 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 Employee and his respective
successors, assigns, heirs, executors,
administrators 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.
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 know
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.
By /s/ Xxxxxx X. Xxxxx
----------------------
Xxxxxx X. Xxxxx
ATTEST: AMERICAN BILTRITE INC.
/s/ Xxxxx X. Xxxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
---------------------- ------------------------
Secretary Name: Xxxxxxx X. Xxxxxx
Title: Executive
Vice President
EXHIBIT A
---------
The following life insurance policy is subject
to the attached Split-Dollar Agreement:
Insurer: Massachusetts Mutual Life Insurance Company
Insured: Xxxxxx X. Xxxxx
Policy Number: 0025309
Selected Face Amount of Insurance: $320,000
Issue Date: December 16, 1996
