SPLIT DOLLAR INSURANCE AGREEMENT COLLATERAL ASSIGNMENT
Exhibit 10(q)
SPLIT DOLLAR INSURANCE AGREEMENT
COLLATERAL ASSIGNMENT
COLLATERAL ASSIGNMENT
This agreement made this 21st day of June, 1994, by and between BANCINSURANCE CORPORATION, an Ohio
corporation, (hereinafter called “Corporation”) and FIFTH THIRD BANK OF COLUMBUS, Trustee of the Si
and Xxxxxxx X. Xxxxx Irrevocable Life Insurance Trust dated May 6, 1994, (hereinafter called
“Trust”).
WHEREAS, Si Xxxxx (hereinafter called “Employee”) is a valuable employee of the Corporation; and
WHEREAS, the Employee desires to insure his life for the benefit and protection of the family with
a policy to be issued by the Pan-American Assurance Company (hereinafter called (“Insurer”).
NOW, THEREFORE, in consideration of the services heretofore rendered and to be rendered by the
Employee and the mutual covenants considered herein, the parties agree as follows:
1. Definitions:
A. “Specified Amount” shall mean the specified amount plus accumulated value.
B. “Current Rates” shall refer collectively to the insurer’s current mortality, rate of return, and
expense charges.
C. “Cash Value” shall mean the policy’s cash value as that term is defined in the policy.
D. “Planned Periodic Payments” shall mean the premium level selected by the parties subject to the
Insurer’s minimum premium requirements.
2. Purchase of the Policy. The Trust has applied to Insurer for a life insurance policy on the
joint lives of the Employee and his spouse, Xxxxxxx X. Xxxxx in the specified amount of $2,700,000.
Such policy is specified on Exhibit A, attached hereto. The Employee, and his spouse, have agreed
to medical examinations as requested by the life insurance company, as required for issuance of the
policy.
3. Policy Ownership. The Trust shall be the owner of the life insurance policy on the joint lives
of the Employee and his spouse identified in Exhibit A, attached hereto and made apart hereof, and
may exercise all rights of ownership with respect to the policy, except as otherwise hereinafter
provided.
4. Payment of Premiums on the Policy. The Trust shall pay the planned periodic premium annually as
of the date of issue and upon each anniversary of the date of issue. The Corporation shall remit
to the Trust, on behalf of the Employee, for this purpose an amount equal to the planned periodic
premium on each policy anniversary.
5. Collateral Assignment for Benefit of the Corporation. The Trust hereby executes, assigns and
conveys to the Corporation the policy, outlined in Exhibit A attached hereto, acquired pursuant to
the terms of this Agreement, as security for the repayment of the amounts which the Corporation
will pay to the Trust under Article 4 of this Agreement. This collateral assignment will not be
altered or changed without the consent of the Corporation.
6. Trust’s Incident of Ownership. The Trust shall retain all rights of ownership of the life
insurance policy except for those rights, if any, specifically given to the Corporation under this
Agreement. The rights retained by the Trust include, among others, the right to cancel or
surrender the policy and the right to borrow or withdraw from the policy.
The Trust’s right to borrow from the policy is restricted to an amount equal to the maximum loan
value less the cumulative planned periodic premiums paid by the Corporation under Article 4 of this
Agreement.
The Trust’s right to withdraw from the policy cash value shall be limited to a partial surrender of
the policy surrender value less the cumulative planned periodic premiums paid by the Corporation
under the Split Dollar arrangement selected in Article 4 of this Agreement, plus any applicable
surrender charges imposed under the life insurance contract.
7. Disposition of Policy Death Proceeds. Notwithstanding any beneficiary designation made on the
policy, the Corporation shall be entitled to an amount equal to the cumulative planned periodic
premiums paid on the policy. The beneficiary designated by the Trust shall be entitled to the
balance of the policy death benefit.
8. Termination of the Agreement. This Agreement shall terminate upon the occurrence of any of the
following events:
| (A). | Written notice given by the Trust to the Corporation; | |
| (B). | Bankruptcy, receivership or dissolution of the Corporation; | |
| (C). | The Trust’s failure to apply the Corporation premium to the life insurance premium. | |
| (D). | Repayment in full by the Trust to the Corporation of the contributions made by the Corporation under Article 4 of this Agreement. |
Upon termination of this Agreement the Trust shall have the option for thirty (30) days to receive
from the Corporation a release of the assignment of the policy in consideration of a cash payment
to the Corporation of the cumulative planned premium paid by the Corporation. The Corporation
agrees that the Trust may borrow or withdraw from the policy cash values in an amount in excess of
the Corporation’s share as established in the Agreement. In the event that the Trust does not
receive a release of the assignment within the thirty day period then the Trust agrees that the
policy will be surrendered and the Corporation shall be entitled to an amount equal to the
cumulative planned periodic premiums paid to the Trust. The Trust shall be entitled to any
remainder of such cash surrender value.
9. Additional Policy Benefits and Riders. The Trust may add a rider to the policy on the
Employee’s life, acquired pursuant to this Agreement. Upon written request by the Corporation, the
Trust may add a rider to the policy for the benefit of the Corporation. Any additional premium for
any rider which is added to the policy shall be paid by the party which will be entitled to receive
the proceeds of the rider.
10. Named Fiduciary and Plan Administrator. The Corporation is the named fiduciary and plan
administrator of this plan. As such, it shall be responsible for the management, control, and
administration of the Split Dollar plan as established herein.
11. Amendments and Binding of Parties. Amendments may be made to this Agreement in writing and
signed by each of the parties to this Agreement. Such amendments must be attached hereto.
Additional life insurance policies on the life of the Employee may be purchased under this
Agreement by amendment to Article 2 hereof. This Agreement and its amendments are binding upon the
successors and assigns of each party.
12. Liability of the Insurer. The Insurer is not considered a party to this Agreement except with
respect to the rights of the parties herein developed upon receiving an executed copy of this
Agreement. The Insurer is not responsible to account for the actual premium contributions of the
parties to this Agreement. Said insurer shall rely on the written declarations of the parties in
any dispute concerning distribution of cash value or death proceeds. Performance of its
contractual obligations in accordance with the policy provisions shall fully discharge the Insurer
from any and all liability.
13. State Law. This Agreement shall be subject to and shall be construed under the laws of the
State of Ohio.
IN WITNESS WHEREOF, the parties hereunto have executed this Agreement this day and year written
above.
BANCINSURANCE CORPORATION (“Corporation”)
BY:
|
/s/ Xxxxx Xxxxx
|
FIFTH THIRD BANK OF COLUMBUS, Trustee under the Si and Xxxxxxx X. Xxxxx Irrevocable Life Insurance
Trust dated May 6, 1994 (“Trust”)
By:
|
/s/ Xxxxx X. Lease
|
|||
| Xxxxx X. Lease | ||||
| Trust Administrative Officer | ||||
| Fifth Third Bank of Columbus |
EXHIBIT A
Name of Life Insurance Company: Pan-American Assurance (Insurance) Company
Policy Number: [omitted]
Insured: Si Xxxxx and Xxxxxxx X. Xxxxx
Specified Amount: $2,700,000
