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EXHIBIT 10.17
SPLIT DOLLAR INSURANCE AGREEMENT
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THIS AGREEMENT made and entered into as of the 10th day of October, 1993,
by and between XXXXXX METALCRAFT CO., an Illinois corporation, with principal
offices and place of business in the State of Illinois in Morton, Illinois
(hereinafter referred to as the "Corporation"), and XXXXXXX X. XXXXXX, XX, an
individual residing at 000 Xxxxxxx Xxxx Xx., Xxxxxx, Xxxxxxxx 00000
(hereinafter referred to as the "Employee");
WITNESSETH:
WHEREAS, the Employee is employed by the Corporation as President of the
Corporation; and
WHEREAS, the Employee, on September 14, 1993, applied to Protective Life
Insurance Company (hereinafter referred to as the "Insurer") for life insurance
in the specified amount of $300,000; and
WHEREAS, pursuant to the aforesaid application, the Insurer issued its
flexible premium adjustable life insurance policy under the Insurer's program
known as Patriot 100 Plus in the initial face amount of $300,000 dated October
10, 1993 as Policy No. B00212921 (hereinafter the "Policy"); and
WHEREAS, the Corporation in recognition of the Employee's invaluable
management skills, knowledge of the Corporation's business and contributions to
earnings and profits, desires to obtain key executive death protection for its
estimated losses in the event of the Employee's premature death; and
WHEREAS, the Corporation agrees to receive, by way of an assignment, a
limited Policy ownership interest in the Policy on the life of the Employee and
to pay premiums under the method described herein; and
WHEREAS, the Employee agrees to make the Policy subject to this Agreement in
exchange for the Employer's willingness to pay a portion of the Policy premiums
due on the Policy; and
WHEREAS, this Agreement is intended to qualify as a split dollar life
insurance plan as described in Revenue Ruling 64-328;
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein, the parties hereto agree as follows:
1. Policy Subject to This Agreement; Term. The Policy shall be subject to
the terms and conditions of this Agreement during the term hereof. The term of
this Agreement shall commence
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on October 10, 1993 and shall expire October 10, 2012, unless earlier
terminated as hereafter provided.
2. Premium Payments. The Corporation has paid to the Insurer an initial
premium on the Policy of $3,500.00. The Corporation agrees to continue to pay
eighteen (18) additional annual premiums of $3,500.00 each, which represents
the cumulative increasing P.S. 58 costs for the assigned death benefit to the
Corporation of $229,548 during the term of this Agreement, averaged and
levelized over a period of nineteen (19) years commencing on the date of
issuance of the Policy, for a term of nineteen (19) years of protection. The
annualized amount of premiums is reflected in Column 1 on Exhibit A attached
hereto and made a part hereof by this reference. Employee agrees to pay any
remaining portion of the planned periodic premiums due with respect to the
Policy. The Policy may, at the Employee's discretion, provide for the waiver
of premium on the Employee's disability. If it does so provide, the cost
thereof shall be borne by the Employee, the prior provisions of this Section 2
to the contrary notwithstanding.
3. Assignment of Limited Policy Ownership Interest. The Employee does hereby
assign, transfer and set over to the Corporation, its successors and assigns, a
specific and limited policy ownership interest in the Policy in consideration
of the premium payment paid by the Corporation as required hereunder.
4. Corporation's Policy Interest Defined. The limited policy ownership
interest hereby assigned by the Employee to the Corporation is as follows:
A. Upon death of Employee. In the event of the Employee's death during the
term, the Corporation's policy interest shall be an amount equal to $229,548
of death protection under the limited policy ownership created hereunder,
increased by the amount, if any, of unearned premiums resulting from the
pre-payment of premiums by the Corporation plus any amount in the "unearned
premium account" as hereinafter defined. Any remaining death proceeds shall
be payable to Employee's designated beneficiary pursuant to the Policy. For
purposes of this Agreement, the "unearned premium account" means the amount
by which the Corporation's levelized premium payments required pursuant to
this Agreement exceeds the amount of the P.S. 58 costs for the assigned death
benefits accrued during the term of the Policy until the date of termination
of the Policy, as reflected in Column 2 of Exhibit A attached.
B. Upon Cancellation or Termination of the Policy. In the event the
Employee elects to surrender or cancel the Policy during the term, the
Corporation shall receive such share of the Policy cash values as
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are attributable to the Corporation's prepaid premiums and any
unearned premium account. In the event such cash values are
insufficient to repay any amount due the Corporation, the
Employee agrees to pay any difference to THE Corporation. No
further benefits shall be payable to the Corporation hereunder.
Any remaining cash value shall inure to the benefit of the
Employee.
5. Employee's Retained Incidents of Ownership. Except as to the limited
policy ownership rights specifically granted the Corporation herein, Employee
retains all incidents of ownership (including the right to surrender or cancel
the Policy and the right to borrow or withdraw against the Policy). Employee's
right to borrow shall be limited to an amount equal to the maximum loan value
reduced by any prepaid premiums and unearned premium account of the
Corporation. Employee's right to withdraw from the Policy cash values under
the Policy's partial surrender provisions shall be limited to the allowable
partial surrender value under the Policy reduced by any prepaid premiums and
any unearned premium account in favor of the Corporation. In the event
Employee's Policy loans and accrued interest or, alternatively, the sum of
Employee's cash withdrawals, reduce the Corporation's earlier-stated death
benefit, the Employee agrees to contribute to the Policy such sums as are
required to maintain the integrity of such death benefits.
6. Possession of Policy. If the above-described Policy is in the possession
of the Corporation, the Corporation will, upon notice and request, forward the
Policy without unreasonable delay to the Insurer if required by the Insurer for
any Policy transaction or change.
7. Insurer Action. The Insurer shall be bound only by the provisions of and
endorsements on the Policy, and any payments made or actions taken by it in
accordance therewith shall fully discharge it from all claims, suits and
demands of all persons whatsoever. It shall in no way be bound by or be deemed
to have notice of the provisions of this Agreement.
8. Release of Corporation's Limited Ownership Interest. Upon Employee's
request and upon full payment to the Corporation of its Policy interest, as
earlier defined, the Corporation agrees to release and reassign its ownership
rights to the Policy to the Employee.
9. Premium Waiver. If the Policy contains a disability waiver of premium
provision or waiver of monthly deduction, any waived amounts shall be
considered for all purposes of this Agreement as having been paid by the
Employee and all provisions herein relating to Policy cash values and death
proceeds shall be construed accordingly should such premium waiver become
effective.
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10. Termination of the Agreement. This Agreement shall terminate during
Employee's lifetime on the first to occur of the following: (a) expiration of
the term of this Agreement as set forth in Section 1 hereof; (b) surrender of
the Policy by the Employee, who has the sole and exclusive right of surrender;
(c) by written notice by either the Corporation or the Employee to the other;
(d) upon termination of Employee's employment. Upon termination of this
Agreement, the Corporation shall receive an amount equal to the Corporation's
prepaid premiums and any unearned premium account at the time of such
termination and the Corporation's interest in the Policy shall thereafter
cease.
11. Special Provisions. The following provisions are part of this
Agreement and are intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
A. The named fiduciary: The Corporation.
B. The funding policy under this Agreement is that all premiums on the
Policy be remitted to the Insurer when due.
C. Direct payment by the Insurer is the basis of payment of benefits
under this Agreement, with those benefits in turn being based on the
payment of premiums as provided in this Agreement.
D. The claims procedure under this Agreement shall be as follows:
(1) If for any reason a claim for benefits under this Agreement
is denied by the Corporation, it shall deliver to the claimant a
written explanation setting forth the specific reason for the denial,
pertinent references to the Agreement section on which the denial is
based, such other data as may be pertinent and information on the
procedures to be followed by the claimant in obtaining a review of his
claim, all written in a manner calculated to be understood by the
claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented in writing to the Corporation.
(B) The Corporation's explanation shall be in writing
delivered to the claimant within ninety (90) days of the date
the claim is filed.
(2) The claimant shall have sixty (60) days
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following his receipt of the denial of the claim
to file with the Corporation a written request for
review of the denial. For such review, the claim
or his representative may submit pertinent documents
and written issues and comments.
(3) The Corporation shall decide the issue on
review and furnish the claimant with a copy within
sixty (60) days of receipt of the claimant's request
for review of his claim. The decision on review
shall be in writing and shall include specific reasons
for the decision written in a manner calculated to
be understood by the claimant, as well as specific
reference to the pertinent Agreement provisions on
which the decision is based. If a copy of the decision
is not so furnished to the claimant within such sixty
(60) days, the claim shall be deemed denied on review.
12. No Contract of Employment. Neither this Agreement, nor any
provisions hereof, nor any action taken by the Corporation pursuant hereto,
shall be construed as giving to the Employee the right to be retained in the
employ of the Corporation, nor shall it limit or restrict the right of the
Corporation to terminate the employmennt of the Employee with or without cause.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ATTEST: XXXXXX METALCRAFT CO.
By: By:
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Xxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxx XX,
Secretary President
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Xxxxxxx X. Xxxxxx XX
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