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EXHIBIT 10.41
SPLIT-DOLLAR AGREEMENT
(Xxxxxxx X. Xxxxxxx)
THIS AGREEMENT, made and entered into by and among CONSECO, INC., an
Indiana corporation (the "Corporation"), XXXXXXX X. XXXXXXX, of Carmel, Indiana
(the "Employee"), and XXXXXX X. XXXX, of Zionsville, Indiana, Trustee of the
AMENDED XXXXXXX RESIDENCE MAINTENANCE TRUST, dated December 19, 1996 (the
"Owner").
Recitals
A. The Employee is employed by the Corporation.
B. The Employee desires to provide life insurance protection for the
Employee's family in the event of the Employee's death, under a
policy of life insurance insuring the life of the Employee and
payable upon his death, which Policy is described in Exhibit "A"
attached hereto and by this reference made a part hereof (the
"Policy"), and which was or is being issued by METLIFE (the
"Insurer").
C. The Employee is also an officer and director of the Corporation and
has contributed significantly to its success. The Corporation
desires to continue to retain the services of the Employee, and
accordingly, 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.
D. The Owner is the owner of the Policy and, as such, possesses all
incidents of ownership in and to the Policy.
E. The Corporation desires to have the Policy collaterally assigned to
it by the Owner, pursuant to a collateral assignment in the form of
Exhibit "B" attached hereto and by this reference made a part hereof
or such other form as proposed by the Insurer that is acceptable to
the parties hereto (the "Collateral Assignment"), to secure the
repayment of the amounts which it will pay toward the premiums on
the Policy.
F. The parties hereto intend that under the Collateral Assignment, the
Corporation shall receive only the right to such repayment, with the
Owner retaining all other ownership rights in the Policy, as
specified herein, and the
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Corporation shall have no "incidents of ownership" (as defined in
Treas. Reg. Section 20.2042-l(c)(2)) in the Policy.
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Agreement
NOW, THEREFORE, in consideration of the foregoing Recitals, of the
mutual covenants and promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Purchase of the Policy. The Owner has purchased the Policy from the
Insurer in the total face amount of $12,500,000. The parties hereto
have taken all necessary action to cause the Insurer to issue the
Policy, and shall take any further action which may be necessary to
cause the Policy to conform to the provisions of this Agreement. The
Corporation agrees that it will take such actions as are necessary
to cause the Policy to remain in full force and effect during the
lifetime of the Employee. The parties hereto agree that the Policy
shall be subject to the terms and conditions of this Agreement and
of the Collateral Assignment filed with the Insurer relating to the
Policy.
2. Ownership of the Policy.
a. The Owner shall be the sole and absolute owner of the Policy,
and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as may otherwise be
provided herein.
b. It is the agreement of the parties hereto and the Collateral
Assignment that the Owner shall retain all rights which the
Policy grants to the owner thereof. The sole right of the
Corporation hereunder shall be to be repaid the amounts which
it has paid toward the premiums on the Policy and,
accordingly, the Corporation shall have no "incidents of
ownership" (as defined in Treas. Reg. Section 20.2042-l(c)(2))
in the Policy, except the right to borrow against its cash
surrender value, subject to the terms hereof and provided the
Corporation shall pay when due any and all interest and other
charges assessed by the Insurer regarding such indebtedness.
Specifically, but without limitation, the Corporation shall
neither have nor exercise any right as collateral assignee of
the Policy which could in any way defeat or impair the Owner's
right to receive the cash surrender value or the death
proceeds of the Policy in excess of the amount due the
Corporation hereunder. All provisions of this Agreement and of
the
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Collateral Assignment shall be construed so as to carry out
such intention.
3. Policy Dividends. Any dividend declared on the Policy shall be
applied to purchase paid-up additional insurance on the life of the
Employee. The parties hereto agree that the dividend election
provisions of the Policy shall conform to the provisions hereof.
4. Payment of Premiums.
a. Thirty (30) days prior to the due date of each Policy premium,
the Corporation shall notify the Employee or the Owner of the
exact amount due from the Employee hereunder, which shall be
an amount equal to the annual cost of current life insurance
protection under the Policy, measured by the lower of the PS
58 rate, set forth in Rev. Rul. 55-747, 1955-2 C.B. 228 (or
the corresponding applicable provision of any subsequent
Revenue Ruling), or the Insurer's current published premiu
rate for annually renewable term insurance for standard risks.
Either the Employee or the Owner, on behalf of the Employee,
shall pay such required contribution to the Corporation prior
to the premium due date. If neither the Employee nor the Owner
makes such timely payment, the Corporation, in its sole
discretion, may elect to make the Employee's 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 premium to the Insurer, and shall, upon
request, promptly furnish the Employee and the Owner evidence
of timely payment of such premium. The Corporation shall
annually furnish the Employee and the Owner evidence of timely
payment of such premium. 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, if any, as a result of the insurance protection
provided the Owner as the policy beneficiary.
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5. Collateral Assignment. To secure the repayment to the Corporation of
the amount of the premiums on the Policy paid by it hereunder, the
Owner has, contemporaneously herewith, assigned the Policy to the
Corporation as collateral in accordance with the terms of the
Collateral Assignment. The Collateral Assignment of the Policy to
the Corporation hereunder shall not be terminated, altered or
amended by the Owner while this Agreement is in effect. The parties
hereto agree to take all action necessary to cause the Collateral
Assignment to conform to the provisions of this Agreement.
6. Limitations on Owner's Rights in Policy. The Owner shall not sell,
assign, transfer, borrow against, surrender or cancel the Policy,
change the beneficiary designation provision thereof, or terminate
the dividend election thereof.
7. Collection of Death Proceeds.
a. Upon the death of the Employee, the Corporation and the Owner
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 total amount of the premiums paid by it
hereunder. The balance of the death benefit provided under the
Policy, if any, shall be paid directly to the Owner, in the
manner and in the amount or amounts provided in the
beneficiary designation provision of the Policy.
Notwithstanding any term or provision hereof to the contrary,
in no event shall the amount payable to the Corporation
hereunder exceed the Policy proceeds payable at the death of
the Employee. No amount shall be paid from such death benefit
to the Owner until the full amount due the Corporation
hereunder has been paid. The parties hereto agree that the
beneficiary designation provision of the Policy shall conform
to the provisions hereof.
c. Notwithstanding any term or 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
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Employee and in lieu thereof the Insurer refunds all or any
part of the premiums paid for the Policy, the Corporation and
the Owner shall have the unqualified right to share such
premiums based on their respective cumulative contributions
thereto.
8. Termination of the Agreement During the Employee's Lifetime. This
Agreement shall terminate, during the lifetime of Employee, without
notice, upon the occurrence of any of the following events: (1)
bankruptcy of the Corporation; or (2) failure of the Employee and
the Owner to timely pay the Corporation the Employee's portion of
the premium, if any, due hereunder, unless the Corporation elects to
make such payment on behalf of the Employee, as provided herein.
9. Disposition of the Policy on Termination of the Agreement During the
Employee's Lifetime.
a. For sixty (60) days after the date of the termination of this
Agreement during the lifetime of Employee, the Owner shall
have the option of obtaining the release of the Collateral
Assignment. To obtain such release, the Owner shall repay to
the Corporation the total amount of the premium payments made
by the Corporation hereunder, less any indebtedness secured by
the Policy which was incurred by the Corporation and remains
outstanding as of the date of such termination, including any
interest due on such indebtedness. Upon receipt of such
amount, the Corporation shall release the Collateral
Assignment, by the execution and delivery of an appropriate
instrument of release.
b. If the Owner fails to exercise such option within such sixty
(60) day period, then, at the request of the Corporation, the
Owner shall execute any document or documents required by the
Insurer to transfer the interest of the Owner in the Policy to
the Corporation. Alternatively, the Corporation may enforce
its right to be repaid the amount of the premiums on the
Policy paid by it from the cash surrender value of the Policy
under the Collateral Assignment; provided, however, tha in the
event the cash surrender value of the Policy exceeds the
amount due the Corporation, such excess shall be paid to the
Owner. Thereafter, neither the Owner nor the Owner's
successors, assigns or beneficiaries shall have any
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further interest in and to the Policy, under the terms
thereof,under this Agreement or the Collateral Assignment.
10. 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, or 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.
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. This Agreement shall be binding upon and inure to
the benefit of the Corporation and its successors and assigns, and
the Employee, the Owner, and their respective successors, assigns,
heirs, executors, administrators and beneficiaries.
13. Notices. 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. If such
notice, consent or demand is mailed to a party hereto, it shall be
sent by United States certified mail, postage prepaid, addressed to
such party's last known 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 State of Indiana.
15. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which, together,
shall be deemed one and the same document.
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IN WITNESS WHEREOF, the parties hereto have executed this Split-Dollar
Agreement on this 18th day of December, 1998.
CONSECO, INC. AMENDED XXXXXXX RESIDENCE
MAINTENANCE TRUST,
dated December 19, 1996
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
---------------------------- -----------------------------
Printed: Xxxxxx X. Xxxx Xxxxxx X. Xxxx, Trustee
Title: Executive Vice President
"Corporation" "Owner"
/s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
"Employee"
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EXHIBIT "A"
The following life insurance policy is subject to the attached
Split-Dollar Agreement:
Insurer: MetLife
Insured: Xxxxxxx X. Xxxxxxx
Policy Number: 981250011PR
Face Amount: $12,500,000
Date of Issue: December 1, 1998
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EXHIBIT "B"
COLLATERAL ASSIGNMENT OF LIFE INSURANCE POLICY
PURSUANT TO SPLIT-DOLLAR AGREEMENT
1. Assignment. FOR VALUE RECEIVED, XXXXXX X. XXXX, of Zionsville,
Indiana, Trustee of the AMENDED XXXXXXX RESIDENCE MAINTENANCE TRUST, dated
December 19, 1996, (the "Owner"), does hereby assign, transfer and set over to
CONSECO, INC., an Indiana corporation, and its successors and assigns (the
"Assignee"), the following specific rights in and to the policy listed on
Exhibit "A" attached hereto and by this reference made a part hereof, issued by
the insurance company listed on Exhibit "A" (the "Insurer"), together with any
supplementary contract or contracts issued in connection therewith (said policy,
together with said supplementary contract or contracts are hereinafter
collectively referred to as the "Policy"), insuring the life of XXXXXXX X.
XXXXXXX of Carmel, Indiana (the "Insured") subject to all the terms and
conditions of the Policy and to all superior liens, if any, which the Insurer
may have against the Policy. The Owner, by this Assignment, and the Assignee, by
the acceptance of the assignment to it hereunder, agree to the terms and
conditions contained herein.
2. Liabilities Secured by This Assignment. This Assignment is made, and
the Policy is to be held as collateral security for, all liabilities of the
Owner to the Assignee, now existing or hereafter arising under and pursuant to
that certain Split-Dollar Agreement, among the Assignee, the Insured and the
Owner, dated December 18th, 1998 (the "Split-Dollar Agreement"). It is the
intention of the Owner to reserve all rights in and to the Policy, except those
specific rights to realize on a portion of the cash value thereof and a portion
of the death benefit thereof granted to the Assignee hereby, as security for and
only to the extent of the liabilities of the Owner to the Assignee under the
Split-Dollar Agreement.
3. Assignee's Limited Rights. It is expressly agreed that the
Assignee's interest in the Policy shall be limited to the following rights: (a)
the right to be paid for its premium payments, less any indebtedness secured by
the Policy which was incurred by the Corporation, pursuant to, and as provided
by, the Split-Dollar Agreement, with respect to the Policy (the "Payment
Amount"); (b) the right to be paid the Payment Amount by realizing on a portion
of the cash value of the Policy in the event of the termination of the
Split-Dollar Agreement, as provided in the Split-Dollar Agreement; and (c) the
right to be paid the Payment Amount by realizing on a portion of the proceeds of
the Policy upon the death of the Insured. The Assignee shall have no other or
further rights in and to the Policy as a result of the assignment hereunder.
Except as otherwise provided in the Split-Dollar Agreement, the Assignee shall
not have the right to borrow against, make withdrawals, cancel, surrender,
pledge or assign the Policy, or exercise any other "incidents of ownership" as
defined under Treas. Reg. Section 20.2042-l(c)(2).
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4. Owner Retains All Other Incidents of Ownership. Except as
specifically provided herein, the Owner shall retain all incidents of ownership
in and to the Policy, including, but not limited to: (a) the sole right to
collect and receive all distributions or shares of surplus, dividend deposits or
additions to the Policy now or hereafter made or apportioned thereto, except as
otherwise provided herein, and to exercise any and all options contained in the
Policy with respect thereto; (b) the sole right to exercise all non-forfeiture
rights permitted by the terms of the Policy or allowed by the Insurer and to
receive all benefits and advantages derived therefrom; (c) the sole right to
elect any optional mode of settlement permitted by the Policy or allowed by the
Insurer; and (d) the right to collect from the Insurer that portion of the net
proceeds of the Policy when it becomes a claim by death or maturity not payable
to the Assignee under the Split-Dollar Agreement; provided however, that the
foregoing rights retained by the Owner shall be subject to the terms and
conditions of the Split-Dollar Agreement.
5. Additional Agreements of the Assignee. The Assignee agrees with the
Owner as follows: (a) any balance or sums received hereunder from the Insurer
remaining after payment of the then existing liabilities of the Owner to the
Assignee under the Split-Dollar Agreement shall be paid to the persons entitled
thereto under the terms of the Policy as if this Assignment had not been
executed; (b) the Assignee will not exercise any of the rights granted herein to
it unless and until there has been default in any of the liabilities by the
Owner to the Assignee under the Split-Dollar Agreement, and until twenty (20)
days after the Assignee shall have mailed, by first class mail, to the Owner,
notice of its intention to exercise such right; and (c) the Assignee will, upon
request, forward the Policy to the Insurer, without unreasonable delay, for any
election of optional mode of settlement, or the exercise of any other right
reserved by the Owner hereunder.
6. Insurer. The Insurer is hereby authorized to recognize the
Assignee's claims to rights hereunder without investigating the reason for any
action taken by the Assignee, the validity or amount of any of the liabilities
of the Owner to the Assignee under the Split-Dollar Agreement, the existence of
any default therein, the giving of any notice required herein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The sole signature of the Assignee or the Owne shall be sufficient for
the exercise of their respective rights under the Policy and this Assignment and
the sole receipt of the Assignee or the Owner for any sums received by the
respective party from the Insurer shall be a full discharge and release therefor
to the Insurer.
7. Insurer Relieved of Liability. The Insurer shall be fully protected
in (and shall have no liability from) recognizing (and complying with) any
request made by the Owner or Assignee, with or without the consent of any other
person or entity.
8. Release of This Collateral Assignment. Upon the full payment of the
liabilities of the Owner to the Assignee pursuant to the Split-Dollar Agreement,
the Assignee shall promptly release and reassign to the Owner all specific
rights in the Policy included in this Assignment.
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9. Additional Rights and Powers of Assignee. The exercise of any right,
option, privilege or power herein granted to the Assignee shall be at the option
of the Assignee, and except as provided herein, the Assignee may exercise any
such right, option, privilege or power without notice to, or assent by, or
affecting the liability of, or releasing any interest hereby assigned by the
Owner. The Assignee may take or release other security, may grant extensions,
renewals or indulgences with respect to the obligations of the Owner to the
Assignee under the Split-Dollar Agreement, or may apply the proceeds of the
Policy hereby assigned or any amount received on account of the Policy by the
exercise of any right permitted under this Assignment, without resorting to or
regard to other security, if any.
10. Conflicts. In the event of any conflict between the provisions of
this Assignment and the provisions of the Split-Dollar Agreement, with respect
to the Policy or the Assignee's rights of collateral security therein, the
provisions of this Assignment shall prevail.
11. No Bankruptcy Proceeding. The Owner declares that no proceedings in
bankruptcy are pending against the Owner, and that the Owner's property is not
subject to any assignment for the benefit of creditors of the Owner.
12. Counterparts. This Assignment may be executed in counterparts, each
of which shall be deemed an original, but all of which, together, shall be
deemed one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Collateral
Assignment of Life Insurance Policy Pursuant to Split-Dollar Agreement on this
18th day of December, 1998.
AMENDED XXXXXXX RESIDENCE
MAINTENANCE TRUST,
dated December 19, 1996
By:
-------------------------------------
Xxxxxx X. Xxxx, Trustee
"Owner"
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Agreed and accepted on this 18th day of December, 1998.
CONSECO, INC.
By:
Printed:
Title:
"Assignee"
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EXHIBIT "A"
The following life insurance policy is subject to the attached
Collateral Assignment:
Insurer: MetLife
Insured: Xxxxxxx X. Xxxxxxx
Policy Number: 981250011PR
Face Amount: $12,500,000
Date of Issue: December 1, 1998
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