EXHIBIT 10.3
CONFIRMATORY SPLIT DOLLAR AGREEMENT NO. 1
This Confirmatory Split Dollar Agreement No. 1 (the
"Agreement") is made and entered into by and between Nortek,
Inc., a Delaware corporation having a principal place of business
in Providence, Rhode Island (the "Corporation"), and Xxxxxxx X.
Xxxxxx, of said Providence (the "Employee") (the Corporation and
the Employee are hereinafter referred to together as the
"Parties").
WITNESSETH:
WHEREAS, the Employee is employed by the Corporation as its
chief executive officer; and
WHEREAS, the Corporation is the owner of policies numbered
[policy numbers redacted] (the "Policies") issued by New York
Life Insurance Company (the "Insurer") on the life of the
Employee; and
WHEREAS, on January 12, 1996 the Corporation executed new
beneficiary designations with respect to the Policies, it being
the Corporation's desire to make a portion of the death benefit
available to the Employee's family as an employment benefit to
the Employee; and
WHEREAS, the Corporation continues to desire to assist the
Employee by providing insurance on the Employee's life, the
Corporation believing that providing such assistance is in its
best interests; and
WHEREAS, the Parties now wish to clarify and confirm the
arrangements in place between them with respect to the Policies;
NOW, THEREFORE, for and in consideration of the promises and
mutual covenants expressed herein by each of the Parties, the
Parties agree as follows:
1. The Corporation shall pay each premium on the Policies
due after the date of this Agreement, on or before the due date
or within the applicable grace period. Immediately thereafter,
the Corporation may require payment from the Employee of the
Employee's share (as defined below). If payment from the
Employee is not so required, the Corporation shall treat its
payment of the Employee's share (as so defined) as additional
compensation to the Employee. The Employee's share of each
premium shall be that portion of the premium that is equal to the
economic benefit which the Employee would be deemed to have
received and which would be taxable to him for federal income tax
purposes under Revenue Rulings 64-328, 66-110 and any subsequent
rulings or regulations if the entire premium were paid by the
Corporation.
2. The Corporation shall continue to be the sole owner of
the Policies, and to the extent of its Interest in the Policies
(as defined in Section 6 below) shall have and may exercise all
the rights of policy owner, including but not limited to the
right to designate the beneficiaries, select settlement options,
apply dividends, borrow on the security of the policy and
surrender the policy.
3. Upon termination of this Agreement during the
Employee's lifetime, all rights to the Policies shall vest in the
Corporation, the Corporation shall have no further right of
recovery against the Employee or his assignee, and the Employee
or his assignee shall have no further rights with respect to any
of the Policies. Upon termination of this Agreement as a result
of the
Employee's death, the Corporation shall be the direct
beneficiary of an amount equal to its Interest in each policy (as
defined in Section 6 below) as of the Employee's date of death.
4. With respect to each of the Policies, the Employee or
his assignee shall have the right to designate and change direct
and contingent beneficiaries of any proceeds payable as a result
of the Employee's death in excess of the Corporation's Interest
in the particular policy.
5. The Parties shall upon execution of this Agreement
simultaneously execute a policy endorsement with respect to each
of the Policies to put into effect the provisions of this
Agreement.
6. The Corporation's "Interest" in each of the Policies as
of any given date shall equal the greater of (a) the cash value
of such policy as of such date and (b) the sum of the
Corporation's cumulative premiums paid to the Insurer with
respect to the policy (whether paid before or after the date of
this Agreement), in either case reduced by the amount of any
outstanding indebtedness on the particular policy. The term
"cash value" means the gross cash value of the particular policy,
including accumulated dividends and the value of any paid up
additions.
7. This Agreement may be terminated by either party or its
or his assignee, with or without the consent of the other party,
by giving written notice to the other party. If not sooner
terminated, the Agreement shall terminate automatically upon the
first to occur of any one of the following events:
(a) The total cessation of the business of the Corporation;
(b) Termination of the Employee's employment with the
Corporation (employment shall include any period during
which Employee serves as a consultant to the
Corporation);
(c) The bankruptcy, insolvency or dissolution of the
Corporation; or
(d) The death of the Employee.
Upon termination, the rights of the Parties shall be as provided
herein.
8. The Parties intend for this Agreement to confirm the
terms of all split dollar insurance arrangements between them
with respect to the Policies. To that end, as between the
Parties this Agreement supersedes any inconsistent split dollar
documentation concerning any of the Policies that predates this
Agreement, whether or not such documentation has been filed with
the Insurer.
9. The Parties agree to execute any and all documents
necessary or proper to carry out the purpose and intent of this
Agreement.
10. The Parties agree that this is a private agreement to
which the Insurer is not a party and for which it can assume no
responsibility and, therefore, a copy need not be filed with the
Insurer. The Insurer shall be fully protected from all liability
under the Policies in dealing exclusively with the owner of the
particular policy and in paying the proceeds of the policy in
accordance with any policy endorsement and beneficiary
designation provided to the Insurer.
11. If this Agreement is subject to the Employee Retirement
Income Security Act of 1974 ("ERISA"), it shall constitute an
employee welfare benefit plan. If required, the Vice President
and Treasurer of the Corporation is hereby designated as the
named fiduciary under this Agreement for ERISA purposes. The
Vice President and Treasurer shall have discretionary authority
to control and manage the operation, interpretation and
administration of this Agreement and to establish any claims
procedures required by ERISA.
12. The Employee shall have the right to assign any part or
all of the Employee's interest in this Agreement and any of the
Policies to any person, entity or trust by execution of a written
assignment delivered to the Corporation and a new designation of
beneficiary to the Insurer.
13. Any of the provisions of this Agreement may be amended
or altered, and such changes shall become effective when reduced
to writing and signed by both of the Parties.
14. This Agreement shall be binding upon and inure to the
benefit of the Corporation, and its successors and assigns, and
the Employee, and his successors and assigns.
15. Except to the extent that federal law applies, this
Agreement shall be governed by, and construed in accordance with,
the laws of the State of Rhode Island. However, if and to the
extent that ERISA applies, ERISA shall pre-empt any state laws
(including the laws of the State of Rhode Island) relating to
this Agreement.
SIGNED and SEALED in two original counterparts as of the
31st day of December, 1996.
NORTEK, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Its:Vice President and Treasurer,
duly authorized
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Appendix (prepared by the Company for SEC filing purposes)
to
Exhibit 10.3 -- Confirmatory Split Dollar Agreement No. 1 dated
as of December 31, 1996 between the Company and Xxxxxxx X. Xxxxxx
The life insurance policies covered by this Split Dollar
Agreement (the "Agreement") currently provide for death benefits
in the following amounts to be divided between the beneficiary of
the policy and the Company pursuant to the Agreement:
First Policy $183,122
Second Policy $123,352
Third Policy $2,970,773
