EXHIBIT 10.2
SPLIT DOLLAR AGREEMENT
This Split Dollar Agreement (the "Agreement") is made and
entered into as of December 20, 1996 by and between Nortek, Inc.,
a Delaware corporation having a principal place of business in
Providence, Rhode Island (the "Corporation"), and Xxxxxxxx X.
Xxxxx, Xx., of Brookline, Massachusetts (the "Trustee"), for
himself and his successors in office as trustee of The Xxxxxxx X.
Xxxxxx 1996 Irrevocable Trust established as of December 20, 1996
by Xxxxxxx X. Xxxxxx, of said Providence (the Corporation and the
Trustee are hereinafter referred to together as the "Parties").
WITNESSETH:
WHEREAS, Xxxxxxx X. Xxxxxx ("the Employee") is employed by
the Corporation as its chief executive officer; and
WHEREAS, the Corporation desires to assist the Trustee in
funding insurance on the Employee's life, the Corporation
believing that providing such assistance is in its best
interests; and
WHEREAS, the Trustee is the owner of policies numbered
[policy numbers redacted] (the "Policies") issued by New York
Life Insurance Company ("the Insurer") on the Employee's life;
and
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 on or 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 Trustee
of the Trustee's share (as defined below). If payment from the
Trustee is not so required, the Corporation shall treat its
payment of the Trustee's share (as so defined) as additional
compensation to the Employee. The Trustee'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 Trustee shall be the owner the Policies and, except
to the extent of the Corporation's Interest in each of the
Policies as provided herein, shall have and may exercise all the
rights of a policy owner. Dividends shall not be applied to the
payment of premiums unless otherwise agreed by the Corporation
and the Trustee.
3. The Trustee hereby assigns to the Corporation the
following limited ownership rights in the Policies:
(a) The right to obtain one or more loans or advances
on each of the Policies to the extent of the
Corporation's Interest in the particular policy.
(b) The right upon termination of this Agreement to
realize against the cash value of each of the
Policies or the death proceeds payable under the
terms of each of the Policies, as the case may be,
the Corporation's Interest in the particular
policy. For purposes of this subparagraph, the
sale, surrender, or transfer of ownership of one
of the Policies by the Trustee shall be deemed a
termination of the Agreement with respect to that
policy unless consented to by the Corporation. If
this Agreement terminates during the Employee's
lifetime with respect to a particular policy, the
Corporation shall have no right of recovery
against the Trustee in excess of the then cash
value of such policy.
The Trustee shall upon execution of this Agreement execute
collateral assignments evidencing and securing the Corporation's
Interest in the Policies.
4. 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, 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.
5. This Agreement may be terminated by either party, with
or without the consent of the other party, by giving notice to
the other party. If not sooner terminated, this Agreement shall
terminate 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.
6. The Parties agree to execute any and all documents
necessary or proper to carry out the purpose and intent of this
Agreement.
7. 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 each policy covered by this Agreement in dealing
exclusively with the owner of the Policies and in paying the
proceeds of the Policies in accordance with any collateral
assignment and beneficiary designation provided to the Insurer.
8. 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.
9. 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.
10. This Agreement shall be binding upon and inure to the
benefit of the Corporation, and its successors and assigns, and
the Trustee, and his successors and assigns.
11. 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
date first above written.
NORTEK, INC.
By: /s/Xxxxxxx X. Xxxxxx
Its:Vice President and Treasurer,
duly authorized
/s/ Xxxxxxxx X. Xxxxx, Xx.
Xxxxxxxx X. Xxxxx, Xx., for
himself and his successors
in office as trustee of The
Xxxxxxx X. Xxxxxx 1996
Irrevocable Trust,
and not individually
Appendix (prepared by the Company for SEC filing purposes)
to
Exhibit 10.2 -- Split Dollar Agreement dated as of December 20,
1996 between the Company and Xxxxxxxx X. Xxxxx, Xx., as trustee
of The Xxxxxxx X. Xxxxxx 1996 Irrevocable Trust
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 $8,778,907
Second Policy $17,806,847
