Exhibit No. 10(25)
SPLIT-DOLLAR AGREEMENT
SPLIT-DOLLAR AGREEMENT (this "Agreement") made and entered into as of this
20th day of November, 2000 by and between American Biltrite Inc., a Delaware
corporation with principal offices and a principal place of business in the
Commonwealth of Massachusetts (the "Corporation"), and Xxxxxx X. Xxxxx III, an
individual residing in the State of Massachusetts (the "Employee").
The Employee is employed by the Corporation as a Vice President-Finance
and Chief Financial Officer.
The Employee desires that his family be provided life insurance protection
under a policy of life insurance insuring the Employee's life, described in
Exhibit A attached hereto and by this reference made a part hereof (the
"Policy"). The Policy has been issued by Xxxx Xxxxxxx Life Insurance Company
(the "Insurer").
The Employee is the owner of the Policy and, as such, possesses all
incidents of ownership in and to the Policy, including without limitation the
right to designate the Policy beneficiary.
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.
74
The Corporation desires to have the Policy collaterally assigned to it by
the Employee in order to secure the repayment of the amounts which it will pay
toward the premiums on the Policy.
In consideration of the premises and of the mutual promises contained
herein, the parties hereto agree as follows:
1. The Policy. The Policy has a Selected Face Amount (as such term is
defined in the Policy) of $2,500,000. The parties hereto agree that
they will take any action which may be necessary to cause the Policy
to conform to the provisions of this Agreement. The parties hereto
agree that the Policy shall be subject to the terms and conditions
of this Agreement and of the related collateral assignment filed
with the Insurer relating to the Policy.
2. Ownership of Policy. The Employee is the sole and absolute owner of
the Policy. The Employee shall have and may exercise all ownership
rights granted to the owner of the Policy by its terms, including
without limitation the right to designate the Policy beneficiary and
the right to elect and change both the Selected Face Amount and the
investment options of the Policy, except as may otherwise be
provided herein.
75
3. Payment of Premiums.
a. On or prior to the date which is 30 days prior to the due
date of each Policy premium, the Corporation shall notify the
Employee of the exact amount due from the Employee to the
Corporation hereunder toward payment of the Planned Annual Premium
(as such term is defined in the policy), which shall be an amount
equal to the annual cost of current life insurance protection on the
life of the Employee, measured by the lower of the P.S. 58 rate, set
forth in Revenue Ruling 55-747 (or the corresponding applicable
provision of any future Revenue Ruling), or the Insurer's current
published premium rate for annually renewable term insurance for
standard risks. The Employee shall pay such required contribution to
the Corporation prior to the premium due date. If the Employee fails
to make such timely payment, the Corporation, in its sole
discretion, may elect to make such 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
76
Corporation shall pay the full amount of the Planned Annual Premium
to the Insurer and shall, upon request, promptly furnish the
Employee evidence of timely payment of such premium. Except with the
consent of the Employee, the Corporation shall not pay less than the
Planned Annual Premium, but it may, in its discretion, at any time
and from time to time, subject to acceptance of such amount by the
Insurer, pay more than the Planned Annual Premium or make other
premium payments on the Policy. 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 as a
result of the insurance protection provided to the Policy
beneficiary.
4. Collateral Assignment. To secure repayment to the Corporation of the
amount of the premiums on the Policy paid by it hereunder, the
Employee has contemporaneously herewith assigned the Policy to the
Corporation as collateral, under a form acceptable to the Insurer
for such assignments. The collateral assignment of the Policy to the
Corporation hereunder shall not be terminated, altered or amended by
the Employee without the express written
77
consent of the Corporation. The parties hereto agree to take all
action necessary to cause such collateral assignment to conform to
the provisions of this Agreement.
5. Limitations on Employee's Rights in Policy.
a. Except as otherwise provided herein, the Employee shall not
sell, assign, transfer, borrow against or withdraw from the cash
surrender value of the Policy, surrender or cancel the Policy,
change the beneficiary designation provision thereof or increase or
decrease the Selected Face Amount without, in any such case, the
express written consent of the Corporation.
b. Notwithstanding any provision hereof to the contrary, the
Employee shall have the sole authority to direct the manner in which
the Separate Account (as such term is defined in the Policy)
established pursuant to the terms of the Policy shall be allocated
among the various investment options from time to time available
under the Policy and to change such allocation from time to time, as
provided for in the Policy; provided, however, that at least
78
50% of the annual premium paid must at all times be allocated to one
or more of the following: the Guaranteed Principal Account (as such
term is defined in the Policy); a short-term government bond fund;
or a money market account.
c. The Corporation shall have the right to borrow that portion
of the loan value of the Policy equal in amount to the total amount
of the premiums advanced by the Corporation on behalf of the
Employee hereunder, reduced by any then outstanding indebtedness
secured by the Policy which was incurred by the Corporation,
including any interest due on such indebtedness (the "net
premiums"). Interest on such Policy loan shall be the responsibility
of the Corporation as such interest becomes due. The Employee shall
have the right to borrow that portion of the loan value of the
Policy equal in amount to the net premiums for the sole purpose of
paying such amount to the Corporation under Section 8.a. of this
Agreement if it is terminated during the lifetime of the Employee.
In the event of any such borrowing, the loan proceeds shall be paid
by the Insurer directly to the Corporation, and such payment shall
discharge completely
79
all obligations owing from the Employee to the Corporation under
this Agreement with respect to the Policy. Interest on any such
Policy loan shall be the responsibility of the Employee as such
interest becomes due.
6. Collection of Death Proceeds.
a. Upon the death of the Employee, the Corporation and the
Policy beneficiary 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 net premiums paid by it. The balance of the death
benefit provided under the Policy, if any, shall be paid directly to
the Policy beneficiary in the manner and in the amount or amounts
provided in the beneficiary designation provision of the Policy. In
no event shall the amount payable to the Corporation hereunder
exceed the Policy proceeds payable as a result of the maturity of
the Policy as a death claim. No amount shall be paid from such death
benefit to the
80
Policy beneficiary until the full amount due the Corporation
hereunder has been paid.
c. Notwithstanding any 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 Employee and in lieu
thereof the Insurer refunds all or any part of the premiums paid for
the Policy, the Corporation shall have the unqualified right to such
premiums in an amount not to exceed the net premiums paid by it.
7. Termination of this Agreement During the Lifetime of the Employee.
a. This Agreement shall terminate during the lifetime of the
Employee, without notice, upon the occurrence of any of the
following events: (a) total cessation of the Corporation's business;
(b) liquidation or dissolution of the Corporation; or (c)
termination of the Employee's employment by the Corporation for
Cause (as defined below). For the purposes of this Section 7.a.,
"Cause" shall mean: (i) conviction of the Employee for any felony or
for fraud or embezzlement; (ii) the Employee's willful and continued
refusal to substantially perform reasonably assigned duties with the
Corporation (other than
81
any such refusal resulting from incapacity due to physical or mental
illness or disability) after a written demand for substantial
performance is delivered to the Employee identifying the manner in
which the Corporation believes that the Employee has willfully and
continuously refused to substantially perform his duties; or (iii)
other willful misconduct by the Employee which is materially
injurious to the Corporation. For the purposes of this Section 7.a.,
no act or failure to act shall be considered "willful" unless done
or omitted to be done not in good faith and without reasonable
belief that such action or omission was in the best interest of the
Corporation.
b. The Corporation may terminate this Agreement at any time
after the date which is 16 years after the Issue Date (as such term
is defined in the Policy) by written notice to the Employee. Such
termination shall be effective as of the date of such notice.
c. In addition, the Employee may terminate this Agreement
during the lifetime of the Employee and while no premium under the
Policy is overdue, by written notice to the Corporation. Such
termination shall be effective as of the date of such notice.
82
8. Disposition of the Policy on Termination of this Agreement During
the Lifetime of the Employee.
a. For 60 days after the date of the termination of this
Agreement during the lifetime of the Employee under Section 7 of
this Agreement, the Employee shall have the option of obtaining the
release of the collateral assignment of the Policy to the
Corporation. To obtain such release, the Employee shall repay to the
Corporation an amount equal to the total amount of the net premiums
paid by the Corporation. Upon receipt of such amount, the
Corporation shall release the collateral assignment of the Policy by
the execution and delivery of an appropriate instrument of release.
b. If the Employee fails to exercise such option within such
60-day period, then, at the request of the Corporation, the Employee
shall execute any document or documents required by the Insurer to
transfer all interests of the Employee in the Policy, including
without limitation the Employee's right to designate the Policy
beneficiary, to the Corporation. Alternatively, the Corporation may
enforce its right to be repaid the amount due it hereunder from the
cash surrender value of the Policy under the
83
collateral assignment of the Policy; provided, however, that in the
event the cash surrender value of the Policy exceeds the amount due
the Corporation hereunder, such excess shall be paid to the
Employee. Thereafter, neither the Employee nor the Employee's
successors, assigns or beneficiaries shall have any further interest
in and to the Policy under the terms thereof or under this
Agreement.
9. 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 nor 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 executed by the Employee and
filed with the Insurer in connection herewith.
10. Named Fiduciary, Determination of
84
Benefits, Claims Procedure and Administration.
a. The Corporation is hereby designated as the named fiduciary
under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this
Agreement, and it shall be responsible for establishing and carrying
out a funding policy and method consistent with the objectives of
this Agreement. The Corporation may allocate to others certain
aspects of the management and operational responsibilities of this
Agreement, including by the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
b. (1) Claim.
A person who believes that he or she is being denied a benefit to
which he or she is entitled under this Agreement (hereinafter
referred to as a "Claimant") may file a written request for such
benefit with the Corporation, setting forth his or her claim. The
request must be addressed to the President of the Corporation at its
then principal place of business.
(2) Claim Decision.
85
Upon receipt of a claim, the Corporation shall advise the Claimant
that a reply will be forthcoming within 90 days and shall, in fact,
deliver such reply within such 90-day period. Upon written notice
prior to the expiration of the 90-day reply period, the Corporation
may, however, extend the reply period for an additional 90 days for
reasonable cause. If the claim is denied in whole or in part, the
Corporation shall adopt a written opinion, using language calculated
to be understood by the Claimant, setting forth: (A) the specific
reason or reasons for such denial; (B) the specific reference to
pertinent provisions of this Agreement on which such denial is
based; (C) a description of any additional material or information
necessary for the Claimant to perfect his or her claim and an
explanation why such material or such information is necessary; (D)
appropriate information as to the steps to be taken if the Claimant
wishes to submit the claim for review; and (E) the time limits for
requesting a review under subsection (3) and for review under
subsection (4) of this Section 10.b. If a notice of denial is not
received within the reply period, the claim shall be deemed denied
and the Claimant shall be permitted to request review, as set forth
below.
86
(3) Request for Review.
Within 60 days after the receipt by the Claimant of the written
opinion described above (or, in the case of a deemed denial, within
60 days after the end of the reply period), the Claimant may request
in writing that the Secretary of the Corporation (the "Secretary")
review the determination of the Corporation. Such request must be
addressed to the Secretary, at the Corporation's then principal
place of business. The Claimant or his or her duly authorized
representative may, but need not, review the pertinent documents and
submit issues and comments in writing for consideration by the
Secretary. If the Claimant does not request a review by the
Secretary of the Corporation's determination within such 60-day
period, he shall be barred and estopped from challenging the
Corporation's determination, except as may be otherwise provided
herein.
(4) Review of Decision.
Within 60 days after the Secretary's receipt of a request for
review, he or she will review the Corporation's determination. After
considering all materials presented by the Claimant, the Secretary
will render a written opinion, using
87
language calculated to be understood by the Claimant, setting forth
the specific reasons for the decision and containing specific
references to the pertinent provisions of this Agreement on which
the decision is based. If special circumstances require that the
60-day time period be extended, the Secretary will so notify the
Claimant and will render the written opinion as soon as possible,
but no later than 120 days after receipt of the request for review.
If the written opinion on review is not rendered within the 60-day
period (or the 120-day period, if an extension is granted), the
claim shall be deemed denied on review.
(5) Payment of Claim.
If and when a claim is determined to be payable, the Corporation
will promptly issue a check to the Claimant.
(6) Other Remedies.
After exhaustion of the claims procedures set forth in this Section
10.b., nothing shall prevent any person from pursuing any other
legal or equitable remedy otherwise available, including without
limitation legal action in federal court.
11. Amendment. This Agreement may not be amended, altered or modified,
except by a written instrument signed
88
by the parties hereto or their respective successors or assigns, and
may not be otherwise terminated except as provided herein.
12. Binding Effect; No Third-party Beneficiary.
This Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns and the Employee and his
respective successors, assigns, heirs, executors, administrators and
beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the parties hereto and their
respective successors and assigns.
13. Notice. 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. Any such
notice, consent or demand mailed to a party hereto shall be sent by
United States certified mail, postage prepaid, or sent by a
nationally recognized overnight delivery service, charges prepaid,
in each case addressed to such party's last known address as shown
on the records of the Corporation. The
89
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 Commonwealth of Massachusetts.
90
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the day and year first above written.
By /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx III
ATTEST: AMERICAN BILTRITE INC.
/s/ Xxxxx X. Xxxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
----------------------- ----------------------------
Secretary Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
91
EXHIBIT A
The following life insurance policy is subject to the attached
Split-Dollar Agreement:
Insurer: Xxxx Xxxxxxx Life Insurance Company
-----------------------------------------------------------------------
Insured: Xxxxxx X. Xxxxx III
-----------------------------------------------------------------------
Policy Number: 58490001
-----------------------------------------------------------------
Selected Face Amount of Insurance: $2,500,000
---------------------------------------------
Issue Date: November 20, 2000
--------------------------------------------------------------------
92
