1
EXHIBIT 10.15
SPLIT DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT made and entered into as of the 3rd day of February,
1995, 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 Xxxx, Xxxxxx, Xxxxxxxx 00000
(hereinafter referred to as the "Employee");
WITNESSETH:
WHEREAS, the Employee is employed by the Corporation as President/CEO
of the Corporation; and
WHEREAS, the Employee, on November 28, 1994, applied to Xxxx Xxxxxxx
Mutual Life Insurance Company (hereinafter referred to as the "Insurer") for
life insurance in the specified amount of $2,000,000; and
WHEREAS, pursuant to the aforesaid application, the Insurer issued its
modified premium whole life insurance policy with additional insurance
protection rider in the initial face amount of $2,000,000 dated February 3, 1995
as Policy No. 67090421 (hereinafter the "Policy"); and
WHEREAS, the Corporation, in recognition of the Employee's management
skills, knowledge of the Corporation's business and contributions to its
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 is to receive, by way of an assignment, a
limited Policy ownership interest in the Policy on the life of the Employee and
has agreed to pay premiums under the method described herein; and
WHEREAS, the Employee agrees to make the Policy subject to the limited
Policy ownership interest of the Corporation in exchange for the Corporation'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
2
term hereof. The term of this Agreement shall commence on February 3, 1995 and
shall expire February 2, 2015, unless earlier terminated as hereafter provided.
2. Beneficiary Provisions. The beneficiary provisions of the Policy
shall provide that upon the death of the Employee the proceeds shall be paid as
follows:
A. Amount to Corporation. To the Corporation there shall be
paid $1,100,000, or the total proceeds of less than that amount. The
Employee shall not have the right to change the beneficiary as to this
portion of the proceeds except with the consent of the Corporation, and
this designation may be accomplished pursuant to an assignment of an
interest in the Policy as described below.
B. Amount to Employee's Beneficiaries. Any balance of the
proceeds shall be paid to the beneficiary or beneficiaries noted by the
Employee in the Policy, and if no such beneficiary is noted, to the
Employee's spouse, if living, otherwise to the Executor or
Administrator of the estate of the Employee.
3. Ownership. Although the consent of the Corporation is required for
any change of beneficiary as to the portion of the proceeds payable to
Corporation as provided in Section 2, and although the exercise of ownership
rights is subject to the further restrictions provided in Sections 5 and 7, all
rights of ownership of the Policy continue in the Employee.
4. Premium Payments. The premiums on the Policy shall be paid by the
Corporation. Such premium payments shall be allocated between the Corporation
and the Employee as follows:
A. Corporation's Share. The Corporation's share of the premium
shall be equal to the lesser of (i) the economic benefit of $1,100,000
of one-year term insurance or (ii) the amount of planned premium due on
the Policy. Such economic benefit shall be computed in accordance with
the procedures specified in Internal Revenue Service Revenue Rulings
64-328 and 66-110, using the government "P.S. 58" rates set forth in
Revenue Rulings 55-747 and 66-110.
B. Employee's Share. The Employee's share of the premium shall
equal the planned premium pursuant to the Policy less the share of the
planned premium allocated to the Corporation in accordance with
subsection 4(A) above. The Employee shall reimburse the Corporation for
the amount of the premium allocated to the Employee at the time of each
premium payment by the Corporation. Solely as an administrative
convenience, the Employee may request that the Corporation make direct
payment to the Insurer of the entire premium due and charge the
Employee with earned income in an amount equal
-2-
3
to that portion of the premium allocated to the Employee in this
subsection.
5. 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.
6. Corporation's Policy Interest Defined. The limited policy ownership
interest hereby assigned by the Employee to the Corporation is that in the event
of the Employee's death during the term, the Corporation's policy interest shall
be an amount equal to $1,100,000 of death protection under the limited policy
ownership created hereunder as set forth in Section 2 hereof.
7. Restriction on Policy Loans and Surrenders. It is understood and
agreed that all cash values accruing to the Policy are the sole property of the
Employee and that the Corporation has no interest in or claim to such values.
The Corporation's interest in the Policy is limited to its beneficial interest
specified in Sections 2 and 6 hereof. It is further provided, however, that
while this Agreement is in force neither party to the Agreement shall have the
right to borrow, directly or indirectly against the Policy's values, to assign
the Policy as collateral (except the assignment from the Employee to the
Corporation to secure the death benefit payable to the Corporation hereunder) or
to surrender the Policy in full or in part.
8. 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.
9. 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.
10. Termination of the Agreement. This Agreement shall terminate on the
first to occur of the following: (a) expiration of the term of this Agreement as
set forth in Section 1 hereof; (b) while the Employee is living by written
notice by either the Corporation or the Employee to the other; (c) upon
termination of the Employee's employment with the Corporation. Upon termination
of this Agreement, the Corporation shall receive an amount equal to any unearned
premium attributable to the premiums allocated to the Corporation at the time of
such termination and the Corporation's interest in the Policy shall thereafter
cease.
-3-
4
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 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
-4-
5
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. Binding Effect. This Agreement shall be binding upon the
parties hereto, their respective heirs, assigns, successors, executors and
administrators.
13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties in connection with the subject matter hereof.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Illinois.
15. Amendments. Amendments may be made to this Agreement by a
written agreement signed by each of the parties and attached hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
ATTEST: XXXXXX METALCRAFT CO.
By: Xxxxx X. Xxxxxxxxx By: Xxxxxxx X. Xxxxxx XX
----------------------- -----------------------------
Xxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxx XX,
Secretary President
Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx XX
-5-
