Exhibit 10d
1
[Estate Preservation Plan]
[Owner is the Executive]
EPP SD-1.DOC
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT is made and entered into as of the
___ day of _________ 1999, by and between AMERITECH, a
Delaware corporation, with principal offices and place of
business in the State of Illinois (hereinafter referred to
as the "Corporation"), and _______________, an individual
(hereinafter referred to as the "Executive"),
WITNESSETH THAT:
WHEREAS, the Executive is employed by the Corporation
(or one of its subsidiaries or affiliates, and employment by
any such subsidiary or affiliate shall be considered the
same as employment by the Corporation for purposes of this
Agreement) and is eligible under the Corporation's "Estate
Preservation Plan" (hereinafter referred to as the "Plan")
to purchase life insurance coverage pursuant to a collateral
assignment, split-dollar arrangement (hereinafter referred
to as the "Split-Dollar Arrangement") with the Corporation;
and
WHEREAS, the Executive is acquiring life insurance
coverage by purchasing a policy of life insurance
(hereinafter referred to as the "Policy"), insuring the
lives of the Executive and the Executive's spouse (the
Executive and the Executive's spouse are also sometimes
hereinafter referred to as the "Insureds") and providing a
death benefit upon the death of the survivor of the
Insureds, which policy is described in Exhibit A attached
hereto and by this reference made a part hereof, and which
policy is issued by Manufacturers Life Insurance Company
(hereinafter referred to as the "Insurer"); and
WHEREAS, pursuant to the Plan, the Corporation is
obligated to pay a portion of the premiums on the Policy as
an employment benefit for the Executive, on the terms and
conditions hereinafter set forth; and
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WHEREAS, pursuant to the Plan, the Executive is
obligated to pay a portion of the premiums on the Policy, on
the terms and conditions hereinafter set forth; and
WHEREAS, the Executive will be the sole and absolute
owner of the Policy and, as such, will possess all ownership
rights and incidents of ownership in and to the Policy
(except as otherwise specifically provided herein); and
WHEREAS, pursuant to the Plan, the Corporation is
entitled to have the Policy collaterally assigned in its
favor by the Executive, in order to secure the payment of
the amount due it hereunder as a result of its payments
toward the premiums on the Policy; and
WHEREAS, the parties intend that by such collateral
assignment the Corporation shall receive only the right to
such payment, with the Executive retaining all other
ownership rights and incidents of ownership in and to the
Policy, as specified herein;
NOW, THEREFORE, in consideration of the premises and of
the mutual promises contained herein, the parties hereto
agree as follows:
1. Purchase of Policy. The Executive shall purchase
the Policy described in Exhibit A from the Insurer. 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 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 Policy.
a. The Executive shall be the sole and absolute
owner of the Policy, and may exercise all ownership rights
and incidents of ownership granted to the owner thereof by
the terms of the Policy, except as otherwise specifically
provided herein.
b. It is the intention of the parties to this
Agreement and the collateral assignment executed by the
Executive in favor of the Corporation in connection herewith
that the Executive shall retain all rights which the Policy
grants to the owner thereof and
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that the sole right of the Corporation shall be to be paid
the amount due it hereunder as a result of its payments
toward the premiums on the Policy. Specifically, but
without limitation, except as otherwise specifically provided
herein, the Corporation shall neither have nor exercise any
right as collateral assignee of the Policy which could in any way
defeat or impair the right of the Executive to utilize the cash
surrender value of the Policy or of the Executive's
beneficiary to receive that portion of the death benefit
provided under the Policy to which the Executive's
beneficiary is entitled pursuant to the terms of this
Agreement. All provisions of this Agreement and of such
collateral assignment shall be construed so as to carry out
such intention.
3. Policy Dividends. Subject to the provisions of
paragraph 6, while the Split-Dollar Arrangement remains in
effect, the Executive may make any elections and exercise
any and all other rights relating to Policy Dividends, as
hereinafter defined, granted to the owner of the Policy.
For purposes of this Agreement, the term "Policy Dividends"
shall include "dividends" earned by a participating policy
and "excess interest" earned by a non-participating policy
and any similar type of policy distribution.
4. Payment of Premiums. While the Split-Dollar
Arrangement remains in effect:
a. Except as otherwise provided herein, the premium
to be paid to the Insurer for the Policy in each "Policy
Year," as hereinafter defined in paragraph 10, shall be as
set forth in Column 3 ("Total Policy Year Premium") of
Exhibit B attached hereto and by this reference made a part
hereof.
b. Except as otherwise provided herein, on or before
the date of this Agreement as to the first Policy Year and
on or before the first day of each next succeeding Policy
Year, or within the grace period provided in the Policy, the
Corporation shall pay to the Insurer the amount set forth in
Column 3 of Exhibit B for that Policy Year. However, for
purposes of determining the amount due the Corporation
hereunder as a result of its payments toward the premiums on
the Policy, in each Policy
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Year the Corporation shall be
deemed to have paid only that portion of the premium for
which it has not received payment from the Executive as the
Executive's contribution to the premium as provided for in
paragraph 4(c) of this Agreement (hereinafter referred to as
the "Corporation's Policy Year Net Premium Payment").
c. Except as otherwise provided herein, as to each
Policy Year, a certain amount of contribution to the premium
shall be due from the Executive hereunder (hereinafter
referred to as the "Executive's Policy Year Contribution to
Premium") for such Policy Year. This amount shall be based
upon the annual cost of the current life insurance coverage
provided to the Executive hereunder for such Policy Year and
shall be equal to the "economic benefit" of such current
life insurance coverage for federal income tax purposes, as
provided in Revenue Ruling 64-328 (or the corresponding
applicable provisions of any future Revenue Ruling) or as
otherwise provided for federal income tax purposes. Under
current tax law, while both Insureds are alive, this amount
would be measured by the U.S. Life Table 38, and after the
death of one of the Insureds, this amount would be measured
under Revenue Ruling 66-110 by the lower of the P.S. 58
rate, as set forth in Revenue Ruling 55-747, or the
Insurer's current published premium rates per $1,000 of life
insurance coverage for individual one-year term life
insurance available for all standard risks. The Executive
shall be required to pay the Executive's Policy Year
Contribution to Premium to the Corporation for each such
Policy Year. So long as the Executive's employment with the
Corporation continues and unless the parties agree
otherwise, the Corporation shall deduct the Executive's
Policy Year Contribution to Premium from the Executive's
normal salary payments on a level basis during the Policy
Year, except as to the first Policy Year, during which the
Executive's Policy Year Contribution to Premium shall be
deducted on a level basis beginning as of the date of this
Agreement, and except as to the last Policy Year, during
which the Executive's Policy Year Contribution to Premium
shall be deducted on a level basis ending as of the date of
the termination of the Split-Dollar Arrangement. Upon the
termination of the
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Executive's employment with the
Corporation in any Policy Year and continuing until the
termination of the Split Dollar Arrangement, the Executive
shall be required to pay the balance of the Executive's
Policy Year Contribution to Premium for such Policy Year
(which has not theretofore been deducted from the
Executive's salary) generally within ninety (90) days of
such termination of the Executive's employment with the
Corporation, and the Executive shall be required to pay the
Executive's Policy Year Contribution to Premium for each
succeeding Policy Year generally within ninety (90) days of
the premium payment date for the Policy for each such Policy
Year. In all events, the Executive shall pay the
Executive's Policy Year Contribution to Premium prior to the
end of each such Policy Year. For the Policy Year in which
either of the Insureds dies, the Executive's employment with
the Corporation is terminated, or the Split-Dollar
Arrangement is otherwise terminated, an appropriate
adjustment will be required to the Executive's Policy Year
Contribution to Premium for such Policy Year to reflect such
event.
d. Based on the foregoing provisions of this
paragraph 4, under current tax law, it is not anticipated
that any amount of income will be reportable by the
Executive for federal, state or local income tax purposes as
a result of the current life insurance coverage provided to
the Executive hereunder for any Policy Year. However, if
any amount of income becomes reportable by the Executive for
federal, state or local income tax purposes as a result of
the current life insurance coverage provided to the
Executive hereunder for any Policy Year, then the
Corporation shall furnish to the Executive a statement of
such reportable income for such Policy Year.
e. Based on the foregoing provisions of this
paragraph 4, if the Executive's employment with the
Corporation continues until the Executive attains age sixty
-five (65), and both Insureds continue to live until the
termination of the Split-Dollar Arrangement pursuant to
paragraph 8(a)(5), under current tax law, the Corporation's
Policy Year Net Premium Payment under paragraph 4(b) and the
Executive's Policy Year
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Contribution to Premium under
paragraph 4(c) during each Policy Year while the
Split-Dollar Arrangement remains in effect would be
illustrated by Columns 6 and 5, respectively, of Exhibit B.
5. Collateral Assignment. To secure the payment to
the Corporation of the amount due it hereunder as a result
of its payments toward the premiums on the Policy, the
Executive has, contemporaneously herewith, assigned the
Policy in favor of the Corporation as collateral, which
collateral assignment specifically provides that the sole
right of the Corporation thereunder is to be paid the amount
due it hereunder as a result of its payments toward the
premiums on the Policy. Such payment shall be made from the
cash surrender value of the Policy (as defined therein) if
the Split-Dollar Arrangement is terminated or if the
Executive surrenders or cancels the Policy while the Split
-Dollar Arrangement remains in effect, or from the death
benefit provided under the Policy if both Insureds die while
the Policy and the Split-Dollar Arrangement remain in
effect. In no event shall the Corporation have any right to
borrow against or withdraw amounts from the Policy, to
surrender or cancel the Policy, or to take any other action
which would impair or defeat the rights of the Executive as
the owner of the Policy. The collateral assignment of the
Policy to the Corporation hereunder shall not be terminated,
altered or amended by the Executive while the Split-Dollar
Arrangement is in effect. The parties hereto agree to take
all action necessary to cause such collateral assignment to
conform to the provisions of this Agreement.
6. Limitations on Executive's Rights under Policy. As
the sole and absolute owner of the Policy, the Executive may
exercise all of the rights, options, privileges and other
incidents of ownership granted to the owner thereof by the
terms of the Policy (including, without limitation, the
unlimited ability to borrow against or withdraw amounts from
the cash surrender value of the Policy and to surrender or
cancel the Policy). Notwithstanding the foregoing so long
as the Split-Dollar Arrangement remains in effect: (1) the
Executive shall not take any action with respect to the
Policy which
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would have a direct or indirect adverse effect
on the Corporation's interests under this Agreement in the
Policy without the Corporation's prior written consent; and
(2) except with respect to the Executive's right to change
the beneficiaries of the "Executive's Death Benefit," as
hereinafter defined in paragraph 7, and to assign the
Executive's interests in the Policy and under this
Agreement, as contemplated in paragraph 13, the Executive
shall not take any other action with respect to the Policy
(regardless of whether it would directly or indirectly
adversely affect the Corporation's interests under this
Agreement in the Policy) without the Corporation's prior
written consent, which consent will not be unreasonably
withheld by the Corporation. For purposes of this paragraph
6, the Executive may borrow against or withdraw from the
cash surrender value of the Policy any amounts which may be
required to be paid to the Corporation and which are due the
Corporation under paragraph 4(c), so long as the amount of
any such loan or withdrawal is chargeable solely against the
"Executive's Death Benefit," as hereinafter defined in
paragraph 7, and that portion of the cash surrender value of
the Policy which is in excess of the cash surrender value of
the Policy due the Corporation hereunder as a result of its
payments toward the premiums on the Policy pursuant to the
collateral assignment hereunder.
7. Collection and Payment of Death Benefit.
a. Upon the death of the survivor of the Insureds
while the Split-Dollar Arrangement remains in effect, the
Corporation and the Executive's beneficiary shall promptly
take all action necessary to obtain the death benefit
provided under the Policy and payable as a result of the
maturity of the Policy (hereinafter referred to as the
"Death Benefit").
b. The Death Benefit shall be paid as follows:
(1) The Corporation shall first be paid from the
Death Benefit any unpaid amount of the Executive's Policy
Year Contribution to Premium owed to it by the Executive
under paragraph 4(c).
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(2) The Corporation shall next be paid from the
Death Benefit the total net amount of the payments made by
it toward the premiums on the Policy hereunder. Such amount
shall be the sum of the Corporation's Policy Year Net
Premium Payment amounts under paragraph 4(b) (hereinafter
referred to as the "Corporation's Cumulative Net Premium
Payment"). Based on the foregoing provisions of this
Agreement, if, for example, both Insureds died on the last
day of any Policy Year (other than the Policy Year in which
the Executive's employment with the Corporation shall have
terminated or any subsequent Policy Year), under current tax
law, the amount of the Corporation's Cumulative Net Premium
Payment would be equal to the amount set forth in Column 7
of Exhibit B for the Policy Year in which both Insureds
died.
(3) The Executive's beneficiary shall next be
paid, in the manner and in the amount or amounts provided in
the beneficiary designation provision of the Policy, from
the Death Benefit an amount equal to the "Executive's Death
Benefit," as hereinafter defined. For purposes of this
Agreement, the "Executive's Death Benefit" shall be an
amount equal to the lesser of (A) the amount provided in
Column 4 of Exhibit B (hereinafter referred to as the
"Executive's Maximum Death Benefit") for the Policy Year in
which the survivor of the Insureds shall have died or (B)
that portion of the Death Benefit remaining after the
payments provided for in subparagraphs (1) and (2) of this
paragraph 7(b), and then reduced by any loan chargeable
against the Executive's Death Benefit. Based on the
foregoing provisions of this Agreement, if the Executive's
employment with the Corporation continues until the
Executive attains age sixty-five (65), under current tax
law, the amount of the Executive's Death Benefit, before any
reduction for any loan chargeable against the Executive's
Death Benefit, would be equal to the Executive's Maximum
Death Benefit as set forth in said Column 4 for the Policy
Year in which the survivor of the Insureds dies.
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(4) The Corporation shall receive the balance, if
any, of the Death Benefit remaining after the payments
provided for in subparagraphs (1), (2) and (3) of this
paragraph 7(b).
c. The parties hereto agree that the beneficiary
designation provision of the Policy shall conform to the
provisions hereof.
8. Termination of Split-Dollar Arrangement.
a. The Split-Dollar Arrangement shall terminate,
without notice, on the first day of the month following the
month during which the first of the following events occurs:
(1) the Executive fails to make any premium
payment required under paragraph 4(c) of this Agreement for
any Policy Year by the end of such Policy Year or the
Executive notifies the Corporation that the Executive
intends to surrender or cancel the Policy;
(2) the Executive's employment with the
Corporation terminates before the date upon which the
Executive becomes "retirement eligible," as hereinafter
defined in paragraph 8(c);
(3) the Executive is demoted by the Corporation
to a position that is not eligible under the Plan, even if
the demotion occurs on or after the date upon which the
Executive becomes "retirement eligible," unless the Senior
Vice President of Human Resources or the Compensation
Committee of the Corporation shall make a determination
based on all relevant facts and circumstances that the
Split-Dollar Arrangement shall not terminate as a result of
the Executive's demotion and so notifies the Executive;
(4) the Executive establishes a relationship with
a competitor of the Corporation or engages in any activity
which is in conflict with or adverse to the interests of the
Corporation whether before or after the Executive's
employment with the
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Corporation has terminated and whether
before, on or after the date upon which the Executive
becomes "retirement eligible;" or
(5) if the Executive's employment with the
Corporation terminates after the date upon which the
Executive becomes "retirement eligible" or hereinafter
defined in paragraph 8(c), the later of:
(A) the date the Executive attains age 65,
or
(B) the date immediately before the date
fifteen (15) years after the "Policy Date" of the Policy (as
defined therein), namely, June 30, 2014.
b. In addition, the Executive may terminate the
Split-Dollar Arrangement at any time by written notice to
the Corporation. Such termination shall be effective as of
the date of such notice.
c. For purposes of this Agreement, the Executive
shall be deemed to be "retirement eligible" as of the date
upon which (1) the Executive's age and service equal 75
years or (2) the Executive is eligible to receive a Minimum
Disability Pension Allowance under the Corporation's "Senior
Management Retirement and Survivor Protection Plan" or (3)
the Executive has been "disabled" for more than fifty-two
(52) weeks and had at least six (6) months credited service,
as long as the Executive continues to be "disabled," in each
case as defined under subsection 3.2 of the Corporation's
"Senior Management Long Term Disability Plan" or the
Corporation's "Long Term Disability Plan for Salaried
Employees." Anything contained in this Agreement to the
contrary notwithstanding, the Executive's employment with
the Corporation shall be deemed to continue for as long as
the Executive is eligible to receive Sickness and Accident
Disability Benefits under the Corporation's "Sickness and
Accident Disability Benefit Plan." For purposes of this
paragraph 8(c), each of the Corporation's plans identified
above shall also include any successor plan.
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9. Options on Termination of Split-Dollar Arrangement.
a. Upon termination of the Split-Dollar Arrangement,
the Corporation shall be entitled to receive from the cash
surrender value of the Policy an amount equal to the sum of
(1) the Corporation's Cumulative Net Premium Payment plus
(2) the amount owed to it by the Executive under paragraph
4(c), if any. Such amount is hereinafter referred to as the
"Corporation's Cumulative Net Premium Payment at
Termination."
b. For thirty (30) days after the date of the
termination of the Split-Dollar Arrangement, the Executive
shall have the option of obtaining the release of the
collateral assignment of the Policy to the Corporation. To
obtain such release, the Executive shall pay to the
Corporation an amount equal to the Corporation's Cumulative
Net Premium Payment at Termination, and, notwithstanding any
other provision hereof, the Executive shall specifically be
allowed to borrow against or withdraw from the cash
surrender value of the Policy for this purpose. 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.
c. If the Executive fails to exercise such option
within such thirty (30) day period, then, at the request of
the Corporation, the Executive shall execute any document or
documents required by the Insurer to transfer the interest
of the Executive in the Policy to the Corporation.
Alternatively, the Corporation may enforce its right to be
paid an amount equal to the Corporation's Cumulative Net
Premium Payment at Termination under the collateral
assignment of the Policy. Thereafter, neither the
Executive, nor the Executive's heirs, assigns or
beneficiaries shall have any further interest in and to the
Policy, either under the terms thereof or under this
Agreement. However, in no event shall the Executive be
liable to the Corporation in the event the cash surrender
value of the Policy at the time of the termination of the
Split-Dollar Arrangement is insufficient to pay the
Corporation an amount equal to the Corporation's Cumulative
Net Premium Payment at Termination.
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d. Anything contained in this Agreement to the
contrary notwithstanding, if the Split-Dollar Arrangement
terminates (other than as a result of the death of the
survivor of the Insureds) for any reason other than pursuant
to paragraph 8(a)(5) of this Agreement, the Corporation
shall also be entitled to recover, in addition to the
Corporation's Cumulative Net Premium Payment at Termination,
an amount sufficient to pay all federal, state and local
income taxes, if any, imposed upon the Corporation as a
result of such early termination and attributable to the
Policy so that the Corporation will receive the
Corporation's Cumulative Net Premium Payment at Termination
on an after-tax basis. The amount, if any, payable to the
Corporation pursuant to this paragraph 9(d) shall be
determined by the Corporation's independent certified public
accountant which is responsible for preparing the income tax
returns for the Corporation for such Policy Year.
10. Policy Year. For purposes of this Agreement, the
term "Policy Year" shall mean, as the context requires, the
twelve month period beginning July 1st and ending June 30th
in which this Agreement is signed or any succeeding twelve
month period in which this Agreement is in force. Each
Policy Year shall begin on July 1st and end on June 30th of
each calendar year. The first such twelve month period in
which this Agreement is signed shall be the first Policy
Year (or, alternatively, Policy Year 1) and each such
succeeding twelve month period will be the succeeding Policy
Year.
11. Insurer Not a Party. The Insurer shall be fully
discharged from its obligations under the Policy by payment
of the 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 Executive and filed with the
Insurer in connection herewith.
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12. 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.
13. Binding Effect. This Agreement (and all rights,
options, privileges and obligations hereby created and/or
imposed) shall be binding upon and inure to the benefit of
the Corporation and its successors and assigns, and the
Executive and the Executive's successors, assigns, heirs,
executors, administrators and beneficiaries. More
specifically, if the Executive shall assign any or all of
the Executive's interests in the Policy and under this
Agreement to another person ("Third Party Owner"), then all
of such rights, options, privileges and obligations in the
Policy and under this Agreement which would otherwise inure
to the benefit of or be imposed upon the Executive shall
instead inure to the benefit of or be imposed upon the Third
Party Owner.
14. 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. 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.
15. Governing Law. This Agreement, and the rights of
the parties hereunder, shall be governed by and construed in
accordance with the law of the State of Illinois.
16. Death of Executive as First Death. If the
Executive is the first of the Insureds to die, then the
Executive's successor in interest shall, unless the context
otherwise requires, be substituted in place of the Executive
for purposes of this Agreement. Further, after the
Executive's death, all rights, options, privileges and
obligations in the Policy and under this Agreement which
theretofore inured to the benefit of and were imposed upon
the Executive shall instead inure to the benefit of and be
imposed upon the Executive's successor in interest. The
Executive's successor in interest
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shall be the person to
whom the Executor's interest in the Policy and under this
Agreement shall pass as a result of the Executive's death.
This paragraph 16 shall apply only to the extent that the
Executive has not assigned the Executive's interests in the
Policy and under this Agreement to a Third Party Owner prior
to the Executive's death and shall only apply if the
Executive dies while the Split-Dollar Arrangement is in
effect.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement, in duplicate, as of the day and year first
above written.
AMERITECH
By:______________________________
Its authorized officer
"Corporation"
ATTEST:
______________________________
Secretary
Signature:___________________________
Name:___________________________
Executive
