XXXXX ORGAN COMPANY
EXECUTIVE BONUS PROGRAM AGREEMENT
AGREEMENT, made and entered into this 1st day of
August, 1999, by and between XXXXX ORGAN COMPANY, a corporation
organized under the laws of the Commonwealth of Pennsylvania, and
having its principal place of business at 000 Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter referred to as
"Employer") and Xxxxxx X. Xxxxxxx, currently residing 00 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000 (hereinafter referred to as
"Executive").
WITNESSETH THAT:
WHEREAS, the Employer employs the Executive in the
position of Vice President of Product Development; and
WHEREAS, the Executive has provided valuable services
to the Employer; and
WHEREAS, the President or his designee of the Employer
believe it is in the Employer's best interest to retain the
Executive's services; and
WHEREAS, the Executive wishes to enter into an
agreement that will provide additional compensation in the future
subject to the Executive fulfilling the terms and conditions of
this agreement.
NOW, THEREFORE, in consideration of the premises, and
for other good and valuable consideration, receipt of which both
parties hereby acknowledge, the Employer and the Executive
mutually agree as follows:
ARTICLE 1.
Contributions/Deferred Compensation Account
1.01. Beginning on August 1, 1999 and continuing
thereafter prior to April of each year ("Contribution Date"), the
Employer may credit a discretionary sum based on the decision of
the President or his designee of the Employer ("Deferred Amount")
to a deferred compensation account ("Account") established for
the Executive.
If the Executive shall remain in the employment of the
Employer until the "Retirement Date" hereinafter defined in
Article 2.01, then in such event, he shall be entitled to receive
those retirement benefits from the Employer based upon the
Employer's contributions accumulated at an assumed pre-retirement
interest rate, equal to the annual prime rate of interest as
stated in the Wall Street Journal on December 31 of each calendar
year, not to exceed 9% in any year.
Unless otherwise elected by the Employer, no amount
will be credited to the Account on or after any Contribution Date
if the Executive was not employed on a full time basis during the
entire period between Contribution Dates.
If there is an extraordinary gain on the sale of an
asset of the Employer, defined as a gain in excess of $500,000
per transaction, the Employer may contribute a discretionary
amount to your account, determined based upon, among other
things, your years of service with the Employer, your involvement
with the asset sold, and any other contributing factor that the
President or his designee of the Employer deem appropriate.
1.02. Deferred amounts will be invested in such
assets, including money markets, mutual funds, or single and/or
joint life insurance policies, as the Employer may select from
time to time. All such assets ("Account Assets") will be
identified and allocated to the Account for the sole purpose of
measuring the Account's value, and will remain part of the
Employer's general assets and subject to the claims of the
Employer's creditors. Account Assets shall be valued at their
fair market value without regard to any liens, security interests
or loans, except for loans used to pay benefits. Any life
insurance policy will be valued at its cash surrender value until
a death benefit is payable, at which point the value of the
Account will be based on the death benefit received by the
Employer rather than the policy's cash surrender value. In
construing the preceding sentence, if a life insurance policy is
subject to a split-dollar agreement, the death benefit received
by the Employer shall equal the amount paid to the Employer under
the split-dollar agreement.
1.03. It is understood and agreed that the Employer
will have all right, title and interest in all assets used to
measure the value of the Account, and that neither the Executive
nor his or her heirs, beneficiaries or creditors shall have any
right, title or interest in any of the Employer's assets as a
result of this Agreement, whether or not the asset is used to
measure the value of the Account. The Employer is free to select
the source of the payment of any benefits under this Agreement,
without any obligation to use any particular asset or assets. At
no time will the creditor status of the Executive, or of any
person or entity claiming benefits under this Agreement, be
greater than that of an unsecured general creditor of the
Employer. This Agreement constitutes an unsecured promise by the
Employer to pay benefits. It is the intention of the parties
that, in form, substance and operation, this Agreement will
constitute an "unfunded" deferred compensation program under the
Employee Retirement Income Security Act of 1974, as amended, and
the Internal Revenue Code of 1986, as amended.
ARTICLE 2.
Retirement Benefit
2.01. A retirement benefit will be paid upon the
Executive's retirement on or after attaining age sixty-two (62).
2.02. The Account will be paid in installments over a
period of 10 years. The first installment will be made thirty
(30) days following the date of the Executive's retirement.
Interest will accrue on unpaid installments equal to the annual
prime rate of interest minus three percentage (3%) points on
December 31st of each calendar year, not to exceed six percent
(6%) in any year.
2.03. No later than 90 days prior to retiring, the
Executive may elect to have the Account paid in one of the
following installment options: annual payments, quarterly
payments, or monthly payments. In default of the Executive's
election, the Employer will elect the form of payment.
2.04. The amount of each installment will be
calculated as follows. For the first year of retirement, the
value of the Account on the date of retirement shall be divided
by the number of remaining years of payment to determine the
annual benefit ("Annual Benefit") for that year. On each
respective yearly anniversary date of the Executive's retirement,
the divisor shall be reduced by one to arrive at a particular
year's Annual Benefit. The value of the Account shall be divided
by the divisor so obtained in order to determine the annual
Benefit for that year. As a result of this annual reduction in
the divisor, the divisor for the last Annual Benefit will be one.
To arrive at the amount of each installment, each year's Annual
Benefit shall be divided by the number of installments for that
year. Notwithstanding, the final installment payment shall equal
the remaining balance of the Account.
2.05. If the Executive dies before the Account has
been paid in full, any remaining installments may either be paid
in a lump sum at the option of the Employer or continue to be
paid for the remainder of the installment period, to the
Executive's designated beneficiary; if there is no designated
beneficiary, to the Executive's estate.
ARTICLE 3.
Pre-retirement Death Benefit
3.01. A pre-retirement death benefit will be paid if
the Executive dies prior to retirement as defined in Article 2,
provided the Executive is employed by the Employer at the time of
death.
3.02. The Account will be paid in a single payment or
a series of payments as determined by the Employer. If the value
of the Account is measured by a policy or policies insuring the
Executive's life, and a death benefit is payable as a result of
the Executive's death, the single payment will be made thirty
(30) days following the Employer's receipt of its share of life
insurance death benefits. Otherwise, the payment(s) will begin
within thirty (30) days after the Executive's death.
Notwithstanding the foregoing provisions of this Section, the
Employer will retain any benefit payable to the Executive's
estate until the appointment of an executor or administrator.
3.03. The provisions of Section 2.04 shall apply to
the calculation of each installment, except that the value of the
Account shall be calculated on the date of the Executive's death
with adjustments as provided in Section 1.02 for life insurance
death benefits.
3.04. Payments made under this Article 3 shall be made
to the Executive's designated beneficiary or, if there is no
designated beneficiary, to the Executive's estate.
ARTICLE 4.
Termination of Employment
4.01. If the Executive's employment terminates, other
than as a result of death, prior to retirement as provided in
Article 2, the Executive's vested benefits (determined at the
date of termination of employment) will be paid upon the
Executive's attainment of age 62 in accordance with Article 2.
If the Executive's employment terminates as a result of death,
benefits will be paid under Article 3 and not this Article.
4.02. Initial vesting is based on years of service as
an Executive with the Employer. Thereafter, a five-year vesting
schedule applies to each contribution to the Program (hereinafter
defined). Contributions are 20% vested after one year of
service, 40% after 2 years of service, 60% after 3 years of
service, 80% after 4 years of service and 100% after 5 years of
service.
4.03. Notwithstanding the provisions of Section 4.02,
the vesting percentage will be 100 if the Executive's employment
terminates due to total disability. The Executive will be deemed
totally disabled if, due to bodily injury occurring or mental or
physical disease originating while this Agreement is in force, he
is determined to be disabled based on the definition of
disability as defined in the insurance policy currently in force
with the Employer at the time of disability.
4.04. Notwithstanding the provisions of Section 4.02,
the vesting percentage will be 100 if the Executive's employment
terminates due to a "Change in Control." A Change in Control
means the occurrence of (i) a person (including a group as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934) becoming, directly or indirectly, the beneficial owner (as
defined under the Securities Exchange Act of 1934) of fifty
percent (50%) or more of the voting shares of common stock of the
Employer, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors of the Employer (the "Board"), ceasing for any
reason to constitute at least a majority of the Board unless the
election of each director of the Board, who was not a director of
the Board at the beginning of such period, was approved by a vote
of at least two-thirds of the directors then still in office who
were directors at the beginning of such period, or (iii) the
Employer merging or consolidating with or having its assets
purchased by another corporation and as a result of such merger,
consolidation or sale of assets, less than a majority of the
outstanding voting stock of the surviving, resulting or
purchasing corporation being owned, immediately after the
transaction, by the holders of the voting stock of the Employer
outstanding immediately before the transaction. Notwithstanding
the foregoing, a Change in Control will not be deemed to occur
due to the transfer of shares of common stock of the Employer
between individuals who are related within two (2) degrees of
consanguinity by will, gift or trust transferred pursuant to the
laws of descent and distribution of the Commonwealth of
Pennsylvania or pursuant to an agreement to purchase or sell such
common stock of the Employer.
4.05. The Employer will pay any benefit payable under
this Article 4 in the same installments as defined in
Article 2.02 thirty (30) days following the date of termination
of employment.
4.06. Notwithstanding anything contained herein to the
contrary, if the President or his designee determines that an
Executive has committed an act of embezzlement, fraud,
dishonesty, nonpayment of any obligation owed to the Employer, or
an Executive makes an unauthorized disclosure of any Employer
trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Employer customer to
breach a contract with the Employer or induces any principal for
whom the Employer acts as agent to terminate such agency
relationship, neither the Executive nor his or her estate shall
be entitled to a distribution of any amounts under the Program
whatsoever.
ARTICLE 5.
Hardship Distributions
5.01. While employed by the Employer, the Executive
may apply to the Program Administrator (hereinafter defined) for
a hardship distribution. A hardship distribution can be made
only for an unforeseeable emergency or for education for the
Executive or Executive's dependents. The term "unforeseeable
emergency" means a severe financial hardship to the Executive or
his dependent resulting from a sudden and unexpected illness or
accident, loss of the Executive's property due to casualty, or
other similar extraordinary and unforeseeable circumstances
arising as a result of circumstances beyond the Executive's
control. Except for hardship distributions for education
expenses, no payment will be made to the extent other
alternatives to relieve the hardship are reasonably available to
the Executive such as the sale of assets, or other borrowings or
loans.
5.02. The maximum amount which will be applicable to
the hardship distribution shall be limited to 50% of the
Executive's vested Account balance at the time of distribution to
a maximum of $100,000.
5.03. The value of the Account will be reduced by any
hardship distribution.
ARTICLE 6.
Claims Procedure
6.01. The Executive or his or her beneficiary
("Claimant"), or duly authorized representative, must file a
claim for benefits in writing with Xxxxxx X. Xxxxxxx, the
Employer representative, who for purposes of this Agreement is
referred to as the Program Administrator. The Employer reserves
the right to change the Program Administrator from time to time,
and will notify the Executive of any such change.
6.02. If the claim is denied in whole or in part,
written notice of the decision will be furnished to the Claimant
within a reasonable time after receipt of the claim. The notice
will be prepared in a manner calculated to be understood by the
Claimant and will (1) state the specific reason or reasons for
the denial, (2) refer specifically to the pertinent Program
provisions on which the denial is based, (3) describe any
additional material or information necessary for the Claimant to
perfect a claim and an explanation as to why such material or
information is necessary, and (4) provide appropriate information
as to the steps to be taken by the Claimant if the Claimant
wishes to submit the claim for review.
6.03. A denied claim is appealable to the Program's
Named Fiduciary for review. Xxxxx Organ Company is the Program's
Named Fiduciary. The Employer reserves the right to change the
Named Fiduciary from time to time. The Claimant, or the
Claimant's duly authorized representative, must request a review
in writing no later than sixty (60) days after receipt of notice
of denial of the claim. The Claimant, or the Claimant's duly
authorized representative, may review pertinent documents and
submit issues and comments in writing. The Named Fiduciary may,
at his discretion, hold a hearing. The Named Fiduciary will make
a written decision following receipt of the request for review.
Absent special circumstances, the decision will be, made no later
than sixty (60) days following receipt of the request for review.
The decision on review will include specific reasons for the
decision and will be written in a manner calculated to be
understood by the Claimant. The decision will also include
specific references to the pertinent Program provisions on which
the decision is based.
ARTICLE 7.
Miscellaneous
7.01. Neither the Executive nor any beneficiary or
creditor of the Executive shall have any right of anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment. In the event of an attempted
assignment, alienation, sale, pledge or transfer, the Employer
shall have no further liability or responsibility for the payment
of benefits.
7.02. The term "beneficiary" includes any person,
trust or other entity, including the plural, last designated in
writing by the Executive and filed with the Program
Administrator. The Executive may revoke or change any
beneficiary designation, in whole or in part, without the
beneficiary's consent.
7.03. The Named Fiduciary and designated Program
Administrator shall have the discretionary authority to interpret
the terms of this Agreement.
7.04. This Agreement may be amended or revoked, in
whole or in part, only by the written agreement of the Employer
and the Executive.
7.05. This Agreement is binding on the parties, as
well as their beneficiaries, heirs, and successors.
7.06. This Agreement will be executed in duplicate,
with one copy retained by each party. Both copies shall be
considered an original copy and together shall constitute one and
the same Agreement,
7.07. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania.
XXXXX ORGAN COMPANY
(Employer)
Attest: By /s/ XXXXXX XXXXXXXXX
Xxxxxx Xxxxxxxxx
/s/ XXXXXXX X. XXXXXXXX Title: President
Xxxxxxx X. Xxxxxxxx, Sec.
/s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx (Executive)
ENDORSEMENT SPLIT DOLLAR LIFE INSURANCE AGREEMENT
INSURER: Xxxx Xxxxxxx Variable Life Insurance Company
POLICY NUMBER: 51398001
INSURED/EMPLOYEE: XXXXXX X. XXXXXXX
POLICYOWNER/CORPORATION: XXXXX ORGAN COMPANY
EFFECTIVE DATE OF AGREEMENT: August 1, 1999
The respective rights and duties of the Corporation and
Insured/Employee in the subject policy shall be as defined in the
following numbered paragraphs, namely:
I. DEFINITIONS
"DEATH PROCEEDS": Death Proceeds as used in this Agreement shall
mean Specified Amount, described as Option 1 in the policy
contract;
"CASH VALUES": Cash Values as used in this Agreement shall mean:
For Purposes of Policy Surrender - The Cash Surrender Value, as
that term is defined in the policy contract.
For Purposes Of Measuring Premium Payments And Obligations -
Accumulated Value or Policy Account Value, as that term is
described in the policy contract.
"PLANNED PERIODIC PREMIUM": shall mean that premium level
selected by the parties subject to the Insurer's minimum premium
requirements.
II. POLICY TITLE AND OWNERSHIP
Title and Ownership shall reside in the Corporation for its use
and for the use of Insured all in accordance with this Agreement.
The Corporation alone may, to the extent of its interest,
exercise the right to borrow or withdraw on the policy cash
values. Where the Corporation and Insured (or his assignee, with
the consent of the Insured) mutually agree to exercise the right
to increase the coverage under the subject Split Dollar Policy,
then, in such event, the rights, duties and benefits of the
parties to such increased coverage shall continue to be subject
to the terms of this Agreement.
Notwithstanding any provision hereof to the contrary, the
Corporation shall have the sole authority to direct the manner in
which the Policy 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.
III. BENEFICIARY DESIGNATION RIGHTS
Insured/Employee (or his assignee) shall have the right and power
to designate a beneficiary or beneficiaries to receive his share
of the proceeds payable on the death of the insured but subject
to any right or interest the Corporation may have in such
proceeds as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
Planned Periodic premium shall be paid annually as of the date of
issue and upon each subsequent premium due date. The Corporation
shall pay an amount equal to the Planned Periodic Premium due.
The Employee shall be charged with taxable income by reason of
the economic benefit of the insurance protection received, as
determined under Revenue Rulings 64-328, l964-2 C.B.ll and 66-
ll0, l966-l C.B. l2. The Corporation shall furnish the Employee
a statement on Form W-2 of his or her taxable income, including
income, received under this Plan.
V. ASSUMPTION OF PREMIUM PAYMENT OBLIGATION BY THE OTHER
PARTY
In the event either the Corporation or Insured/Employee (or his
assignee) fails to fulfill the obligation to pay premiums as
contemplated in Paragraph IV., the other may freely assume such
obligation in which event the rights under the policy shall be
altered in the manner described in Paragraph VIII.
VI. DIVISION OF DEATH PROCEEDS OF POLICY
The division of death proceeds of the policy, when premiums are
paid in strict accord with Paragraph IV. and when insured's death
occurs before the end of the grace period for any premium in
default, is as follows:
A.(1) Prior to The Insured's reaching age 62, or
retirement age, if later:
The Insured's Beneficiary, (or his assignee's),
beneficiary(s), designated in accordance with Paragraph
II., shall be entitled to a minimum of $400,000 of the
policy proceeds, if available. The amount payable to the
Insured/Employee's Beneficiary shall be determined
annually by the President of the Company, but shall not
be less than $400,000 of the policy proceeds, if
available.
A.(2) Post The Insured's attainment of age 62, or
retirement age, if later:
The Insured's Beneficiary, (or his assignee's),
beneficiary(s), designated in accordance with Paragraph
II., shall be entitled to a amount which shall be
determined annually by the President of the Company.
B. Corporation/Assignee shall be entitled to the remainder
of such proceeds, less, any indebtedness determined as of
the date of death.
C. Corporation and Insured's Beneficiary (or his assignees)
shall share in any interest due on the death proceeds as
their respective share of the proceeds as above-defined
bears to the total proceeds excluding such interest.
D. In the event the Insured's death shall be the result of
suicide within a two year period following the issuance of a
life insurance policy insuring Employee's life or should
Employee be found to have committed fraud in completion of
the insurance application, then no death benefits shall be
payable to Employee or his designated beneficiary.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
Division of the cash surrender value of the policy, when premiums
are paid in strict accord with Paragraph IV. and when surrender
occurs not later than sixty days after due date of any premium in
default, are as follows:
The Corporation shall be entitled to an amount equal to the
policy's cash value, as that term is defined in the policy
contract, less any policy loans and unpaid interest or cash
withdrawals previously incurred by the Corporation and any
applicable policy surrender charges. Such cash value shall be
determined as of the date of Surrender.
VIII. PARTIES' RIGHTS WHERE PREMIUM PAYMENT VARIATIONS EXIST
When premiums are not paid in strict accord with Paragraph IV.,
division of death proceeds or net cash value of the policy, as in
either case is defined in Paragraph VI. or VII., shall be as
follows:
X.Xx the event the Corporation should pay less in the aggregate
than the share of planned periodic premiums, as defined in
Paragraph IV., then the Corporation's share of death proceeds
or of the net cash value of the policy on surrender shall be
decreased within the limits of such proceeds or cash value, as
the case may be, by the total amount of such decreased
premiums. The Insured's (or his assignee's) designated
beneficiary, in the event of death, and the Insured (or his
assignee), in the event of surrender, shall be entitled to any
remainder of proceeds or net cash value.
B.Alternatively, should the Corporation pay more in the
aggregate than its share of premiums defined in Paragraph IV.,
then the Corporation's share of death proceeds or the cash
value of the policy on surrender shall be increased within the
limits of such proceeds or cash value, as the case may be, by
the total amount of such increased share does not exceed the
sum of the Corporation's premiums paid. The Insured's (or his
assignee's designated beneficiary, in the event of death, and
the Insured (or his assignee), in the event of surrender,
shall be entitled to any remainder of cash value.
IX. NONFORFEITURE DEATH PROCEEDS
The Corporation's share of death proceeds payable on the
Insured's death while the policy is in force under any of its non-
forfeiture provisions shall be an amount equal to the excess, if
any, of Corporation's share of the policy's cash value at the
date of default in premium payment (such share determined in the
manner prescribed in Paragraphs VI. or VIII. in relation to the
facts presented) over any indebtedness against the policy at
Insured's death. The designated beneficiary(ies) shall be
entitled to any remainder of such proceeds.
X. NONFORFEITURE CASH VALUE
The Corporation's share of the cash value payable on surrender of
the policy while it is in force under any of its non-forfeiture
provisions shall be an amount equal to the lesser of: (a) the
cash value at date of surrender less any policy surrender charge,
or (b) the excess, if any, of the Corporation's share of the
policy's cash value in the manner prescribed in Paragraphs VII.,
VIII. of IX. in relation to the facts presented over any
indebtedness on the policy at date of surrender. Insured (or his
assignee) shall be entitled to any remainder of such cash value.
XI. PREMIUM WAIVER
If the policy contains a premium waiver provision or waiver of
monthly deduction, such waived amounts shall be considered for
all purposes of this Agreement as having been paid by Insured (or
his assignee).
XII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY
ELECTION EXISTS
In the event the subject policy involves as endowment or annuity
element, the Corporation's right and interest in any endowment
proceeds or annuity benefits, on expiration of the deferment
period, shall be determined under the provisions of this
Agreement by regarding such endowment proceeds or the commuted
value of such annuity benefits as the policy's net cash value.
The Corporation's right and interest in endowment proceeds or in
annuity benefits shall be fulfilled at the end of the endowment
period or annuity deferment period under either the policy proper
or under its settlement provisions. As contemplated herein, an
annuity policy shall be considered to mature for its commuted
value on the specific date stated in the policy on which benefits
become payable or on a date elected by the Corporation pursuant
to the terms of the policy.
XIII. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of
the following events:
A. Termination by any party upon the occurrence of 30-day
written notice to the other parties;
B. Termination of Executive's employment for cause or
Executive's Voluntary Resignation.
C. The Insured's (or his assignee's ) failure to pay (his/its)
proportionate share of premiums, if any, as mutually-agreed upon
by the Corporation and Insured under the options provided within
Paragraphs IV. and V., herein.
Upon such termination, Insured (or his assignee) shall have a 90-
day option to receive from the Corporation an absolute assignment
of the policy in consideration of a cash payment to the
Corporation, whereupon this Agreement shall terminate. Such cash
payment shall be the greater of:
A. The Corporation's share of the cash value of the policy
on the date of such assignment, as defined in this
Agreement;
B. The amount of the premiums which have been paid by the
Corporation prior to the date of such assignment;
Should Insured (or his assignee(s)) fail to exercise the option
within the prescribed 90-day period, Corporation shall have an
additional 30 day period to elect to continue the coverage in
which case Insured shall transfer their respective interests to
the Corporation.
Should the Corporation elect not to continue the coverage,
Insured (or his assignee(s)) agrees that the subject policy will
be surrendered to the Insurer and the proceeds distributed
between the Corporation and the Insured (or his assignee(s)) as
prescribed by Paragraphs VII, VIII or X. herein.
XIV. INSURED OR ASSIGNEE'S ASSIGNMENT RIGHTS
Insured (or his assignee) may, at any time, assign to any
individual, trust or other organization all right, title and
interest in the subject policy and all rights, options,
privileges and duties created under this Agreement.
XV. AGREEMENT BINDING UPON PARTIES
This Agreement shall bind the Insured and the Corporation, their
heirs, successors, personal representatives and assigns.
XVI. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
Xxxxx Organ Co. is hereby designated the "Named Fiduciary" until
resignation or removal by the Board of Directors. As Named
Fiduciary, Xxxxx Organ Co. shall be responsible for the
management, control and administration of the Split Dollar plan
as established herein. Xxxxx Organ Co. may allocate to others
certain aspects of the management and operation responsibilities
of the plan including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
XVII. FUNDING
The funding policy for the Split Dollar arrangement shall be to
maintain the subject policy in force by paying, when due, all
premiums required.
XVIII. AMENDMENT
The Split Dollar plan may be amended at any time and from time to
time by a written instrument executed by the Insured (or his
assignee(s)) and the Corporation.
XIX. BASIS OF PREMIUM PAYMENTS AND BENEFITS
Payments to and from the Split Dollar Plan adopted herein shall
be in accordance with the provisions of Paragraphs III. through
X., inclusive.
XX. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR
PLAN
A. Claim forms or claim information as to the subject policy
can be obtained by contacting Cornerstone Advisors.
When the Named Fiduciary has a claim which may be covered under
the insurance policy provisions, he or she should contact the
office or the person named above who will either complete a claim
form and forward it to an authorized representative of the
Insurer or advise the Named Fiduciary what further requirements
are necessary. The Insurer will evaluate the claim and make a
decision as to payment within 90 days of the date the claim is
received by the Insurer. In the event that a claim is not
eligible under the policy, the Insurer will notify the Named
Fiduciary of the denial. Such notification will be made in
writing within 90 days of the date the claim is received and will
be transmitted through the office of person named above.
The notification will include the specific reasons for the denial
as well as specific reference to the policy provisions upon which
the denial is based. The Named Fiduciary will also be informed
as to the steps which may be taken to have the claim denial
reviewed.
A decision as to the validity of a claim will ordinarily be made
within 10 working days of the date the claim is received by the
Insurer. Occasionally, however, certain questions may prevent
the Insurer from rendering a decision on the validity of the
claim within the specific 90 day period. If this occurs, the
Named Fiduciary will be notified of the reasons for the delay as
well as the anticipated length of the delay, in writing and
through the office or person named above. If further information
or other material is required, the Named Fiduciary will be so
informed.
If the Named Fiduciary is dissatisfied with the denial of the
claim or the amount paid, he or she has 60 days from the date he
or she receives notice of a claim denial or receipt of the amount
paid to file his or her objections to the action taken by the
Insurer. If the Named Fiduciary wishes to contest a claim
denial, he or she should notify the person or office named above
who will assist in making an inquiry to the Insurer. All
objections to the Insurer's actions should be in writing and
submitted to the person or office named above for transmittal to
the Insurer. The Insurer will review the claim denial or amount
paid and render a decision on such objections. The Named
Fiduciary will be informed in writing of the decision of the
Insurer within 60 days of the date the claim review request is
received by the Insurer. This decision will be final.
B. Once a decision has been rendered as to the distribution of
proceeds under the claim procedure described above as to the
policy, claims for any benefits due under the plan or the
surrender of the policy may be made in writing by the Owner or
the Owner's designated beneficiary and the Insured or their
designated beneficiary, as the case may be, to the Named
Fiduciary.
In the event a claim for benefits is wholly or partly denied or
disputed, the Named Fiduciary shall, within a reasonable period
of time after receipt of the claim, notify Owner or Owner's
designated beneficiary and Insured or their designated
beneficiary, as the case may be, of such total or partial denial
or dispute, listing:
A. The Specific reason or reasons for the denial or
dispute;
B. Specific reference to pertinent plan provisions upon
which the denial or dispute is based;
C. A description of any additional information necessary
for the claimant to perfect the claim and an
explanation of why such material or information is
necessary, and;
D. An explanation of the plan's review procedure.
Within 60 days of denial or notice of claim under the plan, a
claimant may request, in writing, that the claim be reviewed by
the Named Fiduciary in a full and fair hearing. The claimant or
his duly authorized representative may, but need not, review the
pertinent documents, and submit issues and comments in writing
for consideration by the Named Fiduciary. A decision shall be
rendered by the Named Fiduciary within 60 days after receipt of
request for review. The decision shall be in writing and shall
include the specific reason or reasons for the denial or dispute
and specific reference to pertinent plan provisions upon which
the denial or dispute is based. The Named Fiduciary shall
possess and exercise discretionary authority to make
determinations as to a participant's eligibility for benefits and
to construe the terms of the plan. The decision of the Named
Fiduciary shall be final and non-reviewable unless found to be
arbitrary and capricious by a court of competent review. Such
decision will be binding upon the Corporation and the claimant.
If a claimant does not request a review of the Named Fiduciary's
determination within the 60 day period specified, he or she shall
be barred and estopped from challenging the Named Fiduciary.
XXI. INSURANCE COMPANY NOT A PARTY TO AGREEMENT
The Insurer shall not be deemed a party to this Agreement but
will respect the rights of the parties as herein developed upon
receiving an executed copy of this Agreement. Payment or other
performance of its contractual obligations in accordance with the
policy provisions shall fully discharge the Insurer for any and
all liability.
Executed at Macungie, Pennsylvania, this 26th day of August, 1999.
Xxxxx Organ Co. (OWNER)
/s/ XXXXXX X. XXXXXXX BY:/s/ XXXXXX XXXXXXXXX
WITNESS Xxxxxx Xxxxxxxxx, President
/s/ XXXXXX X. XXXXXXX /s/ XXXXXX X. XXXXXXX
WITNESS Xxxxxx X. Xxxxxxx
(INSURED/EMPLOYEE)
XXXXX ORGAN COMPANY
EXECUTIVE BONUS PROGRAM AGREEMENT
AGREEMENT, made and entered into this 1st day of
August, 1999, by and between XXXXX ORGAN COMPANY, a corporation
organized under the laws of the Commonwealth of Pennsylvania, and
having its principal place of business at 000 Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter referred to as
"Employer") and Xxxxxx X. Xxxxxxx, currently residing at 0000
Xxxxx Xxxx, Xxxxxx, XX 00000 (hereinafter referred to as
"Executive").
WITNESSETH THAT:
WHEREAS, the Employer employs the Executive in the
position of Treasurer & Asst. Secretary; and
WHEREAS, the Executive has provided valuable services
to the Employer; and
WHEREAS, the President or his designee of the Employer
believe it is in the Employer's best interest to retain the
Executive's services; and
WHEREAS, the Executive wishes to enter into an
agreement that will provide additional compensation in the future
subject to the Executive fulfilling the terms and conditions of
this agreement.
NOW, THEREFORE, in consideration of the premises, and
for other good and valuable consideration, receipt of which both
parties hereby acknowledge, the Employer and the Executive
mutually agree as follows:
ARTICLE 1.
Contributions/Deferred Compensation Account
1.01. Beginning on August 1, 1999 and continuing
thereafter prior to April of each year ("Contribution Date"), the
Employer may credit a discretionary sum based on the decision of
the President or his designee of the Employer ("Deferred Amount")
to a deferred compensation account ("Account") established for
the Executive.
If the Executive shall remain in the employment of the
Employer until the "Retirement Date" hereinafter defined in
Article 2.01, then in such event, he shall be entitled to receive
those retirement benefits from the Employer based upon the
Employer's contributions accumulated at an assumed pre-retirement
interest rate, equal to the annual prime rate of interest as
stated in the Wall Street Journal on December 31 of each calendar
year, not to exceed 9% in any year.
Unless otherwise elected by the Employer, no amount
will be credited to the Account on or after any Contribution Date
if the Executive was not employed on a full time basis during the
entire period between Contribution Dates.
If there is an extraordinary gain on the sale of an
asset of the Employer, defined as a gain in excess of $500,000
per transaction, the Employer may contribute a discretionary
amount to your account, determined based upon, among other
things, your years of service with the Employer, your involvement
with the asset sold, and any other contributing factor that the
President or his designee of the Employer deem appropriate.
1.02. Deferred amounts will be invested in such
assets, including money markets, mutual funds, or single and/or
joint life insurance policies, as the Employer may select from
time to time. All such assets ("Account Assets") will be
identified and allocated to the Account for the sole purpose of
measuring the Account's value, and will remain part of the
Employer's general assets and subject to the claims of the
Employer's creditors. Account Assets shall be valued at their
fair market value without regard to any liens, security interests
or loans, except for loans used to pay benefits. Any life
insurance policy will be valued at its cash surrender value until
a death benefit is payable, at which point the value of the
Account will be based on the death benefit received by the
Employer rather than the policy's cash surrender value. In
construing the preceding sentence, if a life insurance policy is
subject to a split-dollar agreement, the death benefit received
by the Employer shall equal the amount paid to the Employer under
the split-dollar agreement.
1.03. It is understood and agreed that the Employer
will have all right, title and interest in all assets used to
measure the value of the Account, and that neither the Executive
nor his or her heirs, beneficiaries or creditors shall have any
right, title or interest in any of the Employer's assets as a
result of this Agreement, whether or not the asset is used to
measure the value of the Account. The Employer is free to select
the source of the payment of any benefits under this Agreement,
without any obligation to use any particular asset or assets. At
no time will the creditor status of the Executive, or of any
person or entity claiming benefits under this Agreement, be
greater than that of an unsecured general creditor of the
Employer. This Agreement constitutes an unsecured promise by the
Employer to pay benefits. It is the intention of the parties
that, in form, substance and operation, this Agreement will
constitute an "unfunded" deferred compensation program under the
Employee Retirement Income Security Act of 1974, as amended, and
the Internal Revenue Code of 1986, as amended.
ARTICLE 2.
Retirement Benefit
2.01. A retirement benefit will be paid upon the
Executive's retirement on or after attaining age sixty-two (62).
2.02. The Account will be paid in installments over a
period of 10 years. The first installment will be made thirty
(30) days following the date of the Executive's retirement.
Interest will accrue on unpaid installments equal to the annual
prime rate of interest minus three percentage (3%) points on
December 31st of each calendar year, not to exceed six percent
(6%) in any year.
2.03. No later than 90 days prior to retiring, the
Executive may elect to have the Account paid in one of the
following installment options: annual payments, quarterly
payments, or monthly payments. In default of the Executive's
election, the Employer will elect the form of payment.
2.04. The amount of each installment will be
calculated as follows. For the first year of retirement, the
value of the Account on the date of retirement shall be divided
by the number of remaining years of payment to determine the
annual benefit ("Annual Benefit") for that year. On each
respective yearly anniversary date of the Executive's retirement,
the divisor shall be reduced by one to arrive at a particular
year's Annual Benefit. The value of the Account shall be divided
by the divisor so obtained in order to determine the annual
Benefit for that year. As a result of this annual reduction in
the divisor, the divisor for the last Annual Benefit will be one.
To arrive at the amount of each installment, each year's Annual
Benefit shall be divided by the number of installments for that
year. Notwithstanding, the final installment payment shall equal
the remaining balance of the Account.
2.05. If the Executive dies before the Account has
been paid in full, any remaining installments may either be paid
in a lump sum at the option of the Employer or continue to be
paid for the remainder of the installment period, to the
Executive's designated beneficiary; if there is no designated
beneficiary, to the Executive's estate.
ARTICLE 3.
Pre-retirement Death Benefit
3.01. A pre-retirement death benefit will be paid if
the Executive dies prior to retirement as defined in Article 2,
provided the Executive is employed by the Employer at the time of
death.
3.02. The Account will be paid in a single payment or
a series of payments as determined by the Employer. If the value
of the Account is measured by a policy or policies insuring the
Executive's life, and a death benefit is payable as a result of
the Executive's death, the single payment will be made thirty
(30) days following the Employer's receipt of its share of life
insurance death benefits. Otherwise, the payment(s) will begin
within thirty (30) days after the Executive's death.
Notwithstanding the foregoing provisions of this Section, the
Employer will retain any benefit payable to the Executive's
estate until the appointment of an executor or administrator.
3.03. The provisions of Section 2.04 shall apply to
the calculation of each installment, except that the value of the
Account shall be calculated on the date of the Executive's death
with adjustments as provided in Section 1.02 for life insurance
death benefits.
3.04. Payments made under this Article 3 shall be made
to the Executive's designated beneficiary or, if there is no
designated beneficiary, to the Executive's estate.
ARTICLE 4.
Termination of Employment
4.01. If the Executive's employment terminates, other
than as a result of death, prior to retirement as provided in
Article 2, the Executive's vested benefits (determined at the
date of termination of employment) will be paid upon the
Executive's attainment of age 62 in accordance with Article 2.
If the Executive's employment terminates as a result of death,
benefits will be paid under Article 3 and not this Article.
4.02. Initial vesting is based on years of service as
an Executive with the Employer. Thereafter, a five-year vesting
schedule applies to each contribution to the Program (hereinafter
defined). Contributions are 20% vested after one year of
service, 40% after 2 years of service, 60% after 3 years of
service, 80% after 4 years of service and 100% after 5 years of
service.
4.03. Notwithstanding the provisions of Section 4.02,
the vesting percentage will be 100 if the Executive's employment
terminates due to total disability. The Executive will be deemed
totally disabled if, due to bodily injury occurring or mental or
physical disease originating while this Agreement is in force, he
is determined to be disabled based on the definition of
disability as defined in the insurance policy currently in force
with the Employer at the time of disability.
4.04. Notwithstanding the provisions of Section 4.02,
the vesting percentage will be 100 if the Executive's employment
terminates due to a "Change in Control." A Change in Control
means the occurrence of (i) a person (including a group as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934) becoming, directly or indirectly, the beneficial owner (as
defined under the Securities Exchange Act of 1934) of fifty
percent (50%) or more of the voting shares of common stock of the
Employer, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors of the Employer (the "Board"), ceasing for any
reason to constitute at least a majority of the Board unless the
election of each director of the Board, who was not a director of
the Board at the beginning of such period, was approved by a vote
of at least two-thirds of the directors then still in office who
were directors at the beginning of such period, or (iii) the
Employer merging or consolidating with or having its assets
purchased by another corporation and as a result of such merger,
consolidation or sale of assets, less than a majority of the
outstanding voting stock of the surviving, resulting or
purchasing corporation being owned, immediately after the
transaction, by the holders of the voting stock of the Employer
outstanding immediately before the transaction. Notwithstanding
the foregoing, a Change in Control will not be deemed to occur
due to the transfer of shares of common stock of the Employer
between individuals who are related within two (2) degrees of
consanguinity by will, gift or trust transferred pursuant to the
laws of descent and distribution of the Commonwealth of
Pennsylvania or pursuant to an agreement to purchase or sell such
common stock of the Employer.
4.05. The Employer will pay any benefit payable under
this Article 4 in the same installments as defined in
Article 2.02 thirty (30) days following the date of termination
of employment.
4.06. Notwithstanding anything contained herein to the
contrary, if the President or his designee determines that an
Executive has committed an act of embezzlement, fraud,
dishonesty, nonpayment of any obligation owed to the Employer, or
an Executive makes an unauthorized disclosure of any Employer
trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Employer customer to
breach a contract with the Employer or induces any principal for
whom the Employer acts as agent to terminate such agency
relationship, neither the Executive nor his or her estate shall
be entitled to a distribution of any amounts under the Program
whatsoever.
ARTICLE 5.
Hardship Distributions
5.01. While employed by the Employer, the Executive
may apply to the Program Administrator (hereinafter defined) for
a hardship distribution. A hardship distribution can be made
only for an unforeseeable emergency or for education for the
Executive or Executive's dependents. The term "unforeseeable
emergency" means a severe financial hardship to the Executive or
his dependent resulting from a sudden and unexpected illness or
accident, loss of the Executive's property due to casualty, or
other similar extraordinary and unforeseeable circumstances
arising as a result of circumstances beyond the Executive's
control. Except for hardship distributions for education
expenses, no payment will be made to the extent other
alternatives to relieve the hardship are reasonably available to
the Executive such as the sale of assets, or other borrowings or
loans.
5.02. The maximum amount which will be applicable to
the hardship distribution shall be limited to 50% of the
Executive's vested Account balance at the time of distribution to
a maximum of $100,000.
5.03. The value of the Account will be reduced by any
hardship distribution.
ARTICLE 6.
Claims Procedure
6.01. The Executive or his or her beneficiary
("Claimant"), or duly authorized representative, must file a
claim for benefits in writing with Xxxxxx X. Xxxxxxx, the
Employer representative, who for purposes of this Agreement is
referred to as the Program Administrator. The Employer reserves
the right to change the Program Administrator from time to time,
and will notify the Executive of any such change.
6.02. If the claim is denied in whole or in part,
written notice of the decision will be furnished to the Claimant
within a reasonable time after receipt of the claim. The notice
will be prepared in a manner calculated to be understood by the
Claimant and will (1) state the specific reason or reasons for
the denial, (2) refer specifically to the pertinent Program
provisions on which the denial is based, (3) describe any
additional material or information necessary for the Claimant to
perfect a claim and an explanation as to why such material or
information is necessary, and (4) provide appropriate information
as to the steps to be taken by the Claimant if the Claimant
wishes to submit the claim for review.
6.03. A denied claim is appealable to the Program's
Named Fiduciary for review. Xxxxx Organ Company is the Program's
Named Fiduciary. The Employer reserves the right to change the
Named Fiduciary from time to time. The Claimant, or the
Claimant's duly authorized representative, must request a review
in writing no later than sixty (60) days after receipt of notice
of denial of the claim. The Claimant, or the Claimant's duly
authorized representative, may review pertinent documents and
submit issues and comments in writing. The Named Fiduciary may,
at his discretion, hold a hearing. The Named Fiduciary will make
a written decision following receipt of the request for review.
Absent special circumstances, the decision will be, made no later
than sixty (60) days following receipt of the request for review.
The decision on review will include specific reasons for the
decision and will be written in a manner calculated to be
understood by the Claimant. The decision will also include
specific references to the pertinent Program provisions on which
the decision is based.
ARTICLE 7.
Miscellaneous
7.01. Neither the Executive nor any beneficiary or
creditor of the Executive shall have any right of anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment. In the event of an attempted
assignment, alienation, sale, pledge or transfer, the Employer
shall have no further liability or responsibility for the payment
of benefits.
7.02. The term "beneficiary" includes any person,
trust or other entity, including the plural, last designated in
writing by the Executive and filed with the Program
Administrator. The Executive may revoke or change any
beneficiary designation, in whole or in part, without the
beneficiary's consent.
7.03. The Named Fiduciary and designated Program
Administrator shall have the discretionary authority to interpret
the terms of this Agreement.
7.04. This Agreement may be amended or revoked, in
whole or in part, only by the written agreement of the Employer
and the Executive.
7.05. This Agreement is binding on the parties, as
well as their beneficiaries, heirs, and successors.
7.06. This Agreement will be executed in duplicate,
with one copy retained by each party. Both copies shall be
considered an original copy and together shall constitute one and
the same Agreement,
7.07. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania.
XXXXX ORGAN COMPANY
(Employer)
Attest: By /s/ XXXXXX XXXXXXXXX
Xxxxxx Xxxxxxxxx
/s/ XXXXXXX X. XXXXXXXX Title: President
Xxxxxxx X. Xxxxxxxx, Sec.
/s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx (Executive)
ENDORSEMENT SPLIT DOLLAR LIFE INSURANCE AGREEMENT
INSURER: Pacific Life Insurance Company
POLICY NUMBER: VP6082838-0
INSURED/EMPLOYEE: XXXXXX X. XXXXXXX
POLICYOWNER/CORPORATION: XXXXX ORGAN COMPANY
EFFECTIVE DATE OF AGREEMENT: August 1, 1999
The respective rights and duties of the Corporation and
Insured/Employee in the subject policy shall be as defined in the
following numbered paragraphs, namely:
I. DEFINITIONS
"DEATH PROCEEDS": Death Proceeds as used in this Agreement shall
mean Specified Amount, described as Option 1 in the policy
contract;
"CASH VALUES": Cash Values as used in this Agreement shall mean:
For Purposes of Policy Surrender - The Cash Surrender Value, as
that term is defined in the policy contract.
For Purposes Of Measuring Premium Payments And Obligations -
Accumulated Value or Policy Account Value, as that term is
described in the policy contract.
"PLANNED PERIODIC PREMIUM": shall mean that premium level
selected by the parties subject to the Insurer's minimum premium
requirements.
II. POLICY TITLE AND OWNERSHIP
Title and Ownership shall reside in the Corporation for its use
and for the use of Insured all in accordance with this Agreement.
The Corporation alone may, to the extent of its interest,
exercise the right to borrow or withdraw on the policy cash
values. Where the Corporation and Insured (or his assignee, with
the consent of the Insured) mutually agree to exercise the right
to increase the coverage under the subject Split Dollar Policy,
then, in such event, the rights, duties and benefits of the
parties to such increased coverage shall continue to be subject
to the terms of this Agreement.
Notwithstanding any provision hereof to the contrary, the
Corporation shall have the sole authority to direct the manner in
which the Policy 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.
III. BENEFICIARY DESIGNATION RIGHTS
Insured/Employee (or his assignee) shall have the right and power
to designate a beneficiary or beneficiaries to receive his share
of the proceeds payable on the death of the insured but subject
to any right or interest the Corporation may have in such
proceeds as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
Planned Periodic premium shall be paid annually as of the date of
issue and upon each subsequent premium due date. The Corporation
shall pay an amount equal to the Planned Periodic Premium due.
The Employee shall be charged with taxable income by reason of
the economic benefit of the insurance protection received, as
determined under Revenue Rulings 64-328, l964-2 C.B.ll and 66-
ll0, l966-l C.B. l2. The Corporation shall furnish the Employee
a statement on Form W-2 of his or her taxable income, including
income, received under this Plan.
V. ASSUMPTION OF PREMIUM PAYMENT OBLIGATION BY THE OTHER
PARTY
In the event either the Corporation or Insured/Employee (or his
assignee) fails to fulfill the obligation to pay premiums as
contemplated in Paragraph IV., the other may freely assume such
obligation in which event the rights under the policy shall be
altered in the manner described in Paragraph VIII.
VI. DIVISION OF DEATH PROCEEDS OF POLICY
The division of death proceeds of the policy, when premiums are
paid in strict accord with Paragraph IV. and when insured's death
occurs before the end of the grace period for any premium in
default, is as follows:
A.(1) Prior to The Insured's reaching age 62, or
retirement age, if later:
The Insured's Beneficiary, (or his assignee's),
beneficiary(s), designated in accordance with Paragraph
II., shall be entitled to a minimum of $400,000 of the
policy proceeds, if available. The amount payable to the
Insured/Employee's Beneficiary shall be determined
annually by the President of the Company, but shall not
be less than $400,000 of the policy proceeds, if
available.
A.(2) Post The Insured's attainment of age 62, or
retirement age, if later:
The Insured's Beneficiary, (or his assignee's),
beneficiary(s), designated in accordance with Paragraph
II., shall be entitled to a amount which shall be
determined annually by the President of the Company.
B. Corporation/Assignee shall be entitled to the remainder
of such proceeds, less, any indebtedness determined as of
the date of death.
C. Corporation and Insured's Beneficiary (or his assignees)
shall share in any interest due on the death proceeds as
their respective share of the proceeds as above-defined
bears to the total proceeds excluding such interest.
D. In the event the Insured's death shall be the result of
suicide within a two year period following the issuance of a
life insurance policy insuring Employee's life or should
Employee be found to have committed fraud in completion of
the insurance application, then no death benefits shall be
payable to Employee or his designated beneficiary.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
Division of the cash surrender value of the policy, when premiums
are paid in strict accord with Paragraph IV. and when surrender
occurs not later than sixty days after due date of any premium in
default, are as follows:
The Corporation shall be entitled to an amount equal to the
policy's cash value, as that term is defined in the policy
contract, less any policy loans and unpaid interest or cash
withdrawals previously incurred by the Corporation and any
applicable policy surrender charges. Such cash value shall be
determined as of the date of Surrender.
VIII. PARTIES' RIGHTS WHERE PREMIUM PAYMENT VARIATIONS EXIST
When premiums are not paid in strict accord with Paragraph IV.,
division of death proceeds or net cash value of the policy, as in
either case is defined in Paragraph VI. or VII., shall be as
follows:
X.Xx the event the Corporation should pay less in the aggregate
than the share of planned periodic premiums, as defined in
Paragraph IV., then the Corporation's share of death proceeds
or of the net cash value of the policy on surrender shall be
decreased within the limits of such proceeds or cash value, as
the case may be, by the total amount of such decreased
premiums. The Insured's (or his assignee's) designated
beneficiary, in the event of death, and the Insured (or his
assignee), in the event of surrender, shall be entitled to any
remainder of proceeds or net cash value.
B.Alternatively, should the Corporation pay more in the
aggregate than its share of premiums defined in Paragraph IV.,
then the Corporation's share of death proceeds or the cash
value of the policy on surrender shall be increased within the
limits of such proceeds or cash value, as the case may be, by
the total amount of such increased share does not exceed the
sum of the Corporation's premiums paid. The Insured's (or his
assignee's designated beneficiary, in the event of death, and
the Insured (or his assignee), in the event of surrender,
shall be entitled to any remainder of cash value.
IX. NONFORFEITURE DEATH PROCEEDS
The Corporation's share of death proceeds payable on the
Insured's death while the policy is in force under any of its non-
forfeiture provisions shall be an amount equal to the excess, if
any, of Corporation's share of the policy's cash value at the
date of default in premium payment (such share determined in the
manner prescribed in Paragraphs VI. or VIII. in relation to the
facts presented) over any indebtedness against the policy at
Insured's death. The designated beneficiary(ies) shall be
entitled to any remainder of such proceeds.
X. NONFORFEITURE CASH VALUE
The Corporation's share of the cash value payable on surrender of
the policy while it is in force under any of its non-forfeiture
provisions shall be an amount equal to the lesser of: (a) the
cash value at date of surrender less any policy surrender charge,
or (b) the excess, if any, of the Corporation's share of the
policy's cash value in the manner prescribed in Paragraphs VII.,
VIII. of IX. in relation to the facts presented over any
indebtedness on the policy at date of surrender. Insured (or his
assignee) shall be entitled to any remainder of such cash value.
XI. PREMIUM WAIVER
If the policy contains a premium waiver provision or waiver of
monthly deduction, such waived amounts shall be considered for
all purposes of this Agreement as having been paid by Insured (or
his assignee).
XII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY
ELECTION EXISTS
In the event the subject policy involves as endowment or annuity
element, the Corporation's right and interest in any endowment
proceeds or annuity benefits, on expiration of the deferment
period, shall be determined under the provisions of this
Agreement by regarding such endowment proceeds or the commuted
value of such annuity benefits as the policy's net cash value.
The Corporation's right and interest in endowment proceeds or in
annuity benefits shall be fulfilled at the end of the endowment
period or annuity deferment period under either the policy proper
or under its settlement provisions. As contemplated herein, an
annuity policy shall be considered to mature for its commuted
value on the specific date stated in the policy on which benefits
become payable or on a date elected by the Corporation pursuant
to the terms of the policy.
XIII. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of
the following events:
A. Termination by any party upon the occurrence of 30-day
written notice to the other parties;
B. Termination of Executive's employment for cause or
Executive's Voluntary Resignation.
C. The Insured's (or his assignee's ) failure to pay (his/its)
proportionate share of premiums, if any, as mutually-agreed upon
by the Corporation and Insured under the options provided within
Paragraphs IV. and V., herein.
Upon such termination, Insured (or his assignee) shall have a 90-
day option to receive from the Corporation an absolute assignment
of the policy in consideration of a cash payment to the
Corporation, whereupon this Agreement shall terminate. Such cash
payment shall be the greater of:
A. The Corporation's share of the cash value of the policy
on the date of such assignment, as defined in this
Agreement;
B. The amount of the premiums which have been paid by the
Corporation prior to the date of such assignment;
Should Insured (or his assignee(s)) fail to exercise the option
within the prescribed 90-day period, Corporation shall have an
additional 30 day period to elect to continue the coverage in
which case Insured shall transfer their respective interests to
the Corporation.
Should the Corporation elect not to continue the coverage,
Insured (or his assignee(s)) agrees that the subject policy will
be surrendered to the Insurer and the proceeds distributed
between the Corporation and the Insured (or his assignee(s)) as
prescribed by Paragraphs VII, VIII or X. herein.
XIV. INSURED OR ASSIGNEE'S ASSIGNMENT RIGHTS
Insured (or his assignee) may, at any time, assign to any
individual, trust or other organization all right, title and
interest in the subject policy and all rights, options,
privileges and duties created under this Agreement.
XV. AGREEMENT BINDING UPON PARTIES
This Agreement shall bind the Insured and the Corporation, their
heirs, successors, personal representatives and assigns.
XVI. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
Xxxxx Organ Co. is hereby designated the "Named Fiduciary" until
resignation or removal by the Board of Directors. As Named
Fiduciary, Xxxxx Organ Co. shall be responsible for the
management, control and administration of the Split Dollar plan
as established herein. Xxxxx Organ Co. may allocate to others
certain aspects of the management and operation responsibilities
of the plan including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
XVII. FUNDING
The funding policy for the Split Dollar arrangement shall be to
maintain the subject policy in force by paying, when due, all
premiums required.
XVIII. AMENDMENT
The Split Dollar plan may be amended at any time and from time to
time by a written instrument executed by the Insured (or his
assignee(s)) and the Corporation.
XIX. BASIS OF PREMIUM PAYMENTS AND BENEFITS
Payments to and from the Split Dollar Plan adopted herein shall
be in accordance with the provisions of Paragraphs III. through
X., inclusive.
XX. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR
PLAN
A. Claim forms or claim information as to the subject policy
can be obtained by contacting Cornerstone Advisors.
When the Named Fiduciary has a claim which may be covered under
the insurance policy provisions, he or she should contact the
office or the person named above who will either complete a claim
form and forward it to an authorized representative of the
Insurer or advise the Named Fiduciary what further requirements
are necessary. The Insurer will evaluate the claim and make a
decision as to payment within 90 days of the date the claim is
received by the Insurer. In the event that a claim is not
eligible under the policy, the Insurer will notify the Named
Fiduciary of the denial. Such notification will be made in
writing within 90 days of the date the claim is received and will
be transmitted through the office of person named above.
The notification will include the specific reasons for the denial
as well as specific reference to the policy provisions upon which
the denial is based. The Named Fiduciary will also be informed
as to the steps which may be taken to have the claim denial
reviewed.
A decision as to the validity of a claim will ordinarily be made
within 10 working days of the date the claim is received by the
Insurer. Occasionally, however, certain questions may prevent
the Insurer from rendering a decision on the validity of the
claim within the specific 90 day period. If this occurs, the
Named Fiduciary will be notified of the reasons for the delay as
well as the anticipated length of the delay, in writing and
through the office or person named above. If further information
or other material is required, the Named Fiduciary will be so
informed.
If the Named Fiduciary is dissatisfied with the denial of the
claim or the amount paid, he or she has 60 days from the date he
or she receives notice of a claim denial or receipt of the amount
paid to file his or her objections to the action taken by the
Insurer. If the Named Fiduciary wishes to contest a claim
denial, he or she should notify the person or office named above
who will assist in making an inquiry to the Insurer. All
objections to the Insurer's actions should be in writing and
submitted to the person or office named above for transmittal to
the Insurer. The Insurer will review the claim denial or amount
paid and render a decision on such objections. The Named
Fiduciary will be informed in writing of the decision of the
Insurer within 60 days of the date the claim review request is
received by the Insurer. This decision will be final.
B. Once a decision has been rendered as to the distribution of
proceeds under the claim procedure described above as to the
policy, claims for any benefits due under the plan or the
surrender of the policy may be made in writing by the Owner or
the Owner's designated beneficiary and the Insured or their
designated beneficiary, as the case may be, to the Named
Fiduciary.
In the event a claim for benefits is wholly or partly denied or
disputed, the Named Fiduciary shall, within a reasonable period
of time after receipt of the claim, notify Owner or Owner's
designated beneficiary and Insured or their designated
beneficiary, as the case may be, of such total or partial denial
or dispute, listing:
A. The Specific reason or reasons for the denial or
dispute;
B. Specific reference to pertinent plan provisions upon
which the denial or dispute is based;
C. A description of any additional information necessary
for the claimant to perfect the claim and an
explanation of why such material or information is
necessary, and;
D. An explanation of the plan's review procedure.
Within 60 days of denial or notice of claim under the plan, a
claimant may request, in writing, that the claim be reviewed by
the Named Fiduciary in a full and fair hearing. The claimant or
his duly authorized representative may, but need not, review the
pertinent documents, and submit issues and comments in writing
for consideration by the Named Fiduciary. A decision shall be
rendered by the Named Fiduciary within 60 days after receipt of
request for review. The decision shall be in writing and shall
include the specific reason or reasons for the denial or dispute
and specific reference to pertinent plan provisions upon which
the denial or dispute is based. The Named Fiduciary shall
possess and exercise discretionary authority to make
determinations as to a participant's eligibility for benefits and
to construe the terms of the plan. The decision of the Named
Fiduciary shall be final and non-reviewable unless found to be
arbitrary and capricious by a court of competent review. Such
decision will be binding upon the Corporation and the claimant.
If a claimant does not request a review of the Named Fiduciary's
determination within the 60 day period specified, he or she shall
be barred and estopped from challenging the Named Fiduciary.
XXI. INSURANCE COMPANY NOT A PARTY TO AGREEMENT
The Insurer shall not be deemed a party to this Agreement but
will respect the rights of the parties as herein developed upon
receiving an executed copy of this Agreement. Payment or other
performance of its contractual obligations in accordance with the
policy provisions shall fully discharge the Insurer for any and
all liability.
Executed at Macungie, Pennsylvania, this 26th day of August, 1999.
Xxxxx Organ Co. (OWNER)
/s/ XXXXXX X. XXXXXXX BY: /s/ XXXXXX XXXXXXXXX
WITNESS Xxxxxx Xxxxxxxxx, President
/s/ XXXXXX XXXXXXXXX /s/ XXXXXX X. XXXXXXX
WITNESS Xxxxxx X. Xxxxxxx
(INSURED/EMPLOYEE)
XXXXX ORGAN COMPANY
EXECUTIVE BONUS PROGRAM AGREEMENT
AGREEMENT, made and entered into this 1st day of
August, 1999, by and between XXXXX ORGAN COMPANY, a corporation
organized under the laws of the Commonwealth of Pennsylvania, and
having its principal place of business at 000 Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter referred to as
"Employer") and Xxxxx X. Xxxxxx, currently residing at 0000 Xxxx
Xxxx Xxxxx, Xxxxxxxx, XX 00000 (hereinafter referred to as
"Executive").
WITNESSETH THAT:
WHEREAS, the Employer employs the Executive in the
position of Vice President of Sales; and
WHEREAS, the Executive has provided valuable services
to the Employer; and
WHEREAS, the President or his designee of the Employer
believe it is in the Employer's best interest to retain the
Executive's services; and
WHEREAS, the Executive wishes to enter into an
agreement that will provide additional compensation in the future
subject to the Executive fulfilling the terms and conditions of
this agreement.
NOW, THEREFORE, in consideration of the premises, and
for other good and valuable consideration, receipt of which both
parties hereby acknowledge, the Employer and the Executive
mutually agree as follows:
ARTICLE 1.
Contributions/Deferred Compensation Account
1.01. Beginning on August 1, 1999 and continuing
thereafter prior to April of each year ("Contribution Date"), the
Employer may credit a discretionary sum based on the decision of
the President or his designee of the Employer ("Deferred Amount")
to a deferred compensation account ("Account") established for
the Executive.
If the Executive shall remain in the employment of the
Employer until the "Retirement Date" hereinafter defined in
Article 2.01, then in such event, he shall be entitled to receive
those retirement benefits from the Employer based upon the
Employer's contributions accumulated at an assumed pre-retirement
interest rate, equal to the annual prime rate of interest as
stated in the Wall Street Journal on December 31 of each calendar
year, not to exceed 9% in any year.
Unless otherwise elected by the Employer, no amount
will be credited to the Account on or after any Contribution Date
if the Executive was not employed on a full time basis during the
entire period between Contribution Dates.
If there is an extraordinary gain on the sale of an
asset of the Employer, defined as a gain in excess of $500,000
per transaction, the Employer may contribute a discretionary
amount to your account, determined based upon, among other
things, your years of service with the Employer, your involvement
with the asset sold, and any other contributing factor that the
President or his designee of the Employer deem appropriate.
1.02. Deferred amounts will be invested in such
assets, including money markets, mutual funds, or single and/or
joint life insurance policies, as the Employer may select from
time to time. All such assets ("Account Assets") will be
identified and allocated to the Account for the sole purpose of
measuring the Account's value, and will remain part of the
Employer's general assets and subject to the claims of the
Employer's creditors. Account Assets shall be valued at their
fair market value without regard to any liens, security interests
or loans, except for loans used to pay benefits. Any life
insurance policy will be valued at its cash surrender value until
a death benefit is payable, at which point the value of the
Account will be based on the death benefit received by the
Employer rather than the policy's cash surrender value. In
construing the preceding sentence, if a life insurance policy is
subject to a split-dollar agreement, the death benefit received
by the Employer shall equal the amount paid to the Employer under
the split-dollar agreement.
1.03. It is understood and agreed that the Employer
will have all right, title and interest in all assets used to
measure the value of the Account, and that neither the Executive
nor his or her heirs, beneficiaries or creditors shall have any
right, title or interest in any of the Employer's assets as a
result of this Agreement, whether or not the asset is used to
measure the value of the Account. The Employer is free to select
the source of the payment of any benefits under this Agreement,
without any obligation to use any particular asset or assets. At
no time will the creditor status of the Executive, or of any
person or entity claiming benefits under this Agreement, be
greater than that of an unsecured general creditor of the
Employer. This Agreement constitutes an unsecured promise by the
Employer to pay benefits. It is the intention of the parties
that, in form, substance and operation, this Agreement will
constitute an "unfunded" deferred compensation program under the
Employee Retirement Income Security Act of 1974, as amended, and
the Internal Revenue Code of 1986, as amended.
ARTICLE 2.
Retirement Benefit
2.01. A retirement benefit will be paid upon the
Executive's retirement on or after attaining age sixty-two (62).
2.02. The Account will be paid in installments over a
period of 10 years. The first installment will be made thirty
(30) days following the date of the Executive's retirement.
Interest will accrue on unpaid installments equal to the annual
prime rate of interest minus three percentage (3%) points on
December 31st of each calendar year, not to exceed six percent
(6%) in any year.
2.03. No later than 90 days prior to retiring, the
Executive may elect to have the Account paid in one of the
following installment options: annual payments, quarterly
payments, or monthly payments. In default of the Executive's
election, the Employer will elect the form of payment.
2.04. The amount of each installment will be
calculated as follows. For the first year of retirement, the
value of the Account on the date of retirement shall be divided
by the number of remaining years of payment to determine the
annual benefit ("Annual Benefit") for that year. On each
respective yearly anniversary date of the Executive's retirement,
the divisor shall be reduced by one to arrive at a particular
year's Annual Benefit. The value of the Account shall be divided
by the divisor so obtained in order to determine the annual
Benefit for that year. As a result of this annual reduction in
the divisor, the divisor for the last Annual Benefit will be one.
To arrive at the amount of each installment, each year's Annual
Benefit shall be divided by the number of installments for that
year. Notwithstanding, the final installment payment shall equal
the remaining balance of the Account.
2.05. If the Executive dies before the Account has
been paid in full, any remaining installments may either be paid
in a lump sum at the option of the Employer or continue to be
paid for the remainder of the installment period, to the
Executive's designated beneficiary; if there is no designated
beneficiary, to the Executive's estate.
ARTICLE 3.
Pre-retirement Death Benefit
3.01. A pre-retirement death benefit will be paid if
the Executive dies prior to retirement as defined in Article 2,
provided the Executive is employed by the Employer at the time of
death.
3.02. The Account will be paid in a single payment or
a series of payments as determined by the Employer. If the value
of the Account is measured by a policy or policies insuring the
Executive's life, and a death benefit is payable as a result of
the Executive's death, the single payment will be made thirty
(30) days following the Employer's receipt of its share of life
insurance death benefits. Otherwise, the payment(s) will begin
within thirty (30) days after the Executive's death.
Notwithstanding the foregoing provisions of this Section, the
Employer will retain any benefit payable to the Executive's
estate until the appointment of an executor or administrator.
3.03. The provisions of Section 2.04 shall apply to
the calculation of each installment, except that the value of the
Account shall be calculated on the date of the Executive's death
with adjustments as provided in Section 1.02 for life insurance
death benefits.
3.04. Payments made under this Article 3 shall be made
to the Executive's designated beneficiary or, if there is no
designated beneficiary, to the Executive's estate.
ARTICLE 4.
Termination of Employment
4.01. If the Executive's employment terminates, other
than as a result of death, prior to retirement as provided in
Article 2, the Executive's vested benefits (determined at the
date of termination of employment) will be paid upon the
Executive's attainment of age 62 in accordance with Article 2.
If the Executive's employment terminates as a result of death,
benefits will be paid under Article 3 and not this Article.
4.02. Initial vesting is based on years of service as
an Executive with the Employer. Thereafter, a five-year vesting
schedule applies to each contribution to the Program (hereinafter
defined). Contributions are 20% vested after one year of
service, 40% after 2 years of service, 60% after 3 years of
service, 80% after 4 years of service and 100% after 5 years of
service.
4.03. Notwithstanding the provisions of Section 4.02,
the vesting percentage will be 100 if the Executive's employment
terminates due to total disability. The Executive will be deemed
totally disabled if, due to bodily injury occurring or mental or
physical disease originating while this Agreement is in force, he
is determined to be disabled based on the definition of
disability as defined in the insurance policy currently in force
with the Employer at the time of disability.
4.04. Notwithstanding the provisions of Section 4.02,
the vesting percentage will be 100 if the Executive's employment
terminates due to a "Change in Control." A Change in Control
means the occurrence of (i) a person (including a group as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934) becoming, directly or indirectly, the beneficial owner (as
defined under the Securities Exchange Act of 1934) of fifty
percent (50%) or more of the voting shares of common stock of the
Employer, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors of the Employer (the "Board"), ceasing for any
reason to constitute at least a majority of the Board unless the
election of each director of the Board, who was not a director of
the Board at the beginning of such period, was approved by a vote
of at least two-thirds of the directors then still in office who
were directors at the beginning of such period, or (iii) the
Employer merging or consolidating with or having its assets
purchased by another corporation and as a result of such merger,
consolidation or sale of assets, less than a majority of the
outstanding voting stock of the surviving, resulting or
purchasing corporation being owned, immediately after the
transaction, by the holders of the voting stock of the Employer
outstanding immediately before the transaction. Notwithstanding
the foregoing, a Change in Control will not be deemed to occur
due to the transfer of shares of common stock of the Employer
between individuals who are related within two (2) degrees of
consanguinity by will, gift or trust transferred pursuant to the
laws of descent and distribution of the Commonwealth of
Pennsylvania or pursuant to an agreement to purchase or sell such
common stock of the Employer.
4.05. The Employer will pay any benefit payable under
this Article 4 in the same installments as defined in
Article 2.02 thirty (30) days following the date of termination
of employment.
4.06. Notwithstanding anything contained herein to the
contrary, if the President or his designee determines that an
Executive has committed an act of embezzlement, fraud,
dishonesty, nonpayment of any obligation owed to the Employer, or
an Executive makes an unauthorized disclosure of any Employer
trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Employer customer to
breach a contract with the Employer or induces any principal for
whom the Employer acts as agent to terminate such agency
relationship, neither the Executive nor his or her estate shall
be entitled to a distribution of any amounts under the Program
whatsoever.
ARTICLE 5.
Hardship Distributions
5.01. While employed by the Employer, the Executive
may apply to the Program Administrator (hereinafter defined) for
a hardship distribution. A hardship distribution can be made
only for an unforeseeable emergency or for education for the
Executive or Executive's dependents. The term "unforeseeable
emergency" means a severe financial hardship to the Executive or
his dependent resulting from a sudden and unexpected illness or
accident, loss of the Executive's property due to casualty, or
other similar extraordinary and unforeseeable circumstances
arising as a result of circumstances beyond the Executive's
control. Except for hardship distributions for education
expenses, no payment will be made to the extent other
alternatives to relieve the hardship are reasonably available to
the Executive such as the sale of assets, or other borrowings or
loans.
5.02. The maximum amount which will be applicable to
the hardship distribution shall be limited to 50% of the
Executive's vested Account balance at the time of distribution to
a maximum of $100,000.
5.03. The value of the Account will be reduced by any
hardship distribution.
ARTICLE 6.
Claims Procedure
6.01. The Executive or his or her beneficiary
("Claimant"), or duly authorized representative, must file a
claim for benefits in writing with Xxxxxx X. Xxxxxxx, the
Employer representative, who for purposes of this Agreement is
referred to as the Program Administrator. The Employer reserves
the right to change the Program Administrator from time to time,
and will notify the Executive of any such change.
6.02. If the claim is denied in whole or in part,
written notice of the decision will be furnished to the Claimant
within a reasonable time after receipt of the claim. The notice
will be prepared in a manner calculated to be understood by the
Claimant and will (1) state the specific reason or reasons for
the denial, (2) refer specifically to the pertinent Program
provisions on which the denial is based, (3) describe any
additional material or information necessary for the Claimant to
perfect a claim and an explanation as to why such material or
information is necessary, and (4) provide appropriate information
as to the steps to be taken by the Claimant if the Claimant
wishes to submit the claim for review.
6.03. A denied claim is appealable to the Program's
Named Fiduciary for review. Xxxxx Organ Company is the Program's
Named Fiduciary. The Employer reserves the right to change the
Named Fiduciary from time to time. The Claimant, or the
Claimant's duly authorized representative, must request a review
in writing no later than sixty (60) days after receipt of notice
of denial of the claim. The Claimant, or the Claimant's duly
authorized representative, may review pertinent documents and
submit issues and comments in writing. The Named Fiduciary may,
at his discretion, hold a hearing. The Named Fiduciary will make
a written decision following receipt of the request for review.
Absent special circumstances, the decision will be, made no later
than sixty (60) days following receipt of the request for review.
The decision on review will include specific reasons for the
decision and will be written in a manner calculated to be
understood by the Claimant. The decision will also include
specific references to the pertinent Program provisions on which
the decision is based.
ARTICLE 7.
Miscellaneous
7.01. Neither the Executive nor any beneficiary or
creditor of the Executive shall have any right of anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment. In the event of an attempted
assignment, alienation, sale, pledge or transfer, the Employer
shall have no further liability or responsibility for the payment
of benefits.
7.02. The term "beneficiary" includes any person,
trust or other entity, including the plural, last designated in
writing by the Executive and filed with the Program
Administrator. The Executive may revoke or change any
beneficiary designation, in whole or in part, without the
beneficiary's consent.
7.03. The Named Fiduciary and designated Program
Administrator shall have the discretionary authority to interpret
the terms of this Agreement.
7.04. This Agreement may be amended or revoked, in
whole or in part, only by the written agreement of the Employer
and the Executive.
7.05. This Agreement is binding on the parties, as
well as their beneficiaries, heirs, and successors.
7.06. This Agreement will be executed in duplicate,
with one copy retained by each party. Both copies shall be
considered an original copy and together shall constitute one and
the same Agreement,
7.07. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania.
XXXXX ORGAN COMPANY
(Employer)
Attest: By /s/ XXXXXX XXXXXXXXX
Xxxxxx Xxxxxxxxx
/s/ XXXXXXX X. XXXXXXXX Title: President
Xxxxxxx X. Xxxxxxxx, Sec.
/s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx (Executive)
ENDORSEMENT SPLIT DOLLAR LIFE INSURANCE AGREEMENT
INSURER: Pacific Life Insurance Company
POLICY NUMBER: XX0000000-0
INSURED/EMPLOYEE: XXXXX X. XXXXXX
POLICYOWNER/CORPORATION: XXXXX ORGAN COMPANY
EFFECTIVE DATE OF AGREEMENT: August 1, 1999
The respective rights and duties of the Corporation and
Insured/Employee in the subject policy shall be as defined in the
following numbered paragraphs, namely:
I. DEFINITIONS
"DEATH PROCEEDS": Death Proceeds as used in this Agreement shall
mean Specified Amount, described as Option 1 in the policy
contract;
"CASH VALUES": Cash Values as used in this Agreement shall mean:
For Purposes of Policy Surrender - The Cash Surrender Value, as
that term is defined in the policy contract.
For Purposes Of Measuring Premium Payments And Obligations -
Accumulated Value or Policy Account Value, as that term is
described in the policy contract.
"PLANNED PERIODIC PREMIUM": shall mean that premium level
selected by the parties subject to the Insurer's minimum premium
requirements.
II. POLICY TITLE AND OWNERSHIP
Title and Ownership shall reside in the Corporation for its use
and for the use of Insured all in accordance with this Agreement.
The Corporation alone may, to the extent of its interest,
exercise the right to borrow or withdraw on the policy cash
values. Where the Corporation and Insured (or his assignee, with
the consent of the Insured) mutually agree to exercise the right
to increase the coverage under the subject Split Dollar Policy,
then, in such event, the rights, duties and benefits of the
parties to such increased coverage shall continue to be subject
to the terms of this Agreement.
Notwithstanding any provision hereof to the contrary, the
Corporation shall have the sole authority to direct the manner in
which the Policy 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.
III. BENEFICIARY DESIGNATION RIGHTS
Insured/Employee (or his assignee) shall have the right and power
to designate a beneficiary or beneficiaries to receive his share
of the proceeds payable on the death of the insured but subject
to any right or interest the Corporation may have in such
proceeds as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
Planned Periodic premium shall be paid annually as of the date of
issue and upon each subsequent premium due date. The Corporation
shall pay an amount equal to the Planned Periodic Premium due.
The Employee shall be charged with taxable income by reason of
the economic benefit of the insurance protection received, as
determined under Revenue Rulings 64-328, l964-2 C.B.ll and 66-
ll0, l966-l C.B. l2. The Corporation shall furnish the Employee
a statement on Form W-2 of his or her taxable income, including
income, received under this Plan.
V. ASSUMPTION OF PREMIUM PAYMENT OBLIGATION BY THE OTHER
PARTY
In the event either the Corporation or Insured/Employee (or his
assignee) fails to fulfill the obligation to pay premiums as
contemplated in Paragraph IV., the other may freely assume such
obligation in which event the rights under the policy shall be
altered in the manner described in Paragraph VIII.
VI. DIVISION OF DEATH PROCEEDS OF POLICY
The division of death proceeds of the policy, when premiums are
paid in strict accord with Paragraph IV. and when insured's death
occurs before the end of the grace period for any premium in
default, is as follows:
A.(1) Prior to The Insured's reaching age 62, or
retirement age, if later:
The Insured's Beneficiary, (or his assignee's),
beneficiary(s), designated in accordance with Paragraph
II., shall be entitled to a minimum of $400,000 of the
policy proceeds, if available. The amount payable to the
Insured/Employee's Beneficiary shall be determined
annually by the President of the Company, but shall not
be less than $400,000 of the policy proceeds, if
available.
A.(2) Post The Insured's attainment of age 62, or
retirement age, if later:
The Insured's Beneficiary, (or his assignee's),
beneficiary(s), designated in accordance with Paragraph
II., shall be entitled to a amount which shall be
determined annually by the President of the Company.
B. Corporation/Assignee shall be entitled to the remainder
of such proceeds, less, any indebtedness determined as of
the date of death.
C. Corporation and Insured's Beneficiary (or his assignees)
shall share in any interest due on the death proceeds as
their respective share of the proceeds as above-defined
bears to the total proceeds excluding such interest.
D. In the event the Insured's death shall be the result of
suicide within a two year period following the issuance of a
life insurance policy insuring Employee's life or should
Employee be found to have committed fraud in completion of
the insurance application, then no death benefits shall be
payable to Employee or his designated beneficiary.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
Division of the cash surrender value of the policy, when premiums
are paid in strict accord with Paragraph IV. and when surrender
occurs not later than sixty days after due date of any premium in
default, are as follows:
The Corporation shall be entitled to an amount equal to the
policy's cash value, as that term is defined in the policy
contract, less any policy loans and unpaid interest or cash
withdrawals previously incurred by the Corporation and any
applicable policy surrender charges. Such cash value shall be
determined as of the date of Surrender.
VIII. PARTIES' RIGHTS WHERE PREMIUM PAYMENT VARIATIONS EXIST
When premiums are not paid in strict accord with Paragraph IV.,
division of death proceeds or net cash value of the policy, as in
either case is defined in Paragraph VI. or VII., shall be as
follows:
X.Xx the event the Corporation should pay less in the aggregate
than the share of planned periodic premiums, as defined in
Paragraph IV., then the Corporation's share of death proceeds
or of the net cash value of the policy on surrender shall be
decreased within the limits of such proceeds or cash value, as
the case may be, by the total amount of such decreased
premiums. The Insured's (or his assignee's) designated
beneficiary, in the event of death, and the Insured (or his
assignee), in the event of surrender, shall be entitled to any
remainder of proceeds or net cash value.
B.Alternatively, should the Corporation pay more in the
aggregate than its share of premiums defined in Paragraph IV.,
then the Corporation's share of death proceeds or the cash
value of the policy on surrender shall be increased within the
limits of such proceeds or cash value, as the case may be, by
the total amount of such increased share does not exceed the
sum of the Corporation's premiums paid. The Insured's (or his
assignee's designated beneficiary, in the event of death, and
the Insured (or his assignee), in the event of surrender,
shall be entitled to any remainder of cash value.
IX. NONFORFEITURE DEATH PROCEEDS
The Corporation's share of death proceeds payable on the
Insured's death while the policy is in force under any of its non-
forfeiture provisions shall be an amount equal to the excess, if
any, of Corporation's share of the policy's cash value at the
date of default in premium payment (such share determined in the
manner prescribed in Paragraphs VI. or VIII. in relation to the
facts presented) over any indebtedness against the policy at
Insured's death. The designated beneficiary(ies) shall be
entitled to any remainder of such proceeds.
X. NONFORFEITURE CASH VALUE
The Corporation's share of the cash value payable on surrender of
the policy while it is in force under any of its non-forfeiture
provisions shall be an amount equal to the lesser of: (a) the
cash value at date of surrender less any policy surrender charge,
or (b) the excess, if any, of the Corporation's share of the
policy's cash value in the manner prescribed in Paragraphs VII.,
VIII. of IX. in relation to the facts presented over any
indebtedness on the policy at date of surrender. Insured (or his
assignee) shall be entitled to any remainder of such cash value.
XI. PREMIUM WAIVER
If the policy contains a premium waiver provision or waiver of
monthly deduction, such waived amounts shall be considered for
all purposes of this Agreement as having been paid by Insured (or
his assignee).
XII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY
ELECTION EXISTS
In the event the subject policy involves as endowment or annuity
element, the Corporation's right and interest in any endowment
proceeds or annuity benefits, on expiration of the deferment
period, shall be determined under the provisions of this
Agreement by regarding such endowment proceeds or the commuted
value of such annuity benefits as the policy's net cash value.
The Corporation's right and interest in endowment proceeds or in
annuity benefits shall be fulfilled at the end of the endowment
period or annuity deferment period under either the policy proper
or under its settlement provisions. As contemplated herein, an
annuity policy shall be considered to mature for its commuted
value on the specific date stated in the policy on which benefits
become payable or on a date elected by the Corporation pursuant
to the terms of the policy.
XIII. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of
the following events:
A. Termination by any party upon the occurrence of 30-day
written notice to the other parties;
B. Termination of Executive's employment for cause or
Executive's Voluntary Resignation.
C. The Insured's (or his assignee's ) failure to pay (his/its)
proportionate share of premiums, if any, as mutually-agreed upon
by the Corporation and Insured under the options provided within
Paragraphs IV. and V., herein.
Upon such termination, Insured (or his assignee) shall have a 90-
day option to receive from the Corporation an absolute assignment
of the policy in consideration of a cash payment to the
Corporation, whereupon this Agreement shall terminate. Such cash
payment shall be the greater of:
A. The Corporation's share of the cash value of the policy
on the date of such assignment, as defined in this
Agreement;
B. The amount of the premiums which have been paid by the
Corporation prior to the date of such assignment;
Should Insured (or his assignee(s)) fail to exercise the option
within the prescribed 90-day period, Corporation shall have an
additional 30 day period to elect to continue the coverage in
which case Insured shall transfer their respective interests to
the Corporation.
Should the Corporation elect not to continue the coverage,
Insured (or his assignee(s)) agrees that the subject policy will
be surrendered to the Insurer and the proceeds distributed
between the Corporation and the Insured (or his assignee(s)) as
prescribed by Paragraphs VII, VIII or X. herein.
XIV. INSURED OR ASSIGNEE'S ASSIGNMENT RIGHTS
Insured (or his assignee) may, at any time, assign to any
individual, trust or other organization all right, title and
interest in the subject policy and all rights, options,
privileges and duties created under this Agreement.
XV. AGREEMENT BINDING UPON PARTIES
This Agreement shall bind the Insured and the Corporation, their
heirs, successors, personal representatives and assigns.
XVI. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
Xxxxx Organ Co. is hereby designated the "Named Fiduciary" until
resignation or removal by the Board of Directors. As Named
Fiduciary, Xxxxx Organ Co. shall be responsible for the
management, control and administration of the Split Dollar plan
as established herein. Xxxxx Organ Co. may allocate to others
certain aspects of the management and operation responsibilities
of the plan including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
XVII. FUNDING
The funding policy for the Split Dollar arrangement shall be to
maintain the subject policy in force by paying, when due, all
premiums required.
XVIII. AMENDMENT
The Split Dollar plan may be amended at any time and from time to
time by a written instrument executed by the Insured (or his
assignee(s)) and the Corporation.
XIX. BASIS OF PREMIUM PAYMENTS AND BENEFITS
Payments to and from the Split Dollar Plan adopted herein shall
be in accordance with the provisions of Paragraphs III. through
X., inclusive.
XX. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR
PLAN
A. Claim forms or claim information as to the subject policy
can be obtained by contacting Cornerstone Advisors.
When the Named Fiduciary has a claim which may be covered under
the insurance policy provisions, he or she should contact the
office or the person named above who will either complete a claim
form and forward it to an authorized representative of the
Insurer or advise the Named Fiduciary what further requirements
are necessary. The Insurer will evaluate the claim and make a
decision as to payment within 90 days of the date the claim is
received by the Insurer. In the event that a claim is not
eligible under the policy, the Insurer will notify the Named
Fiduciary of the denial. Such notification will be made in
writing within 90 days of the date the claim is received and will
be transmitted through the office of person named above.
The notification will include the specific reasons for the denial
as well as specific reference to the policy provisions upon which
the denial is based. The Named Fiduciary will also be informed
as to the steps which may be taken to have the claim denial
reviewed.
A decision as to the validity of a claim will ordinarily be made
within 10 working days of the date the claim is received by the
Insurer. Occasionally, however, certain questions may prevent
the Insurer from rendering a decision on the validity of the
claim within the specific 90 day period. If this occurs, the
Named Fiduciary will be notified of the reasons for the delay as
well as the anticipated length of the delay, in writing and
through the office or person named above. If further information
or other material is required, the Named Fiduciary will be so
informed.
If the Named Fiduciary is dissatisfied with the denial of the
claim or the amount paid, he or she has 60 days from the date he
or she receives notice of a claim denial or receipt of the amount
paid to file his or her objections to the action taken by the
Insurer. If the Named Fiduciary wishes to contest a claim
denial, he or she should notify the person or office named above
who will assist in making an inquiry to the Insurer. All
objections to the Insurer's actions should be in writing and
submitted to the person or office named above for transmittal to
the Insurer. The Insurer will review the claim denial or amount
paid and render a decision on such objections. The Named
Fiduciary will be informed in writing of the decision of the
Insurer within 60 days of the date the claim review request is
received by the Insurer. This decision will be final.
B. Once a decision has been rendered as to the distribution of
proceeds under the claim procedure described above as to the
policy, claims for any benefits due under the plan or the
surrender of the policy may be made in writing by the Owner or
the Owner's designated beneficiary and the Insured or their
designated beneficiary, as the case may be, to the Named
Fiduciary.
In the event a claim for benefits is wholly or partly denied or
disputed, the Named Fiduciary shall, within a reasonable period
of time after receipt of the claim, notify Owner or Owner's
designated beneficiary and Insured or their designated
beneficiary, as the case may be, of such total or partial denial
or dispute, listing:
A. The Specific reason or reasons for the denial or
dispute;
B. Specific reference to pertinent plan provisions upon
which the denial or dispute is based;
C. A description of any additional information necessary
for the claimant to perfect the claim and an
explanation of why such material or information is
necessary, and;
D. An explanation of the plan's review procedure.
Within 60 days of denial or notice of claim under the plan, a
claimant may request, in writing, that the claim be reviewed by
the Named Fiduciary in a full and fair hearing. The claimant or
his duly authorized representative may, but need not, review the
pertinent documents, and submit issues and comments in writing
for consideration by the Named Fiduciary. A decision shall be
rendered by the Named Fiduciary within 60 days after receipt of
request for review. The decision shall be in writing and shall
include the specific reason or reasons for the denial or dispute
and specific reference to pertinent plan provisions upon which
the denial or dispute is based. The Named Fiduciary shall
possess and exercise discretionary authority to make
determinations as to a participant's eligibility for benefits and
to construe the terms of the plan. The decision of the Named
Fiduciary shall be final and non-reviewable unless found to be
arbitrary and capricious by a court of competent review. Such
decision will be binding upon the Corporation and the claimant.
If a claimant does not request a review of the Named Fiduciary's
determination within the 60 day period specified, he or she shall
be barred and estopped from challenging the Named Fiduciary.
XXI. INSURANCE COMPANY NOT A PARTY TO AGREEMENT
The Insurer shall not be deemed a party to this Agreement but
will respect the rights of the parties as herein developed upon
receiving an executed copy of this Agreement. Payment or other
performance of its contractual obligations in accordance with the
policy provisions shall fully discharge the Insurer for any and
all liability.
Executed at Macungie, Pennsylvania, this 26th day of August, 1999.
Xxxxx Organ Co.
(OWNER)
/s/ XXXXXX X. XXXXXXX BY: /s/ XXXXXX XXXXXXXXX
WITNESS Xxxxxx Xxxxxxxxx, President
/s/ XXXXXX X. XXXXXXX /s/ XXXXX X. XXXXXX
WITNESS Xxxxx X. Xxxxxx
(INSURED/EMPLOYEE)
