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EXHIBIT 10(c)
AMENDED AND RESTATED
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SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
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THIS AMENDED AND RESTATED SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
("AMENDMENT"), effective as of the 18th day of August, 2000, is made by and
among THE XXXXXXX-XXXXXXXX COMPANY, an Ohio corporation (the "Corporation"),
XXXX X. XXXXX, an individual residing in the State of Ohio (the "Employee"),
and NATIONAL CITY BANK, Trustee under THE XXXX X. XXXXX AND XXXX XXXX XXXXX
IRREVOCABLE TRUST AGREEMENT dated March 2, 1996 (National City Bank being
hereinafter referred to as the "Trustee" and the trust formed in connection
with the aforementioned Trust Agreement being hereinafter referred to as the
"Trust" and hereinafter the Corporation, the Employee, and the Trustee may be
referred to collectively as the "Parties").
W I T N E S S E T H:
WHEREAS, the Corporation, the Employee, and the Trustee entered
into a Split-Dollar Agreement on March 25, 1996;
WHEREAS, the Trustee is the owner and beneficiary of life
insurance policy 3815720 and life insurance policy 3819246, described in
Exhibit A attached hereto, issued on March 5, 1996, by The Guardian Life
Insurance Company of America (the "Insurer") insuring the lives of the Employee
and Xxxx X. Xxxxx (the "Spouse"), each policy having an initial face value of
Six Million Dollars ($6,000,000) for a total initial face value of Twelve
Million Dollars ($12,000,000);
WHEREAS, the Corporation and the Trustee agreed to make life
insurance policy 3815720 and life insurance policy 3819246 subject to the
Split-Dollar Agreement dated March 25, 1996;
WHEREAS, the Trustee now desires to exchange life insurance policy
3815720 and life insurance policy 3819246 for three new policies of life
insurance, described in Exhibit A attached hereto (policy 3884679, policy
3886165, and policy 3886166), to be issued by the Insurer on the lives of the
Employee and his Spouse with an initial aggregate face value of Twenty-one
Million Dollars ($21,000,000) (the "Policies") and the Corporation and the
Trustee desire to make the Policies subject to the Split-Dollar Agreement dated
March 25, 1996, as modified and restated by this Amendment;
WHEREAS, the Employee continued his employment with the
Corporation through April 30, 2000;
WHEREAS, the Corporation has contributed Two Million Nine Hundred
Eighty Thousand Dollars ($2,980,000) towards the payment of annual premiums on
life insurance policy 3815720 and life insurance policy 3819246;
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WHEREAS, the Corporation is desirous of continuing to assist the
Trustee in paying for life insurance on the lives of the Employee and his
Spouse, which coverage is intended to continue even if the Employee predeceases
his Spouse;
WHEREAS, the Corporation has determined that this assistance can
best be provided under a "split-dollar" arrangement; and
WHEREAS, the Parties now desire to amend and restate the
Split-Dollar Agreement originally entered into on March 25, 1996, in its
entirety as follows. Hereafter, all references herein to "Agreement" shall
refer to the original Split Dollar Agreement dated March 25, 1996, as modified
and restated by this Amendment.
NOW, THEREFORE, for value received and in consideration of the
mutual covenants contained herein, the Parties agree as follows:
1. PAYMENT OF PREMIUMS. Each year the Agreement remains in effect, the
Corporation shall remit the entire premium due on the Policies to the Insurer
on or before the premium due date. The Corporation shall furnish to the
Employee or to his Spouse, if she survives the Employee, and the Trustee notice
of timely payment of such premium.
2. ALLOCATION OF PREMIUMS. The Trustee will contribute a portion
towards the annual premium due on the Policies that is equal to the lesser of
(a) the amount of the entire Economic Benefit (as defined below) that would be
taxable to the Employee or his Spouse but for such payment, or (b) the amount
of the premium due on the Policies. The Trustee shall make such contributions
by remitting its portion of the annual premium on the Policies to the
Corporation before the premium due date. The Corporation shall contribute the
remainder of the annual premium. The Economic Benefit that would be taxable to
the Employee or his Spouse in any given year during the term of the Agreement
shall be an amount equal to the cost of current life insurance protection on
the joint lives of the Employee and his Spouse, measured by the U.S. Life Table
38 (as established by the Internal Revenue Service), while the Employee and his
Spouse are both living, and after the death of either the Employee or his
Spouse, measured by the lower of the P.S. No. 58 Cost (as established by the
Internal Revenue Service) or the Insurer's current published premium rate for
annually renewable term insurance for standard risks. For short taxable years,
or for a year during which either the Employee or his Spouse dies, the amounts
will be prorated on a daily basis.
3. APPLICATION OF POLICY DIVIDENDS. The dividends declared by the
Insurer on the Policies will continue to be applied to purchase additional
paid-up insurance.
4. INCIDENTS OF OWNERSHIP. The Trustee is and shall continue to be the
sole and exclusive owner of the Policies and the Trustee shall be entitled to
exercise any and all rights, privileges and benefits of ownership in the
Policies, including, but not limited to, assigning, surrendering, borrowing
from, canceling, or otherwise disposing of the Policies. It is the intention of
the Parties that the Trustee retain all ownership rights in the Policies,
except the Corporation's right to recover the Corporation's Interest in the
Policies, as hereafter defined.
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The Corporation shall have only those rights as collateral assignee of the
Policies to recover an amount equal to the Corporation's Interest in the
Policies, but no other amounts. All provisions of the Agreement shall be
construed so as to carry out such intention. The "Corporation's Interest in the
Policies" will mean, at any time at which the value of such interest is to be
determined under the Agreement, the sum of (1) Two Million Nine Hundred Eighty
Thousand Dollars ($2,980,000) and (2) the total of amounts contributed toward
premiums on the Policies by the Corporation on and after July 30, 2000, but
less the amount of any loans and/or withdrawals from the Policies theretofore
obtained by the Corporation. The "Corporation's Interest in the Policies" shall
not include any amounts contributed by the Trustee towards the premiums on the
Policies. Not later than the 30th day of September of each year that the
Agreement remains in effect, the Corporation shall furnish to the Trustee a
written, dated schedule indicating the separate contributions to the annual
premiums by the Corporation and the Trustee for such year and the cumulative
value of the Corporation's Interest in the Policies as of the date of such
schedule, as determined in accordance with the provisions of the Agreement.
Upon written consent by the Corporation and the Trustee, such schedule shall
thereafter be referred to as "Exhibit B" for the applicable year and shall be
attached and made a part of the Agreement. Exhibit B shall be updated annually
in accordance with the provisions of this paragraph.
5. COLLATERAL ASSIGNMENT. In order to secure the repayment to the
Corporation of the amount of the premiums on the Policies paid by it under the
Agreement the Trustee has assigned the Policies to the Corporation as
collateral, under the form used by the Insurer for such assignments. The
Trustee and the Corporation agree that the collateral assignment of the
Policies to the Corporation shall continue and shall not be terminated, altered
or amended by the Trustee, without the express, written consent of the
Corporation. The Trustee and the Corporation further agree to take all action
necessary to cause such collateral assignment to conform to the provisions of
the Agreement.
6. RIGHTS TO THE PROCEEDS AT DEATH. Upon the death of the survivor of
the Employee and his Spouse while the Agreement is in force, the Corporation
shall receive the Corporation's Interest in the Policies, the Trustee shall
receive the remaining balance of the proceeds of the Policies and the Agreement
shall terminate. Notwithstanding any provision herein to the contrary, in the
event that, for any reason whatsoever, no death benefit is payable under the
Policies upon the death of the survivor of the Employee and his Spouse and in
lieu thereof the Insurer refunds all or any part of the premiums paid for the
Policies, the Corporation and the Trustee shall have the unqualified right to
share, pro rata, such refund of premiums based on their respective cumulative
contributions thereto.
7. TERMINATION OF AGREEMENT. If not sooner terminated by the death of
the survivor of the Employee and his Spouse, the Agreement shall terminate at
such time as all the Parties agree in writing or at such time on or after
August 2, 2016, as the net death benefit of the Policies payable to the Trustee
exceeds Twenty-three Million Dollars ($23,000,000) determined as if the
Agreement were then terminated and the Corporation's Interest in the Policies
had been paid to the Corporation.
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Notwithstanding the foregoing, if at the time of anticipated
termination of the Agreement as stated above, any distribution from the
Policies would be subject to federal income taxation by reason of the Policies
being classified as a modified endowment contract ("MEC") as defined in Section
7702A of the Internal Revenue Code of 1986, as amended, and applicable Treasury
Regulations thereunder, or any successor provisions thereto, the Agreement as
amended shall not terminate and will continue until such time as any
distributions from the Policies would not be subject to federal income taxation
by reason of the Policies being classified as a MEC as defined in Section 7702A
of the Internal Revenue Code of 1986, as amended, and applicable Treasury
Regulations thereunder, or any successor provisions thereto, unless the Parties
agree in writing to terminate the Agreement.
8. RIGHTS UPON TERMINATION.
(a) The Trustee will, for the sixty (60) days immediately
following the date on which termination occurs, have the right to obtain a
release of the Corporation's Interest in the Policies by paying to the
Corporation an amount equal to the Corporation's Interest in the Policies.
Concurrently with such payment the Corporation will release and relinquish the
collateral assignment of the Policies to the Trustee.
(b) Upon release by the Corporation of the collateral assignment
in the Policies, the Trustee will thereafter own the Policies free from the
provisions of the Agreement but subject to any loans and interest thereon
incurred by the Trustee.
(c) If the Trustee fails to make the payment provided for in
paragraph (a) hereof, the Corporation shall have the right to obtain its
Interest in the Policies, as set forth in the last Exhibit B approved by the
Corporation and the Trustee, directly from the Insurer by a loan against the
Policies, a partial surrender of the Policies, or a withdrawal from the
Policies, as the Corporation deems appropriate. Concurrent with such payment,
the Corporation will release and relinquish the collateral assignment of the
Policies to the Trustee.
9. SATISFACTION OF CLAIM. The Trustee agrees that the Trust's rights
and interest, and the rights and interest of any persons taking under or
through it, will be completely satisfied upon compliance by the Corporation
with the provisions of the Agreement.
10. INSURER NOT A PARTY. The Insurer shall be fully discharged from
its obligations under the Policies by payment of the death benefit of the
Policies to the beneficiary or beneficiaries named in the Policies, subject to
the terms and conditions of the Policies. In no event shall the Insurer be
considered a Party to the Agreement, or any modification or amendment hereof.
No provision of the Agreement, nor any modification or amendment hereof, shall
in any way be construed as enlarging, changing, varying, or in any other way
affecting the obligations of the Insurer as expressly provided in the Policies,
except insofar as the provisions hereof are made a part of the Policies by the
collateral assignment executed by the Trustee and filed with the Insurer in
connection herewith.
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11. NAMED FIDUCIARY, DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND
ADMINISTRATION.
(a) The Corporation is hereby designated as the named fiduciary
under the Agreement. The named fiduciary shall have authority to control and
manage the operation and administration of the Agreement, and it shall be
responsible for establishing and carrying out a funding policy and method
consistent with the objectives of the Agreement.
(b) If the Trustee, the Employee or his Spouse (collectively
and/or individually the "Claimant") believes that he or she or it is entitled
to a benefit under the Agreement which he or she or it has not received because
the Corporation has denied the benefit in whole or in part, the Claimant may
file with the Corporation a written claim specifying the basis of his or her or
its complaint and the facts upon which he or she or it relies in making such
claim. Such claim must be witnessed by the Claimant or his or her or its
authorized representative and shall be deemed filed when received by the
Corporation. Unless such claim is allowed in total by the Corporation, the
Corporation shall respond in writing to the Claimant advising him or her or it
of the total or partial denial of his or her or its claim within a reasonable
amount of time but not later than ninety (90) days after receipt of the claim
and shall deliver such reply within such period. The Corporation may, however,
extend the reply period for an additional ninety (90) days for reasonable
cause. Such notice shall include:
(1) The reasons for denial of claim;
(2) Reference to the provisions of the Agreement upon which
the denial of the claim was based;
(3) A description of any additional material or information
necessary for the Claimant to perfect the claim and an explanation of why such
material and information is necessary; and
(4) An explanation of the review procedure.
Within six (6) months after the mailing of such notice of denial, the Claimant
may appeal such denial by filing with a special review committee appointed by
the Corporation his or her or its written request for review of said claim. A
special review committee shall consist of no less than three (3) persons who
are disinterested as to the claimant. If an appeal is so filed within the six
(6) month period, the special review committee shall conduct a full and fair
review of such claim and mail to the Claimant not later than sixty (60) days
after receipt of a request for review a written decision of the matter based
upon the facts and pertinent provisions of the Agreement. Such decision shall
state the reason for the decision as well as references to the pertinent
provisions of the Agreement on which the decision is based. During the full
review, the Claimant shall be given the opportunity to review documents that
are pertinent to his or her or its claim and to submit issues and comments in
writing to the special review committee, or, if he or she or it requests a
hearing, to present his or her or its case in person or by an authorized
representative at a hearing scheduled by the special review committee. In the
event the Claimant requests a hearing, the time period for the special review
committee to tender a decision upon a
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claim shall be extended from sixty (60) to one hundred twenty (120) days after
receipt of request for review.
(c) Notwithstanding any other provisions of the Agreement, the
Trustee, the Employee or his Spouse who has decision-making or other
administrative authority with respect to the Agreement may not decide matters
affecting his or her or its own benefits under the Agreement.
(d) Neither the establishment of the Agreement or any modification
thereof, or the creation of any fund or account, nor the payment of any benefits
shall be construed as giving to any of the Parties hereto or any other person
any legal or equitable right against the Corporation or any officer or employee
thereof, except as provided by law or by the provisions of the Agreement. Except
as provided herein, the Corporation does not in any way guarantee the benefits
to the Parties hereto from loss or depreciation. Except as provided herein, in
no event shall the Corporation's employees, officers, directors or stockholders
be liable to any person on account of any claim arising by reason of the
provisions of the Agreement or of any instrument or instruments implementing its
provisions, or for the failure of any of the Parties or other person to be
entitled to any particular tax consequences with respect to the Agreement, any
contribution thereto or distribution therefrom.
12. AMENDMENT AND ASSIGNMENT. The Agreement may be altered, amended or
modified, including the addition of any extra policy provisions, only by a
written instrument signed by the Parties. Any Party may, subject to the
limitations of Section 4, assign its or his interests and obligations under the
Agreement, provided, however, that any assignment will be subject to the terms
of the Agreement and shall not increase any obligations of the Parties.
13. BINDING EFFECT. The Agreement shall be binding upon and inure to
the benefit of the Corporation and its successors and assigns, and the Employee,
the Trustee, and their respective successors and assigns, and may not be
otherwise terminated except as provided herein.
14. NOTICE. Any notice, consent or demand required or permitted to be
given under the provisions of the Agreement shall be in writing, and shall be
signed by the Party giving or making the same. If such notice, consent or
demand is mailed to a Party hereto, it shall be sent by United States certified
mail, postage prepaid, addressed to such Party's last known address as shown on
the records of the Corporation. Except as specifically provided otherwise
hereunder, the date of such mailing shall be deemed the date of notice, consent
or demand.
15. ENTIRE AGREEMENT; GOVERNING LAW. This Amendment sets forth the
entire agreement of the Parties hereto, and any and all prior agreements, to the
extent inconsistent herewith, are hereby superseded. The Agreement will be
governed by the laws of the State of Ohio, without giving effect to the
conflicts of laws provisions thereof.
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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment at
Cleveland, Ohio effective as of the date first above written.
THE XXXXXXX-XXXXXXXX COMPANY
("Corporation")
By: /s/
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Its: /s/
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/s/
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XXXX X. XXXXX
("Employee")
THE XXXX X. XXXXX AND XXXX XXXX
XXXXX IRREVOCABLE TRUST AGREEMENT
DATED MARCH 2, 1996
("Trust")
NATIONAL CITY BANK, TRUSTEE
("Trustee")
By: /s/
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Its: ________________________________
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EXHIBIT A
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The following life insurance policies are subject to the attached
Split-Dollar Agreement:
1. Insurer: The Guardian Life Insurance Company of America
Insured: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Policy Number: 3815720
Initial Face Amount: $6,000,000
Dividend Option: Purchase paid-up additions
Date of Issue: Xxxxx 0, 0000
Xxxxxxxxx: August 2, 2000
2. Insurer: The Guardian Life Insurance Company of America
Insured: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Policy Number: 3819246
Initial Face Amount: $6,000,000
Dividend Option: Purchase paid-up additions
Date of Issue: Xxxxx 0, 0000
Xxxxxxxxx: August 2, 2000
3. Insurer: The Guardian Life Insurance Company of America
Insured: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Policy Number: 3884679
Initial Face Amount: $7,000,000
End of Year Death Benefit: $9,108,487
Dividend Option: Purchase paid-up additions
Date of Issue: August 2, 2000
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EXHIBIT A (CONTINUED)
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4. Insurer: The Guardian Life Insurance Company of America
Insured: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Policy Number: 3886165
Initial Face Amount: $7,000,000
End of Year Death Benefit: $9,108,487
Dividend Option: Purchase paid-up additions
Date of Issue: August 2, 2000
5. Insurer: The Guardian Life Insurance Company of America
Insured: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Policy Number: 3886166
Initial Face Amount: $7,000,000
End of Year Death Benefit: $9,108,487
Dividend Option: Purchase paid-up additions
Date of Issue: August 2, 2000
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EXHIBIT B
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CONTRIBUTIONS TO ANNUAL INSURANCE PREMIUMS
SEPTEMBER 30, 20__
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CURRENT YEAR AMOUNT CUMULATIVE AMOUNT
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The Xxxxxxx-Xxxxxxxx Company $ _____________________ $ _____________________
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National City Bank, Trustee $ _____________________ $ _____________________
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Total Premiums $ _____________________ $ _____________________
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APPROVED:
The Xxxxxxx-Xxxxxxxx Company National City Bank, Trustee
By: _________________________ By: __________________________
Its: ________________________ Its: _________________________
Dated: _______________________ Dated: ________________________
