SPLIT DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT is made as of December 1, 1998, between KinderCare Learning
Centers, Inc., a Delaware corporation (the "Corporation"), and
_______________________ (the "Owner").
Recitals:
A. The Owner is a valued employee of the Corporation.
B. The Owner owns the life insurance policy (the "Policy") on the life of
the Owner, as shown on Exhibit A attached hereto. The insurance company issuing
the Policy is called the "Insurer."
C. The Corporation wishes the Owner to continue his/her employment with the
Corporation and, as an inducement thereto, the Corporation is willing to assist
the Owner in the payment of premiums for the Policy as provided in this
Agreement.
D. The parties intend that this Agreement constitute a plan of split dollar
life insurance under Revenue Ruling 64-328, 1964-2 C.B. 11, and Revenue Ruling
66-110, 1966-1 C.B. 12.
THEREFORE, for value received, the parties agree:
1. Premium Payments. Until this Agreement is terminated, the Corporation
and the Owner shall make payments as provided in this section.
1.1. The Corporation shall timely pay all premiums on the Policy.
1.2. For purposes of this Agreement, the "Corporation's Interest" in
the Policy is an amount equal to the total premiums paid by the Corporation on
the Policy from the date of this Agreement to the date as of which the
Corporation's Interest is being determined, reduced by any prior payments to the
Corporation in reduction of its Interest in the Policy.
2. Ownership of the Policy. The Owner is the owner of the Policy. The Owner
agrees not to exercise his/her ownership rights in the Policy in any way that
would prevent the Corporation from recovering its Interest in the Policy in
accordance with this Agreement.
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3. Corporation's Rights.
3.1. In consideration of the Corporation's payment of premiums as
provided in Section 1, and as collateral security for the payment of the
Corporation's Interest, the Owner hereby collaterally assigns to the Corporation
the following rights in the Policy:
(a) The right to receive, upon the partial or total surrender of
the Policy by the Owner, the cash surrender proceeds up to the amount of the
Corporation's Interest in the Policy; and
(b) The right to receive, upon the death of the Owner, the net
proceeds of the Policy up to the amount of the Corporation's Interest in the
Policy.
3.2. To evidence the assignment of rights in the Policy by the Owner
to the Corporation, the Corporation and the Owner shall execute and file with
the Insurer a Collateral Assignment of Policy, which shall be in the form of
Exhibit B attached to this Agreement or in such other form as may be acceptable
to the parties and the Insurer. As between the Owner and the Corporation, this
Agreement shall take precedence over any provision of the Collateral Assignment
in the case of a conflict between the terms of this Agreement and the Collateral
Assignment. Upon full payment to the Corporation of the amount of its Interest
in the Policy, the Corporation shall release the collateral assignment of the
Policy.
3.3. The parties agree that benefits under the Policy may be paid by
the Insurer either by separate checks to the Corporation and Owner, or by a
joint check. In the latter instance, the Owner and the Corporation agree that
the benefits shall be divided as provided in this Agreement.
4. Termination of this Agreement.
4.1. Events of Termination. This Agreement shall terminate upon the
happening of any of the following events:
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(a) Full payment by the Owner to the Corporation of the
Corporation's Interest in the Policy;
(b) Termination of the Owner's employment with the Corporation
for any reason;
(c) Surrender, lapse, or other termination of the Policy by the
Owner;
(d) Written notice of termination either from the Owner to the
Corporation or from the Corporation to the Owner; or
(e) Death of the Owner.
4.2. Rights Upon Termination. Upon termination of this Agreement:
(a) The obligation of the Corporation to pay premiums on the
Policy shall cease; and
(b) If the Agreement is terminated under paragraph (e) of section
4.1, the Corporation shall be entitled to receive an amount equal to the
Corporation's Interest in the Policy.
(c) If the Agreement is terminated under paragraph (b), (c) or
(d) of section 4.1, the Owner shall, within 60 days after the date of
termination, pay to the Corporation an amount equal to the Corporation's
Interest in the Policy. If full payment of this amount is not received by the
Corporation within that 60 day period, then the Owner shall immediately transfer
complete ownership of the Policy to the Corporation.
5. The Insurer. The Insurer shall be bound only by the provisions of the
Policy and the Collateral Assignment. Any payments made or actions taken by the
Insurer in accordance with the Policy shall fully discharge the Insurer from
liability. The Insurer shall not be bound by or deemed to have notice of the
provisions of this Agreement.
6. ERISA Provisions. The following provisions are part of this Agreement
and are intended to meet the requirements of the Employee Retirement Income
Security Act of 1974:
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6.1. Named Fiduciary. The "named fiduciary" and "plan administrator"
is the Corporation.
6.2. Funding Policy. The funding policy under this Agreement is that
all premiums on the Policy be remitted to the Insurer when due.
6.3. Basis of Payment of Benefits. Direct payment by the Insurer is
the basis of payment of benefits under this Agreement, with those benefits in
turn being based on the payment of premiums as provided in this Agreement.
6.4. Claims Procedure.
(a) Claim. A person who believes that he or she is being denied a
claim for benefits to which he or she is entitled under this Agreement (a
"Claimant") may file a written request for such benefit with the Corporation,
setting forth the claim. The request must be addressed to the "Vice President of
Human Resources" of the Corporation at the Corporation's then principal place of
business.
(b) Decision on a Claim. If a claim is denied, the Corporation
shall deliver a written explanation to the Claimant, setting forth: (1) the
specific reason or reasons for the denial; (2) references to the pertinent
provisions of this Agreement on which the denial is based; (3) a description of
any additional material or information necessary for the Claimant to perfect the
claim and an explanation of why that material or information is necessary; (4)
appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and (5) the time limit for requesting a review of
the claim under section 6.4(c). The written explanation shall be delivered to
the Claimant within 90 days after receipt of the claim by the Corporation.
(c) Review of a Denied Claim. A Claimant shall have 60 days
following receipt of the denial of a claim to request a review of the denial. A
request for review shall be in writing and addressed to the Vice President of
Human Resources at the Corporation's then principal place of business. The
Claimant may submit pertinent documents and written issues and comments. The
Vice President of Human Resources shall review the denial of the claim, and
shall furnish the Claimant with a decision on review within 60 days after
receipt of the Claimant's request for review. The decision on review shall be in
writing, shall be written in a manner calculated to be understood by the
claimant, and shall include specific reasons for the decision and specific
references to the pertinent provisions of this Agreement on which the decision
is based. If the written decision on review is not furnished to the Claimant
within the 60 day period, the claim shall be deemed denied on review.
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7. Assignment. Either party may assign all or any of its rights in the
Policy and this Agreement, without the consent of the other party. If a party
assigns all of its rights and obligations under this Agreement in accordance
with this section, then the assignee shall be substituted for the assignor as a
party under this Agreement.
8. Amendment. This Agreement may be amended by, but only by, a written
instrument signed by each of the parties.
9. Binding Effect. This Agreement shall be binding upon, and shall inure to
the benefit of, the Corporation and the Owner and their respective successors
and permitted assigns.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.
IN WITNESS WHEREOF, the parties have signed this Agreement effective on the
date first above written.
KinderCare Learning Centers, Inc., a
Delaware corporation
By: _____________________________________
Print
Name: ___________________________________
Title: __________________________________
_________________________________________
Name
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EXHIBIT A
Description of Life Insurance Policy
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Insurer Policy Number Face Amount
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Security Life of Denver
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EXHIBIT B
Form of Collateral Assignment
COLLATERAL ASSIGNMENT
THIS ASSIGNMENT is made on December __, 1998, by __________, as Assignor,
to KinderCare Learning Centers, Inc., a Delaware corporation, as Assignee.
FOR VALUE RECEIVED, the Assignor hereby collaterally assigns to Assignee,
its successors and assigns, the following specific rights in and to life
insurance policy number ___________ (the "Policy") issued by Security Life of
Denver (the "Insurer") in the face amount of ________ on the life of
_________________ (the "Insured"):
1. This Assignment is made, and the Policy shall be held, as collateral
security for all obligations of the Assignor to Assignee pursuant to that
certain Split Dollar Life Insurance Agreement, dated December 1, 1998, between
Assignor and Assignee with respect to the Policy (the "Agreement"). This
Assignment is subject to all of the terms and conditions of the Policy and to
all superior liens, if any, which the Insurer may have against the Policy.
2. The Assignee shall have the following rights in and to the Policy:
(a) The right to receive, upon the surrender of the Policy by the
Assignor, the cash surrender proceeds up to the amount of the Assignee's
"Interest in the Policy" (as defined in the Agreement); and
(b) The right to receive, upon the death of the Insured, the net
proceeds of the Policy up to the amount of the Assignee's Interest in the
Policy.
3. Except as specifically granted in this Collateral Assignment, the
Assignor shall retain all incidents of ownership in the Policy, subject to the
terms of the Agreement.
4. The Assignee shall, upon request of the Assignor, forward the Policy to
the Insurer, without unreasonable delay, for endorsement of any designation or
change of beneficiary, any election of optional mode of settlement, or the
exercise of any other right reserved by the Assignor.
5. The Insurer shall be bound only by the provisions of, and endorsements
to, the Policy. The Insurer is not a party to the Agreement, and
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shall not be bound by or deemed to have notice of the provisions of the
Agreement, and the Agreement is not incorporated into this Collateral
Assignment. Any payments made or actions taken by the Insurer in accordance with
the Policy shall fully discharge the Insurer from all liability. The Insurer is
hereby authorized to recognize the Assignee's claim to rights hereunder without
investigating the reason for any action taken by the Assignee, the validity or
amount of any of the liabilities of the Assignor to the Assignee under the
Agreement, the existence of any default under the Agreement, the giving of any
notice, or the application to be made by the Assignee of any proceeds paid by
the Insurer to the Assignee pursuant to this Collateral Assignment, and the sole
signature of the Assignee shall be sufficient for the exercise of any rights
under the Policy assigned hereby, and the receipt of the Assignee for any sums
received by it shall be a full discharge and release therefor to the Insurer.
IN WITNESS WHEREOF, the Assignor and Assignee have signed this Collateral
Assignment on the date first written above.
"ASSIGNOR"
_________________________________________
"ASSIGNEE"
KinderCare Learning Centers, Inc.,
a Delaware corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
