SPLIT DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT, made this ________ day of ____________, 1996, by
and between FLORIDA ROCK INDUSTRIES, INC. (the "Employer"), and
__________ _____ ,("Trustee"), Trustee of the Irrevocable Trust Under
Agreement Between ___ ___________ , Grantor, and _________________
Trustee, dated September 7, 1993 ("Trust").
WITNESSETH:
WHEREAS, the Employer desires to help selected key Employees provide
life insurance protection for beneficiaries; and
WHEREAS, the Employer and the Trust desire to enter into this Split Dollar
Insurance Agreement ("Agreement") to set forth the terms and conditions under
which the Trust will acquire and the parties will maintain life insurance
policies on the life of the Employee;
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, and intending to be legally bound hereby, the
Employer and the Trustee agree as follows:
1. Application for Insurance; Ownership of the Policy. The Trustee
shall apply to Xxxx Xxxxxxx ("the Insurer") for issuance of a life insurance
policy (the "Policy") insuring the life of both ____________________, (the
"Employee") and ____________, the Employee's spouse ("Spouse"), and in such
amount as determined by the Employer. When the Policy is issued, the policy
number, initial face amount and death benefit option shall be recorded on
Schedule A attached hereto. The Trust shall be the sole owner of the Policy
and, subject to this Agreement and the Collateral Assignment, the Trustee may
exercise all ownership rights which the Policy grants to the policy owner.
Except as otherwise provided in Section 2(c) of this Agreement, policy
interest credited shall be applied to policy cash value. Notwithstanding
anything herein to the contrary, the Employer's obligations under this
Agreement are expressly conditioned on issuance of the Policy upon such
underwriting classification and premium amount as are acceptable to the
Employer in the exercise of its sole and absolute discretion.
2. Payment of Premiums.
(a) Subject to Section (c) below, the Employer shall pay each premium
due on the Policy as hereinafter set forth. Each premium on the Policy shall be
paid by the Employer as it becomes due. Each insured employee shall pick up as
income the value of the economic benefit via a 1099 issued by the corporation to
him. The value of the economic benefit shall be calculated by using the
lower of the U.S. 38 rates or the Insurer's term rates multiplied by the
Policy's total death benefits minus the cumulative amounts of premium on the
Policy paid by the Employer other than funds reimbursed to it by the Trustee.
(b) Notwithstanding the foregoing, during the term of this Agreement the
Employer shall pay a portion of the annual premium for the number of years
stated in Item 4 of Schedule A, commencing with the premium for the initial
policy year beginning November 8, 1996; provided, the Employer may agree to
pay such additional premiums as it and the Trustee may agree.
(c) If the Employer is not obligated to pay a portion of the premium on
the policy for any policy year during the term of this Agreement, the Trustee
shall pay such premium either in cash of by the application of policy cash
values, provided such application of policy dividends or application of
values does not reduce the Employer's Policy Interests (as defined herein).
3) Collateral Assignment. To secure the Trustee's reimbursement of the
amount of premiums the Employer pays on the Policy pursuant to this Agreement,
the Trustee shall, promptly upon issuance of the Policy, assign and deliver
the Policy to the Employer as collateral (the "Collateral Assignment"). Such
Collateral Assignment shall be in such form as the Employer requires and shall
grant to the Employer the limited rights in and to the Policy specified there
in. All rights in and to the Policy not granted to the Employer by the
Collateral Assignment or this Agreement, including but not limited to the
right to designate and change the beneficiaries of that portion of the Policy
proceeds to which the Trust is entitled hereunder, shall be retained by the
Trust. The Collateral Assignment is intended only to grant to the Employer a
security interest in the Policy and this security interest shall not be
interpreted in any way to include any incidents of ownership, except as
provided in this Agreement and/or the Collateral Assignment. Such Collateral
Assignment shall not be canceled, altered or amended except as provided in
this Agreement by both parties. The Employer and the Trustee agree to take
all action necessary to cause such Collateral Assignment to conform to the
provisions of this Agreement.
(4) Policy Interests.
(a) Employer's Policy Interest. Except to the extent provided in Section
5 hereof, in the event of the surrender or cancellation of the Policy, the
Employer's interest in the Policy is limited to its right to recover a
portion of the cash surrender value equal to the lesser of (i) the cumulative
amount of premiums on the Policy paid by the Employer other than funds
reimbursed to it by the Employee or (ii) the entire Policy cash value. Upon
the death of both of the insureds, the Employer's interest in the Policy's
death benefit is an amount equal to the cumulative amount of premiums on the
Policy paid by the Employer other than funds reimbursed to it by the Trustee.
The Policy interests described in this Section 4(a) shall be referred to as
the "Employer's Policy Interest."
(b) Trustee's Policy Interest. Except to the extent provided in Section
5 hereof, in the event of the surrender or cancellation of the Policy, the
Trust's interest in the Policy shall be the total Policy cash surrender value
minus the Employer's Policy Interest in such cash value. Upon the death of
both insureds,the Trust's interest in the Policy's death benefit is the
Policy's total death benefit reduced by the Employer's Policy Interest.
(c) Any payments made under the Policy to the Employer in connection
with the rights granted to the Employer pursuant to this Agreement shall
first be made from the Policy's cash surrender value attributable to policy
interest credited. The Trust shall have no interest in the life insurance
protection attributable to policy interest credited except to the extent the
death benefit or cash value thereof exceeds the Employer's Policy Interest.
Notwithstanding any provision in this Agreement or the Collateral Assignment
to the contrary, neither the Employer nor the Trustee shall have the right to
obtain one or more policy loans without the express written consent of the
other party.
(d) The Trustee acknowledges that if either of the insureds die during the
first two years after the policy issued under the Agreement is in force, and
they made any material misrepresentation in the policy application that would
have resulted in a different classification or rating or in insurance not being
accepted, a claim for benefits under the policy may be denied. The Trustee
also acknowledges that if, during the first two years the policy issued under
the Plan is in force, both insureds die as a result of suicide, Policy death
benefits will not be paid.
5. Termination of Agreement. This Agreement shall terminate upon the
happening of any of the following.
(a) The expiration of the number of Policy years stated in Item 5,
Schedule A as measured from the initial date of the Policy;
(b) Failure of the Trustee to either pay the Trust's share of a premium or
to reimburse the Employer for the Trust's share of a premium pursuant to Section
2 hereof;
(c) Termination of the Employee's employment for cause. For purposes
hereof, termination for cause shall mean the termination of the Employee's
employment with the Employer for any one or more of the following reasons: (i)
embezzlement or theft from the Employer, or other acts of dishonesty or
disloyalty injurious to the Employer, (ii) use by the Employee of alcohol,
drugs, narcotics, or other controlled substances to such an extent that the
Employee's ability to perform his duties as an Employee of the Employer is
materially impaired, (iii) disclosing without authorization proprietary or
confidential information of the Employer, (iv) committing any act of gross
negligence or gross malfeasance, or (v) conviction of a crime amounting to a
felony under the laws of the United States of America or any of the several
states. The determination of whether or not there has been a termination for
cause shall be made by the Board of Directors of the Employer provided that,
if the terminated Employee is a member of the Board of Directors, he shall
not participate in the determination;
(d) If this Agreement terminates as provided above, the Trustee shall
have the right to pay to the Employer within sixty (60) days following the
date of such termination an amount equal to the Employer's Policy Interest.
Upon receipt of such amount, the Employer shall promptly execute and deliver
to the Trustee an appropriate instrument releasing any and all rights of the
Employer under the Collateral Assignment so that all rights under the Policy
thereafter inure to the Trustee. If the Trust fails to timely repay the
Employer's Policy Interest as herein above provided, the Employer shall
refund to the Trustee any payment made by the Trustee to the Employer or the
Insurer for the unexpired portion of the premium payment period in which the
termination of the Agreement occurred, and thereafter the Trustee promptly
shall execute any and all instruments required to vest sole ownership of the
Policy in the Employer. The Trust shall thereafter have no further interest
in the Policy and will be deemed to have satisfied all of the Trust's
obligations for the repayment of any and all of the Employer's Policy
Interest.
6. Change in Control. This Agreement shall not terminate upon
a Change in Control. A Change in Control shall occur upon the happening of
either of the following:
(a) Should a "Business Combination of Employer" occur as provided in
Article XIII of Employer's Article of Incorporation;
(b) Should a control-share acquisition of Employer occur pursuant to
Section 607.0902, Florida Statutes, (1993), or any successor provision thereto.
7. Assignment.
(a) The Trust may at any time transfer or assign the Trust's interest
in the Policy and his rights and obligations under this Agreement to a third
party or parties. Upon any such transfer, all of the Trustee's interest in
the Policy and rights and obligations under this Agreement and the Collateral
Assignment shall be vested in the transferee or transferees, who shall be
substituted for the Trustee as a party or parties hereto, and the Trustee
shall have no further interest in the Policy or rights under this Agreement.
(b) The Employer may assign its rights, interest and obligations under
this Agreement; provided, however, any such assignment shall be subject to the
terms of this Agreement; and provided further, however, the Employer shall
remain liable to discharge its obligations under this Agreement.
8. ERISA. The following provisions are part of this Agreement and
are intended to meet the requirements of the Employee Retirement Income
Security Act of 1974. This Plan is a "welfare plan" under ERISA. This
Agreement (including the Schedules) constitutes a plan description and a
summary plan description under ERISA.
(a) Plan Name: Executive Split Dollar Life Insurance Plan
(b) Plan Number: 505
(c) Plan Year: January 1 - December 31
(d) Employer: Florida Rock Industries, Inc., 000 Xxxx 00xx Xxxxxx,
Xxxxxxxxxxxx, XX 00000 (904) 355-1781, Federal Tax ID #00-0000000
(e) Plan Administrator: Florida Rock Industries, Inc., 000 Xxxx 00xx
Xxxxxx, Xxxxxxxxxxxx, XX 00000 (904) 355-1781
(f) Agent for Service of Legal Process: Counsel for the Corporation,
Florida Rock Industries, Inc. (Service of process may also be made on the Plan
Administrator.)
(g) Eligibility Requirements: Employees designated by the Employer's
Board of Directors.
(h) Claims: For claims procedure purposes, the "Claims Manager" shall
be the Director of Human Resources of the Employer.
(i) If for any reason a claim for benefits under this Agreement is
denied by the Employer, the Claims Manager shall deliver to the claimant a
written explanation setting forth the specific reasons for the denial, pertinent
references to the section of the Agreement on which the denial is based, such
other data as may be pertinent and information on the procedures to be
followed by the claimant in obtaining a review of his claim, all written in a
manner calculated to be understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented orally or in writing to the Claims Manager.
(B) The Claims Manager's explanation shall be in writing
delivered to the claimant within ninety (90) days of the date the claim is
filed.
(ii) The claimant shall have sixty (60) days following his receipt
of the denial of the claim to file with the Claims Manager a written request for
review of the denial. For such review, the claimant or his representative may
submit pertinent documents and written issues and comments.
(iii) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within sixty (60) days of receipt of the
claimant's request for review of his claim. The decision on review shall be
in writing and shall include specific reasons for the decision written in a
manner calculated to be understood by the claimant, as well as specific
references to the pertinent provisions of the Agreement on which the decision
is based. If a copy of the decision is not so furnished to the claimant
within such sixty (60) days, the claim shall be deemed denied on review.
(i) ERISA Rights: The Employee is entitled to certain rights and
protections under the Employment Retirement Income Security Act of 1974
("ERISA"). ERISA provides that all participants shall be entitled to:
Examine, without charge, at the plan administrators' office and
at other specified locations, all plan documents, including insurance
contracts, and copies of all documents filed by the plan with the U.S.
Department of Labor, such as detailed annual reports and plan
descriptions.
Obtain copies of all plan documents and other plan
information upon written request to the plan administrator. The
administrator may make a reasonable charge for the copies.
In addition to creating rights for plan participants, ERISA
imposes duties upon the people who are responsible for the operation
of the employee benefit plan. The people who operate your plan,
called "fiduciaries" or the plan, have a duty to do so prudently and
in the interest of you and other plan participants and beneficiaries.
No one, including your employer or any other person, may fire you
or otherwise discriminate against you in any way to prevent you
from obtaining a benefit or exercising your rights under ERISA.
Under ERISA, there are steps you can take to enforce the
above rights. For instance, if you request materials from the plan
and do not receive them within 30 days, you may file suit in a federal
court. In such a case, the court may require the plan administrator
to provide the materials and pay you up to $100 a day until you
receive the materials, unless the materials were not sent because of
reasons beyond the control of the administrator.
If it should happen that plan fiduciaries misuse the plan's
money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you
may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If you are successful, the court may
order the person you have sued to pay those costs and fees. If you
lose, the court may order you to pay these costs and fees, for example
if it finds your claim is frivolous.
If you have any questions about your plan, you should contact
the plan administrator. If you have any questions about this
statement or about your rights under ERISA, you should contact the
nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
9. Arbitration of Denied Claims. Any controversy or claim arising out
of or relating to a final decision, upon review pursuant to the procedures
set forth in Section 8 above, that denies a claim for benefits under this
Agreement shall be settled by arbitration under three arbitrators in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. Any such arbitration shall
be subject to the statue of limitations that would apply if the claim on
which the arbitration is based were brought as a suit in a United States
district court under ERISA. The site of any such arbitration shall be
Jacksonville, Florida.
10. Entire Agreement; Amendment. This Agreement and the
Collateral Assignment any written amendments thereto contain all the terms and
provisions of the parties' rights and obligations relating to the subject
hereof and shall constitute the entire agreement of the parties, any other
alleged terms or provisions being of no effect. Neither this Agreement nor
the Collateral Assignment may be amended or modified except by a written
instrument signed by all parties hereto.
11. Liability of Insurer. The Insurer shall be bound only by the
provisions of and endorsements on the Policy, and any payments made or action
taken by it in accordance therewith shall fully discharge it from all claims,
suits and demands of all persons whatsoever. The Insurer shall be entitled
to rely exclusively on a statement by the Employer as to the determination of
the parties' respective interests in the Policy. The Insurer shall in no way
be bound by or be deemed to have notice of the provisions of this Agreement.
12. Liability of Employer. The benefits provided by the Insurer shall
be governed by the terms of the Policy. All such benefits are provided
solely by the Insurer and are subject to the Insurer's ability to pay
benefits. The Employer does not guarantee the Insurer's payments under the
Policy.
13. Binding Effect. This Agreement is binding upon and inures to the
benefit of the Employer and any successor or transferee, the Trustee (and its
successor trustees), and any Policy beneficiary.
14. Merger or Consolidation. In the event of a merger or a consolidation
by Employer with another corporation, or the acquisition of substantially all
of the assets or outstanding stock of the Employer by another corporation,
then and in such event the obligations and responsibilities of the Employer
under this Agreement shall be assumed by any such successor or acquiring
corporation, and all of the rights, privileges and benefits of the Trustee
under this Agreement shall continue.
15. No Employment Agreement. This Agreement is not an employment
agreement and nothing in this Agreement changes or in any way affects the
Employer's rights to terminate the Employee's employment.
16. No Guarantee of Any Particular Tax Results. Neither the Employer
nor any of its agents, consultants or advisors guarantee any particular
income tax or transfer tax treatment of this Agreement and the Policy. The
Employee acknowledges that while the Agreement is in effect the Employee is
subject to income taxation each year based on the value of the economic
benefit attributable to the life insurance protection provided under this
Agreement. Employee and Trustee further acknowledge that they have been
advised of the tax risks associated with Trustee's accession to the cash
value of such policy and accept such risks. The Trustee also acknowledges
that although the Policy is designed not to be or become a Modified Endowment
Contract ("MEC") as defined in Section 7702A of the Internal Revenue Code of
1986, it may nevertheless be or become a MEC. Under a MEC, cash withdrawals
and Policy loans are taxed to the extent there are earnings in the Policy,
and may be subject to an additional tax.
17. Trustee's Interest Is Exempt From Creditors (to the Extent Permitted
by Law). To the extent enforceable under applicable law, neither the Trust's
interest in the Policy and this Agreement nor any part thereof is subject in any
manner to (a) any claims of any creditor of the Trustee, Employee or the
Employer, (b) the debts, contracts, liabilities or torts of the Trustee,
Employee or the Employer, or (c) voluntary or involuntary transfer to, on
behalf of, or on account of any creditor of the Trustee, Employee or Employer.
If any person or entity attempts to take any action contrary to this Section
and if this Section is enforceable under applicable law, such action will
have no effect, and the Trustee, Employee and Employer will disregard the
action, will not in any manner be bound by it, and will not incur any
liability on account of it or the disregard of it.
18. Miscellaneous. Where appropriate in this Agreement, words used
in the singular shall include the plural, and words used in the masculine shall
include the feminine or neuter. This Agreement and all rights hereunder are
governed by ERISA and, to the extent that state law is applicable, the laws
of the State of Florida shall govern this Agreement.
