SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Split Dollar Life Insurance Agreement ("Agreement") is made, as of
____________, 199__, by and between Countrywide Credit Industries, Inc., a
Delaware corporation (the "Corporation"), and ____________ (the "Executive").
RECITALS
A. The Executive desires to insure his or her life for the benefit and
protection of his or her family or designated beneficiary under the Policy (as
defined below);
B. The Corporation desires to help the Executive provide certain
insurance for the benefit and protection of his or her family or designated
beneficiary by providing funds from time to time to pay the premiums due on
the Policy in accordance with this Agreement; and
C. The Executive, as Owner of the Policy, desires to assign
certain rights and interests in the Policy to the Corporation, to the
extent provided herein, as security for repayment of certain funds provided
by the Corporation for the acquisition and/or maintenance of the Policy.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants set forth below, the parties to this Agreement agree as
follows:
1. Definitions. For purposes of this Agreement, unless otherwise
clearly apparent from the context, the following phrases or terms
shall have the following indicated meanings:
(a) "Aggregate Premiums Paid" shall mean, at any time, an amount equal to
(i) the cumulative premiums paid by the Corporation on the Policy, less (ii) any
Policy loans to the Corporation and accrued and unpaid interest thereon, less
(iii) any amounts, if any, received by the Corporation from the Executive for
life insurance coverage provided under this Agreement. Despite the foregoing,
Aggregate Premiums Paid shall not include extra benefit riders or agreements,
other than those providing additional life insurance coverage on the insured,
and shall not include premiums waived pursuant to the terms of any disability
waiver of a premium rider.
(b) "Base Annual Salary" shall mean the base annual
compensation, excluding bonuses, commissions,
overtime, relocation expenses, incentive payments,
non-monetary awards, directors fees and other fees,
paid to the Executive for employment services
rendered to the Corporation, before reduction for
compensation deferred pursuant to all qualified,
non-qualified and Code Section 125 plans of the
Corporation, in effect at the later of (1) March 1,
1997, (2) the date of an increase associated with a
promotion to a higher corporate title, or (3) the
date of entry into the Plan.
(c) "Benefit Measurement Date" shall mean the date on
which the first of any of the following events
occurs:
(i) The Executive's Termination of Employment;
(ii) Termination of this Agreement in accordance with Section 9 below; or
(iii) The Executive's death.
(iv) The Executive's Retirement
(d) "Cash Surrender Value" shall mean an amount that
equals, at any specified time, the cash surrender
value as determined under the terms of the Policy.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Collateral Assignment" shall mean an assignment made
by the Executive in favor of the Corporation in a
form mutually agreed to by the Corporation and the
Executive and accepted by the Insurer.
(g) "Collateral Interest" shall mean the Corporation's
rights and interests in the Policy, as set forth in
Section 6 below.
(h) "Executive's Death Benefit" shall mean an amount that
is equal to the result of multiplying the Executive's
Base Annual Salary by two (2).
(i) "Insurer" shall mean Aetna Life Insurance and Annuity Company and/or
Manufacturers Life Insurance Company.
(j) "Minimum Retirement Cash Value" shall mean, on the
Benefit Measurement Date, the minimum amount of cash
value that is needed in the Policy to maintain a
death benefit that is equal to one half of the
Executive's Death Benefit, determined on the Benefit
Measurement Date, assuming that the Policy will be
held without surrender, withdrawal or loan until the
Executive reaches age 90 and that the fixed interest
rate to be used to project earnings on the Policy up
to the specified age is the Insurer's announced
interest rate under the Policy on the Benefit
Measurement Date.
(k) "Plan" shall mean the plan described in Section 8(a) below.
(l) "Policy" shall mean the following policy or policies
on the life of the Executive that are issued by the
Insurer:
Policy Number Type of Policy Insurance Company
----------------------- ------------------- -----------------------------------
Universal Life Aetna Life Insurance and Annuity Company
-------------------
----------------------- ----------------------------------------------
Universal Life Manufacturers Life Insurance Company
----------------------- ------------------- -----------------------------------
(m) "Retirement" or "Retire" shall mean severance from
employment from the Corporation for any reason other
than an authorized leave of absence, death, or
Termination of Employment, on or after the attainment
of age sixty-five (65).
(n) "Tax Limitation Date" shall mean the date on which
the Policy will no longer be subject to those
provisions of Section 7702(f)(7) of the Code that
would cause any distribution or surrender from or
under the Policy to be taxed under that Section (or
Section 72 of the Code by reason of that Section).
(o) "Termination of Employment" shall mean the ceasing of
employment with the Corporation for any reason other
than death, an authorized leave of absence or a
disability that does not constitute a ceasing of
employment under the Corporation's employment
policies.
2. Acquisition of Policy; Ownership of Insurance. The parties to
this Agreement shall cooperate in applying for and obtaining the
Policy. The Policy shall be issued to the Executive, as the sole
and exclusive owner of the Policy, subject to the rights and
interests granted to the Corporation, as provided in this
Agreement and the Collateral Assignment.
3. Premium Payments on Policy.
(a) Payments and Reimbursements. Prior to the occurrence of the Benefit
Measurement Date, the Corporation shall pay to the Insurer, on or before each
applicable premium due date, all applicable premiums for the Policy. In the
event that the Corporation fails to make any such payment, the Executive may
make (but is not required to make) any such payment, and the Corporation shall
immediately reimburse the Executive for any amount so paid. All such premium
payments made by the Corporation under this Agreement shall constitute advances
by the Corporation to the Executive for which the Executive shall be responsible
for repayment in accordance with the terms of this Agreement, but only up to an
amount equal to the Corporation's Collateral Interest.
(b) Additional Compensation. Each calendar year, the Executive shall be
considered to have taxable compensation income for that portion of the premiums
paid by the Corporation that is equal in amount to the value of the "economic
benefit" derived by the Executive from the Policy's life insurance protection,
as determined for Federal income tax purposes under Revenue Rulings 64-328 and
66-110. The Corporation shall withhold from the Executive's Base Annual Salary,
or other compensation paid to the Executive, in a manner determined by the
Corporation, the Executive's share of FICA and other employment and income taxes
relating to that taxable amount.
4. Corporation's Rights. The Corporation's rights and interests in and to
the Policy shall be specifically limited to (i) the right to increase or
decrease Policy death benefits annually in accordance with maintaining the
"Executives Death Benefit" as defined in Section 1(h), (ii) the right to be paid
its Collateral Interest in accordance with Section 6 below, (iii) the rights
specified in the Collateral Assignment, and (iv) the right to obtain one or more
loans or advances on the Policy, provided, however, that any such loans shall
not, in the aggregate, exceed the Aggregate Premiums Paid by the Corporation at
any specified date without the written consent of the Executive.
5. Executive's Rights. Subject to the terms of this Agreement and
the Collateral Assignment, the Executive shall be the owner of
the Policy, and shall be entitled to exercise all rights in the
Policy while the Collateral Assignment is in effect, except for
the following, which may be exercised only in accordance with
Section 6:
(a) To borrow against or pledge the Policy; (b) To surrender,
cancel or assign the Policy; or (c) To take a distribution or
withdrawal from the Policy.
6. Collateral Interest.
(a) The Corporation's Collateral Interest in the Policy
shall be paid as soon as is reasonably practical
after the Benefit Measurement Date.
(b) On the Benefit Measurement Date, the Corporation's
interest in the Policy (the "Collateral Interest")
shall be determined in the following manner:
(i) If the Benefit Measurement Date occurs
due to the Executive's Termination of
Employment or the termination of this
Agreement by either party in accordance
with Section 9 below, the Corporation
shall be entitled to receive from the
Policy an amount equal to that portion
of the Policy's Cash Surrender Value
that does not exceed the Aggregate
Premiums Paid.
(ii) If the Benefit Measurement Date occurs
due to the death of the Executive
(except as provided in Section 6(b)(iii)
below), the Corporation shall be
entitled to that portion of the Policy's
death proceeds that exceeds the
Executive's Death Benefit.
(iii) If the Benefit Measurement Date occurs
due to the suicide of the Executive, and
the proceeds from the Policy are limited
by either a suicide or contestability
provision under the Policy, the
Corporation shall be entitled to that
portion of the Policy's Cash Surrender
Value and/or death proceeds that does
not exceed the Aggregate Premiums Paid.
(iv) If the Benefit Measurement Date occurs due to the Executive's
Retirement, the Corporation shall be entitled to receive from the Policy an
amount equal to that portion of the Policy's Cash Surrender Value that does not
exceed the Aggregate Premiums Paid. Despite the foregoing, if, on the Benefit
Measurement Date, the Policy's remaining Cash Surrender Value (after taking into
account the Corporation's Collateral Interest described in the preceding
sentence) is less than the Minimum Retirement Cash Value, then the Corporation's
Collateral Interest specified in the preceding sentence shall be reduced by the
amount that the Minimum Retirement Cash Value exceeds the remaining Cash
Surrender Value.
(c) If the Benefit Measurement Date is other than the
date of the Executive's death, the Corporation's
Collateral Interest in the Policy, as determined in
Section 6(b)(i) and (iv) above, shall be paid to the
Corporation in one of the following ways, as elected
by the Executive in writing within 30 days after the
date the Corporation first notifies the Executive in
writing of the occurrence of the Benefit Measurement
Date:
(i) By the Executive's surrender or partial
surrender of, or withdrawal from, the
Policy in an amount equal to the
Corporation's Collateral Interest and
payment of the proceeds to the
Corporation;
(ii) By the Executive taking a loan out on
the Policy in an amount equal to the
Corporation's Collateral Interest, and
payment of the loan proceeds to the
Corporation, provided that the
Corporation shall not be responsible for
any interest that may accrue on any such
loan;
(iii) By the Executive's payment to the
Corporation, from the Executive's
separate funds, an amount equal to the
Corporation's Collateral Interest; or
(iv) By the Executive's transfer of the
ownership of the Policy, and all rights
thereunder, to the Corporation.
(d) If the Benefit Measurement Date is the date of the
Executive's death, the Corporation's Collateral
Interest in the Policy, as determined in Section
6(b)(ii) above, shall be paid to the Corporation from
the Policy's proceeds as soon as is reasonably
practicable after the Executive's death.
(e) Despite Section 6(c) above and Section 6(f) below,
if, at the time of the Benefit Measurement Date, the
Tax Limitation Date has not occurred, (i) the
Corporation shall have the right, in its sole
discretion, to require the Executive to elect to pay
the Corporation's Collateral Interest in accordance
with Section 6(c)(ii) above, and (ii) the
Corporation's rights under Section 6(f) shall be
limited to taking a loan in accordance with Section
6(f)(ii) below.
(f) If the Executive fails to exercise any of the options under
Section 6(c) above, by delivering written notice of such election to the
Corporation no later than 30 days after the date the Corporation first
notifies the Executive in writing of the occurrence of the Benefit
Measurement Date, the Corporation shall be entitled to: (i) surrender the
Policy and receive the Policy's Cash Surrender Value, to the extent of the
Corporation's Collateral Interest, or (ii) take out a loan on the Policy in
an amount equal to the Corporation's Collateral Interest, with the loan
proceeds paid to the Corporation and the Corporation not responsible for
any interest that may accrue on such loan, or (iii) transfer the ownership
of and beneficial interest in the Policy to the Corporation. In the case of
(i) or (iii) above, the Corporation shall pay to the Executive the Cash
Surrender Value or death proceeds that remain after the Corporation has
been paid its Collateral Interest. (g) The Corporation agrees to keep
records of its premium payments and to furnish the Insurer with a statement
of its Collateral Interest whenever the Insurer requires such statement.
(h) Concurrent with the signing of this Agreement, the
Executive will collaterally assign the Policy to the
Corporation, in the form of the Collateral
Assignment, as security for the payment of the
Collateral Interest, which assignment shall not be
altered or changed without the consent of the
Corporation and the Executive.
(i) Promptly following the Executive's death, the Corporation and the
Executive's designated beneficiary under the Policy shall take all steps
necessary to collect the death proceeds of the Policy by submitting the
proper claims forms to the Insurer. The Corporation shall notify the
Insurer of the amount of the Executive's Death Benefit (except when the
Policy's proceeds are limited because of the Executive's death by suicide)
and the Corporation's Collateral Interest in the Policy at the time of such
death. Such amounts shall be paid, respectively, by the Insurer to the
Executive's designated beneficiary and the Corporation.
(j) If the Executive elects to retain the Policy in accordance with
Section 6(c) above, the Corporation shall (i) assign its Collateral
Interest in the Policy to the Executive, (ii) execute and file with the
Insurer an appropriate release of the Corporation's Collateral Interest in
the Policy and (iii) have no further interest in the Policy; provided that,
in all instances, the Corporation receives payment in full for its
Collateral Interest in the Policy. Further, the Executive hereby
acknowledges, understands and agrees that, upon the release of the
Corporation's Collateral Interest, the Corporation shall not have any
responsibility for the future performance of the Policy and shall have no
obligation to make any additional premium payments.
(k) If the Executive elects to transfer the Policy to the
Corporation, or the Corporation makes such an
election in accordance with Section 6(f)(iii) above,
the Executive agrees to execute within thirty (30)
days of such election all documents necessary to
transfer the Policy to the Corporation, and the
Executive shall have no further interest in and to
the Policy. Executive hereby appoints Corporation as
its lawful attorney-in-fact to execute any document
necessary to transfer the Policy to the Corporation
and not executed by Executive within thirty (30) days
of such election.
(l) Upon payment to the Corporation of its Collateral
Interest in accordance with this Section 6, this
Agreement, and the Executive's participation in the
Plan, shall terminate and neither party shall have
any further rights or obligations under the Agreement
or the Plan with respect to the Executive.
(m) The Corporation shall cooperate in effecting any full
or partial policy surrender, withdrawal or policy
loan requested by the Executive related to the
Executive's exercise of any options provided in
Section 6(c) above, provided that the Corporation
receives payment in full for its Collateral Interest
in the Policy. Moreover, the Executive shall
cooperate in effecting any right granted to the
Corporation under this Agreement.
7. Insurer.
(a) The Insurer is not a party to this Agreement, shall
in no way be bound by or charged with notice of its
terms, and is expressly authorized to act only in
accordance with the terms of the Policy. The Insurer
shall be fully discharged from any and all liability
under the Policy upon payment or other performance of
its obligations in accordance with the terms of the
Policy.
(b) The signature(s) required for the Insurer to
recognize the exercise of a right under the Policy
shall be specified in the Collateral Assignment.
8. Plan; Named Fiduciary; Claims Procedure.
(a) This Agreement is part of the Countrywide Credit
Industries, Inc. Split-Dollar Life Insurance Plan,
which consists of all Countrywide Credit Industries,
Inc. Split Dollar Life Insurance Agreements that so
reference their association with the Plan.
(b) The Corporation is the named fiduciary of the Plan for purposes of
this Agreement.
(c) The following claims procedure shall be followed in
handling any benefit claim under this Agreement and
the Plan:
(i) The Executive, or his or her beneficiary, if he or she is dead
(the "Claimant"), shall file a claim for benefits by notifying the
Corporation in writing. If the claim is wholly or partially denied, the
Corporation shall provide a written notice within 90 days specifying the
reasons for the denial, the provisions of this Agreement on which the
denial is based, and additional material or information, if any, that is
necessary for the Claimant to receive benefits. Such written notice shall
also indicate the steps to be taken by the Claimant if a review of the
denial is desired.
(ii) If a claim is denied, and a review is desired, the Claimant shall
notify the Corporation in writing within 60 days after receipt of written
notice of a denial of a claim. In requesting a review, the Claimant may
review plan documents and submit any written issues and comments the
Claimant feels are appropriate. The Corporation shall then review the claim
and provide a written decision within 60 days of receipt of a request for a
review. This decision shall state the specific reasons for the decision and
shall include references to specific provisions of this Agreement, if any,
upon which the decision is based.
(iii) In no event shall the Corporation's
liability under this Agreement exceed
the amount of proceeds from the Policy.
9. Amendment of Agreement; Termination. This Agreement shall not be
modified or amended except by a writing signed by the Corporation
and the Executive. Either party may terminate this Agreement, and
Executive's participation in the Plan, at any time provided that
the obligations of the party terminating the Agreement and the
Plan with respect to the Executive are performed in full under
the Agreement as of the time of the termination.
10. Binding Agreement. This Agreement shall be binding upon the
heirs, administrators, executors, successors and assigns of each
party to this Agreement. This Agreement is not assignable by the
Executive without the Corporation's consent.
11. State Law. This Agreement shall be subject to and be construed
under the internal laws of the State of California, without
regard to its conflicts of laws principles.
12. Validity. In case any provision of this Agreement shall be
illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining parts of this Agreement, but this
Agreement shall be construed and enforced as if such illegal or
invalid provision had never been inserted in this Agreement.
13. Not a Contract of Employment. The terms and conditions of this
Agreement shall not be deemed to constitute a contract of
employment between the Corporation and the Executive. Such
employment is hereby acknowledged to be an "at will" employment
relationship that can be terminated at any time for any reason,
with or without cause, unless expressly provided in a separate
written employment agreement. Nothing in this Agreement shall be
deemed to give the Executive the right to be retained in the
service of the Corporation or to interfere with the right of the
Corporation to discipline or discharge the Executive at any time.
14. Notice. Any notice or filing required or permitted to be given
under this Agreement to the Executive or the Corporation shall be
sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:
To the Executive: ______________________
Address: ___________________________
To the Corporation:Managing Director, Human Resources
Countrywide Credit Industries, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000-0000
or to such other address as may furnished to the Executive or the
Corporation, as the case may be, in writing in accordance with
this notice provision. Such notice shall be deemed given as of
the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or
certification. Any notice or filing required or permitted to be
given to the Executive or the Executive's beneficiary under this
Agreement shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Executive.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with regard to the subject matter of
this Agreement and supersedes all previous negotiations,
agreements and commitments in respect thereto. No oral
explanation or oral information by either of the parties to this
Agreement shall alter the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date first written above.
"Corporation"
Countrywide Credit Industries, Inc.,
a Delaware corporation
By:
Its:
"Executive"
