SPLIT-DOLLAR AGREEMENT
SPLIT-DOLLAR AGREEMENT (this "Agreement") made
and entered into as of this 20th day of December, 1996 by
and between American Biltrite Inc., a Delaware corpora-
tion with principal offices and a principal place of
business in the Commonwealth of Massachusetts (the "Cor-
poration"), and The Xxxxxxx X. Xxxxxx Irrevocable Insur-
ance Trust of 1990 Dated June 1, 1990 (the "Trust").
Xxxxxxx X. Xxxxxx, an individual residing in
the Commonwealth of Massachusetts (the "Employee"), is
employed by the Corporation as its President.
The Employee desires that his family be provid-
ed life insurance protection under a policy of life
insurance insuring the Employee's life, described in
Exhibit A attached hereto and by this reference made a
part hereof (the "Policy"), which has been issued by Xxxx
Xxxxxxx Variable Life Insurance Company (the "Insurer").
The Trust is the owner of the Policy and, as
such, possesses all incidents of ownership in and to the
Policy, including without limitation the right to desig-
nate the Policy beneficiary.
The Corporation is willing to pay a portion of
the premiums due on the Policy as an additional employ-
ment benefit for the Employee, on the terms and condi-
tions hereinafter set forth.
The Corporation desires to have the Policy
collaterally assigned to it by the Trust in order to
secure the repayment of the amounts which it will pay
toward the premiums on the Policy.
In consideration of the premises and of the
mutual promises contained herein, the parties hereto
agree as follows:
1. PURCHASE OF POLICY. The Trust has pur-
chased the Policy from the Insurer with a
Total Sum Insured at Issue (as such term
is defined in the Policy) of $2,590,000.
The parties hereto agree that they will
take all necessary action to cause the
Insurer to issue the Policy and will take
any further action which may be necessary
to cause the Policy to conform to the
provisions of this Agreement. The parties
hereto agree that the Policy shall be
subject to the terms and conditions of
this Agreement and of the related collat-
eral assignment filed with the Insurer
relating to the Policy.
2. OWNERSHIP OF POLICY. The Trust shall be
the sole and absolute owner of the Policy
and shall have and may exercise all owner-
ship rights granted to the owner thereof
by the terms of the Policy, including
without limitation the right to designate
the Policy beneficiary and the right to
elect and change both the Total Sum In-
sured at Issue and the investment options
of the Policy, except as may otherwise be
provided herein.
3. PAYMENT OF PREMIUMS.
a. On or prior to the date which is
30 days prior to the due date of each
Policy premium, the Corporation shall
notify the Employee and the Trust of the
exact amount due from the Trust to the
Corporation hereunder toward payment of
the Planned Premium (as such term is de-
fined in the Policy), which shall be an
amount equal to the annual cost of current
life insurance protection on the life of
the Employee, measured by the lower of the
P.S. 58 rate, set forth in Revenue Ruling
55-747 (or the corresponding applicable
provision of any future Revenue Ruling),
or the Insurer's current published premium
rate for annually renewable term insurance
for standard risks. The Trust shall pay
such required contribution to the Corpora-
tion prior to the premium due date. If
the Trust fails to make such timely pay-
ment, the Corporation, in its sole discre-
tion, may elect to make such portion of
the premium payment, which payment shall
be recovered by the Corporation as provid-
ed herein.
b. On or before the due date of
each Policy premium, or within the grace
period provided therein, the Corporation
shall pay the full amount of the Planned
Premium to the Insurer and shall, upon
request, promptly furnish the Employee
evidence of timely payment of such premi-
um. Except with the consent of the Trust,
the Corporation shall not pay less than
the Planned Premium, but it may, in its
discretion, at any time and from time to
time, subject to acceptance of such amount
by the Insurer, pay more than the Planned
Premium or make other premium payments on
the Policy. The Corporation shall annual-
ly furnish the Employee a statement of the
amount of income reportable by the Employ-
ee for federal and state income tax pur-
poses as a result of the insurance protec-
tion provided to the Policy beneficiary.
4. COLLATERAL ASSIGNMENT. To secure repay-
ment to the Corporation of the amount of
the premiums on the Policy paid by it
hereunder, the Trust has contemporaneously
herewith assigned the Policy to the Corpo-
ration as collateral, under a form accept-
able to the Insurer for such assignments.
The collateral assignment of the Policy to
the Corporation hereunder shall not be
terminated, altered or amended by the
Trust without the express written consent
of the Corporation. The parties hereto
agree to take all action necessary to
cause such collateral assignment to con-
form to the provisions of this Agreement.
5. LIMITATIONS ON TRUST'S RIGHTS IN POLICY.
a. Except as otherwise provided
herein, the Trust shall not sell, assign,
transfer, borrow against or withdraw from
the cash surrender value of the Policy,
surrender or cancel the Policy, change the
beneficiary designation provision thereof
or increase or decrease the Total Sum
Insured at Issue without, in any such
case, the express written consent of the
Corporation.
b. Notwithstanding any provision
hereof to the contrary, the Trust shall
have the sole authority to direct the
manner in which amounts in and among the
Subaccounts (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; pro-
vided, however, that at least 50% of the
annual premium paid must at all times be
allocated to one or more of the following:
a Fixed Account (as such term is defined
in the Policy); a short-term government
bond fund; or a money market account.
c. The Corporation shall have the
right to borrow that portion of the loan
value of the Policy equal in amount to the
total amount of the premiums advanced by
the Corporation on behalf of the Trust
hereunder, reduced by any then outstanding
indebtedness secured by the Policy which
was incurred by the Corporation, including
any interest due on such indebtedness (the
"net premiums"). Interest on such Policy
loan shall be the responsibility of the
Corporation as such interest becomes due.
The Trust shall have the right to borrow
that portion of the loan value of the
Policy equal in amount to the net premiums
for the sole purpose of paying such amount
to the Corporation under Section 8(a) of
this Agreement if it is terminated during
the lifetime of the Employee. In the
event of any such borrowing, the loan
proceeds shall be paid by the Insurer
directly to the Corporation, and such
payment shall discharge completely all
obligations owing from the Trust to the
Corporation under this Agreement with
respect to the Policy. Interest on any
such Policy loan shall be the responsibil-
ity of the Trust as such interest becomes
due.
6. COLLECTION OF DEATH PROCEEDS.
a. Upon the death of the Employee,
the Corporation and the Trust shall coop-
erate to take whatever action is necessary
to collect the death benefit provided
under the Policy. When such benefit has
been collected and paid as provided here-
in, this Agreement shall thereupon termi-
nate.
b. Upon the death of the Employee,
the Corporation shall have the unqualified
right to receive a portion of such death
benefit equal to the net premiums paid by
it. The balance of the death benefit
provided under the Policy, if any, shall
be paid directly to the Policy beneficiary
in the manner and in the amount or amounts
provided in the beneficiary designation
provision of the Policy. In no event
shall the amount payable to the Corpora-
tion hereunder exceed the Policy proceeds
payable as a result of the maturity of the
Policy as a death claim. No amount shall
be paid from such death benefit to the
Policy beneficiary until the full amount
due the Corporation hereunder has been
paid.
c. Notwithstanding any provision
hereof to the contrary, in the event that,
for any reason whatsoever, no death bene-
fit is payable under the Policy upon the
death of the Employee and in lieu thereof
the Insurer refunds all or any part of the
premiums paid for the Policy, the Corpora-
tion shall have the unqualified right to
such premiums in an amount not to exceed
the net premiums paid by it.
7. TERMINATION OF THIS AGREEMENT DURING THE
LIFETIME OF THE EMPLOYEE.
a. This Agreement shall terminate
during the lifetime of the Employee, with-
out notice, upon the occurrence of any of
the following events: (a) total cessation
of the Corporation's business; (b) liqui-
dation or dissolution of the Corporation;
or (c) termination of the Employee's em-
ployment by the Corporation for Cause (as
defined below). For the purposes of this
Section 7(a), "Cause" shall mean (i) con-
viction of the Employee for any felony or
for fraud or embezzlement; (ii) the
Employee's willful and continued refusal
to substantially perform reasonably as-
signed duties with the Corporation (other
than any such refusal resulting from inca-
pacity due to physical or mental illness
or disability) after a written demand for
substantial performance is delivered to
the Employee identifying the manner in
which the Corporation believes that the
Employee has willfully and continuously
refused to substantially perform his du-
ties; or (iii) other willful misconduct by
the Employee which is materially injurious
to the Corporation. For the purposes of
this Section 7(a), no act or failure to
act shall be considered "willful" unless
done or omitted to be done not in good
faith and without reasonable belief that
such action or omission was in the best
interests of the Corporation.
b. The Corporation may terminate
this Agreement at any time after the date
which is 16 years after the Date of Issue
(as such term is defined in the Policy) by
written notice to the Trust. Such termi-
nation shall be effective as of the date
of such notice.
c. In addition, the Trust may ter-
minate this Agreement during the lifetime
of the Employee and while no premium under
the Policy is overdue by written notice to
the Corporation. Such termination shall
be effective as of the date of such no-
xxxx.
8. DISPOSITION OF THE POLICY ON TERMINATION
OF THIS AGREEMENT DURING THE LIFETIME OF
THE EMPLOYEE.
a. For 60 days after the date of
the termination of this Agreement during
the lifetime of the Employee under Section
7 of this Agreement, the Trust shall have
the option of obtaining the release of the
collateral assignment of the Policy to the
Corporation. To obtain such release, the
Trust shall repay to the Corporation an
amount equal to the total amount of the
net premiums paid by the Corporation.
Upon receipt of such amount, the Corpora-
tion shall release the collateral assign-
ment of the Policy by the execution and
delivery of an appropriate instrument of
release.
b. If the Trust fails to exercise
such option within such 60-day period,
then, at the request of the Corporation,
the Trust shall execute any document or
documents required by the Insurer to
transfer all interests of the Trust in the
Policy, including without limitation the
Trust's right to designate the Policy
beneficiary, to the Corporation. Alterna-
tively, the Corporation may enforce its
right to be repaid the amount due it here-
under from the cash surrender value of the
Policy under the collateral assignment of
the Policy; provided, however, that in the
event the cash surrender value of the
Policy exceeds the amount due the Corpora-
tion hereunder, such excess shall be paid
to the Trust. Thereafter, neither the
Trust nor the Trust's successors, assigns
or beneficiaries shall have any further
interest in and to the Policy under the
terms thereof or under this Agreement.
9. INSURER NOT A PARTY. The Insurer shall be
fully discharged from its obligations
under the Policy by payment of the Policy
death benefit to the beneficiary or bene-
ficiaries named in the Policy, subject to
the terms and conditions of the Policy.
In no event shall the Insurer be consid-
ered a party to this Agreement or any
modification or amendment hereof. No
provision of this Agreement nor of any
modification or amendment hereof shall in
any way be construed as enlarging, xxxxx-
ing, varying or in any other way affecting
the obligations of the Insurer as express-
ly provided in the Policy, except insofar
as the provisions hereof are made a part
of the Policy by the collateral assignment
executed by the Trust and filed with the
Insurer in connection herewith.
10. NAMED FIDUCIARY, DETERMINATION OF BENE-
FITS, CLAIMS PROCEDURE AND ADMINISTRATION.
a. The Corporation is hereby desig-
nated as the named fiduciary under this
Agreement. The named fiduciary shall have
authority to control and manage the opera-
tion and administration of this Agreement,
and it shall be responsible for establish-
ing and carrying out a funding policy and
method consistent with the objectives of
this Agreement. The Corporation may allo-
cate to others certain aspects of the
management and operational responsibili-
ties of this Agreement, including by the
employment of advisors and the delegation
of any ministerial duties to qualified
individuals.
b. (1) Claim.
A person who believes that he or she is
being denied a benefit to which he or she
is entitled under this Agreement (herein-
after referred to as a "Claimant") may
file a written request for such benefit
with the Corporation, setting forth his or
her claim. The request must be addressed
to the President of the Corporation at its
then principal place of business.
(2) Claim Decision.
Upon receipt of a claim, the Corporation
shall advise the Claimant that a reply
will be forthcoming within 90 days and
shall, in fact, deliver such reply within
such 90-day period. Upon written notice
prior to the expiration of the 90-day
reply period, the Corporation may, howev-
er, extend the reply period for an addi-
tional 90 days for reasonable cause. If
the claim is denied in whole or in part,
the Corporation shall adopt a written
opinion, using language calculated to be
understood by the Claimant, setting forth:
(A) the specific reason or reasons for
such denial; (B) the specific reference to
pertinent provisions of this Agreement on
which such denial is based; (C) a descrip-
tion of any additional material or infor-
mation necessary for the Claimant to per-
fect his or her claim and an explanation
why such material or such information is
necessary; (D) appropriate information as
to the steps to be taken if the Claimant
wishes to submit the claim for review; and
(E) the time limits for requesting a re-
view under subsection (3) and for review
under subsection (4) of this section
10(b). If a notice of denial is not re-
ceived within the reply period, the claim
shall be deemed denied and the Claimant
shall be permitted to request review, as
set forth below.
(3) Request for Review.
With 60 days after the receipt by the
Claimant of the written opinion described
above (or, in the case of a deemed denial,
within 60 days after the end of the reply
period), the Claimant may request in writ-
ing that the Secretary of the Corporation
(the "Secretary") review the determination
of the Corporation. Such request must be
addressed to the Secretary, at the
Corporation's then principal place of
business. The Claimant or his or her duly
authorized representative may, but need
not, review the pertinent documents and
submit issues and comments in writing for
consideration by the Secretary. If the
Claimant does not request a review by the
Secretary of the Corporation's determina-
tion within such 60-day period, he shall
be barred and estopped from challenging
the Corporation's determination, except as
may be otherwise provided herein.
(4) Review of Decision.
Within 60 days after the Secretary's re-
ceipt of a request for review, he or she
will review the Corporation's determina-
tion. After considering all materials
presented by the Claimant, the Secretary
will render a written opinion, using lan-
guage calculated to be understood by the
Claimant, setting forth the specific rea-
sons for the decision and containing spe-
cific references to the pertinent provi-
sions of this Agreement on which the deci-
sion is based. If special circumstances
require that the 60-day time period be
extended, the Secretary will so notify the
Claimant and will render the written opin-
ion as soon as possible, but no later than
120 days after receipt of the request for
review. If the written opinion on review
is not rendered within the 60-day period
(or the 120-day period, if an extension is
granted), the claim shall be deemed denied
on review.
(5) Payment of Claim.
If and when a claim is determined to be
payable, the Corporation will promptly
issue a check to the Claimant.
(6) Other Remedies.
After exhaustion of the claims procedures
set forth in this Section 10(b), nothing
shall prevent any person from pursuing any
other legal or equitable remedy otherwise
available, including without limitation
legal action in federal court.
11. AMENDMENT. This Agreement may not be
amended, altered or modified, except by a
written instrument signed by the parties
hereto or their respective successors or
assigns, and may not be otherwise termi-
nated except as provided herein.
12. BINDING EFFECT; NO THIRD-PARTY
BENEFICIARY.
This Agreement shall be binding upon
and inure to the benefit of the Corpora-
tion and its successors and assigns and
the Trust and its respective successors,
assigns and beneficiaries. This Agreement
shall not confer any rights or remedies
upon any person other than the parties
hereto and their respective successors and
assigns, except that the Employee is a
third-party beneficiary of this Agreement
to the extent necessary to effectuate the
intents and purposes of this Agreement.
13. NOTICE. Any notice, consent or demand
required or permitted to be given under
the provisions of this Agreement shall be
in writing, and shall be signed by the
party giving or making the same. Any such
notice, consent or demand mailed to a
party hereto shall be sent by United
States certified mail, postage prepaid, or
sent by a nationally recognized overnight
delivery service, charges prepaid, in each
case addressed to such party's last known
address as shown on the records of the
Corporation. The date of such mailing
shall be deemed the date of notice, con-
sent or demand.
14. GOVERNING LAW. This Agreement, and the
rights of the parties hereunder, shall be
governed by and construed in accordance
with the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement, in duplicate, as of the day and
year first above written.
THE XXXXXXX X. XXXXXX
IRREVOCABLE INSURANCE TRUST
OF 1990 DATED JUNE 1, 1990
By /s/ Xxxxx X. Xxxxxxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Trustee
ATTEST: AMERICAN BILTRITE INC.
/s/ Xxxxx X. Xxxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
---------------------- -----------------------
Secretary Name: Xxxxxxx X. Xxxxxx
Title: Executive
Vice President
EXHIBIT A
The following life insurance policy is subject to
the attached Split-Dollar Agreement:
Insurer: Xxxx Xxxxxxx Variable Life Insurance Company
Insured: Xxxxxxx X. Xxxxxx
Policy Number: 50053001
Total Sum Insured at Issue: $2,590,000
Date of Issue: October 10, 1996
