EXHIBIT 10.36
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
[Employee Owner, Employee Pays Premium]
This SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement")
is entered into as of this ____ day of __________, 1995, by and
between REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), and __________________ (the "Employee").
RECITALS
In recognition of the services of the Employee to the
Corporation, the Corporation has determined that its best
interests would be served by entering into this Split Dollar Life
Insurance Agreement with the Employee, whereby the Corporation
will assist the Employee in maintaining certain life insurance on
the Employee's life, subject to the condition that the
Corporation is to be repaid for any amounts which the Corporation
may contribute toward the payment of any premiums due on such
policy.
In furtherance of the purposes of this Agreement, the
Employee will own a policy or policies of life insurance
(collectively the "Policies" and individually the "Policy")
issued by Northwestern Mutual Life Insurance Company (the
"Insurer") on the Employee's life. The Employee's ownership of
the Policies shall be subject to the terms and conditions
contained in this Agreement.
AGREEMENT
Now, therefore, the Corporation and the Employee agree as
follows:
I. DEATH BENEFIT.
The Employee shall acquire, with the Corporation's
assistance, an insurance policy with a death benefit ("Employee's
Death Benefit") in an amount equal to two times the Employee's
"Annual Earnings." Annual Earnings is defined as the Employee's
current annual base salary plus any amount awarded to the
Employee under a cash incentive plan in the previous calendar
year, or such other definition of Annual Earnings as may be in
effect from time to time under the Corporation's Group Term Life
Insurance Plan for Salaried Employees. The Employee's Death
Benefit will be adjusted annually to reflect any increase in the
Employee's Annual Earnings. The Employee's Death Benefit will
increase if the Employee's Annual Earnings increase. Except as
otherwise provided in this Agreement, the Employee's Death
Benefit will not decrease if the Employee's Annual Earnings
decrease.
The Employee's Death Benefit shall be reduced as of each
Policy Release Date, as defined in Article VII of this Agreement,
by that amount equal to the difference between (i) the total
insurance death proceeds of the Released Policy, as defined in
Article VII of this Agreement, as of the Policy Release Date
inclusive of any amounts borrowed against the Released Policy by
the
Employee, and (ii) the total premiums advanced by the Corporation
with respect to the Released Policy.
When the Employee reaches age sixty-five, the Employee's
Death Benefit shall decrease by one percent (the "Reduction
Amount") of the Employee's Death Benefit in effect at that time.
The Employee's Death Benefit will continue to decrease by the
Reduction Amount each month for the next succeeding forty-nine
months. During the fifty month period in which the Employee's
Death Benefit is being reduced by the Reduction Amount, if the
Employee's Death Benefit is also reduced due to a Released Policy
pursuant to Article VII of this Agreement, the Reduction Amount
shall be an amount equal to the previous Reduction Amount
multiplied by a fraction. The numerator of the fraction shall
equal the reduction in the Employee's Death Benefit due to the
Released Policy, and the denominator of the fraction shall equal
the Employee's Death Benefit prior to such reduction in the
Employee's Death Benefit.
If the Employee retires prior to the Employee's sixty-fifth
birthday, the Employee's Death Benefit shall increase each year
by five percent of the previous year's Employee's Death Benefit.
This annual five percent increase shall continue until the
Employee reaches age sixty-five.
As the Employee's Death Benefit increases, temporary
coverage for such increase in the Employee's Death Benefit may be
provided for under the Corporation's Group Term Life Insurance
Plan for Salaried Employees until an additional Policy is
obtained under this Agreement.
The Employee may be required to apply and qualify for
additional coverage that may arise due to increases in the
Employee's Death Benefit. If the Employee does not receive
satisfactory underwriting, any increases in the Employee's Death
Benefit will be provided for under the Corporation's Group Term
Life Insurance Plan for Salaried Employees.
Any part of the Employee's Death Benefit paid under the
Corporation's Group Term Life Insurance Plan for Salaried
Employees will be paid to the beneficiary designated under that
plan in accordance with its terms and conditions.
II. RIGHTS IN THE POLICY.
All insurance policies on the life of the Employee that are
subject to this Agreement shall be identified and made part of
this Agreement by their inclusion on the attached Schedule A.
Other insurance policies on the life of the Employee may be made
subject to the terms of this Agreement by amending the
description in Schedule A to include such policies.
The Employee is the owner of the Policies. The Policies are
subject to the terms of this Agreement. The Employee may
exercise all ownership rights granted to the owner by the terms
of the Policies, including without limitation, the right to
assign rights and interests in the Policies, the right to change
the beneficiary of the Policies and the right to exercise any and
all settlement
options applicable to the Policies. With written permission from
the Corporation, the Employee may borrow against the cash value
of the Policies up to the difference between (i) the cash value
of the Policies and (ii) the total amount of the premiums
advanced by the Corporation.
III. PAYMENT OF PREMIUMS.
The Corporation will pay the entire annual premium due on
the Policies (after taking into account any dividends) and will
be reimbursed by the Employee for the Employee's portion of the
annual premium. The Employee is responsible for that portion of
the annual premium which is equal to the lesser of (i) the amount
of the entire economic benefit that would be taxable to the
Employee but for such payment, or (ii) the entire annual premium
due on the Policies (the "Employee's Portion"). The amount of
the economic benefit to the Employee shall be calculated using
the lower of the P.S. 58 rates or the Insurer's term rates in
accordance with Rev. Ruls. 64-328, 1964-2 C.B. 11, and 66-110,
1966-1 C.B. 12, or their successors, as in effect on the
effective date of this Agreement. The Corporation's portion of
the annual premium is equal to the entire annual premium less the
Employee's Portion (the "Corporation's Portion").
The Employee hereby consents to the Corporation making
monthly or semi-monthly payroll deductions of the Employee's
Portion of the premium from the Employee's salary. This consent
shall not be revoked if the Employee subsequently assigns his
rights and obligations under this Agreement. In no case shall
the Corporation be required to advance the Employee, under this
Article III, an amount in excess of $10,000.00.
IV. COLLATERAL ASSIGNMENT.
All sums advanced by the Corporation to pay the
Corporation's Portion of the annual premiums shall be repayable
to the Corporation as herein provided, notwithstanding
termination of this Agreement. The Employee shall assign the
Policies to the Corporation as security for such advances by
executing an Assignment of Life Insurance Policy as Collateral
(the "Collateral Assignment") for each separate Policy.
Subject to the terms of the Collateral Assignment, the
Corporation shall not possess any incidents of ownership in the
Policies and shall not be entitled to exercise any rights,
privileges or benefits of ownership in the Policies. The
Employee shall possess all incidents of ownership in the
Policies.
V. TERMINATION OF AGREEMENT.
This Agreement shall terminate upon the occurrence of any of
the following events:
A. Performance of its terms, following the death of the
Employee;
B. Upon the Policy Release Date of the last Policy to be
released from this Agreement pursuant to Article VII;
C. The termination of the Employee's employment with the
Corporation for reasons other than total disability (as defined
under the Corporation's Long Term Disability Plan for Salaried
Employees, or any successor plan) or retirement (defined as
termination of employment at a time when the Employee is entitled
to an immediate benefit under the Corporation's New Retirement
Program for Salaried Employees, or any successor plan);
D. Upon the failure of the Employee to pay on a timely basis
the Employee's Portion of the premiums;
E. Receivership or dissolution of the Corporation;
F. Delivery to the Corporation of a written instrument of
termination signed by the Employee; or
G. Delivery to the Employee of a written instrument of
termination authorized by the Corporation's Board of Directors.
VI. RIGHTS TO THE PROCEEDS AT DEATH.
So long as this Agreement is in effect, the beneficiary
provisions of the Policies shall provide that the death proceeds
due under the Policies shall be distributed as follows: 1) the
Corporation shall receive an amount equal to the total premiums
advanced by the Corporation (excluding amounts already reimbursed
to the Corporation by the Employee); 2) after the Corporation has
received all of the premiums it advanced as provided above, the
Employee's designated beneficiary shall receive the remaining
death proceeds, but in no event shall the amount paid to the
designated beneficiary hereunder exceed an amount equal to the
Employee's Death Benefit; and 3) the Corporation shall receive
the remaining death proceeds, if any.
VII. POLICY RELEASE.
Each separate Policy shall no longer be subject to the terms
of this Agreement upon the later of (i) the Policy's anniversary
date following the Employee's sixty-fifth birthday, or (ii) the
expiration of fifteen policy years commencing on the effective
date of the Policy (the "Policy Release Date"). At this time,
the Employee may repay to the Corporation, within sixty (60) days
of such Policy Release Date, an amount equal to the total
premiums advanced by the Corporation with respect to that Policy
(the "Released Policy"). Also at this time, the Employee's Death
Benefit will be reduced as provided in Article I of this
Agreement. Upon receipt of such payment from the Employee, the
Corporation shall release the Collateral Assignment securing the
Released
Policy by the execution and delivery of an appropriate
instrument(s) of release and shall deliver the Released Policy to
the Employee.
If the Employee does not repay the Corporation the amount
calculated above within the prescribed time period, the Employee
shall be required to transfer ownership of the Released Policy to
the Corporation, and the Employee's Death Benefit will be reduced
as provided in Article I of this Agreement. If the cash value of
the Released Policy as of the Policy Release Date is less than
the total premiums advanced by the Corporation with respect to
the Released Policy as of the Policy Release Date, the Employee
is obligated to reimburse the Corporation for the difference
between (i) the total premiums advanced by the Corporation with
respect to the Released Policy as of the Policy Release Date and
(ii) the cash value of the Released Policy as of the Policy
Release Date.
VIII. RIGHTS UPON TERMINATION OF THE AGREEMENT OTHER THAN
DEATH OF THE EMPLOYEE.
Upon the termination of this Agreement as provided in
paragraphs C. through G. of Article V, the Employee may repay to
the Corporation, within sixty (60) days of such termination, an
amount equal to the total premiums advanced by the Corporation
(excluding premiums already reimbursed to the Corporation by the
Employee) as of the date of the termination of the Agreement.
Upon receipt of such payment from the Employee, the Corporation
shall release the Collateral Assignments by the execution and
delivery of an appropriate instrument(s) of release and shall
deliver the Policies to the Employee.
If the Employee does not repay the Corporation the amount
calculated above within the prescribed time period, the Employee
shall be required to transfer ownership of the Policies to the
Corporation. Except as provided below, if the cash value of the
Policies (as may be enhanced by any cash value enhancement rider
in effect) as of the date of the termination of the Agreement is
less than the total premiums advanced by the Corporation
(excluding premiums already reimbursed to the Corporation by the
Employee) as of the date of the termination of the Agreement, the
Employee is obligated to reimburse the Corporation for the
difference between (i) the total premiums advanced by the
Corporation (excluding premiums already reimbursed to the
Corporation by the Employee) as of the date of the termination of
the Agreement and (ii) the cash value of the Policies (as may be
enhanced by any cash value enhancement rider in effect) as of the
date of the termination of the Agreement.
If the Corporation terminates the Agreement pursuant to
paragraph G. of Article V of this Agreement, the Employee is not
obligated to reimburse the Corporation for the difference between
(i) the total premiums advanced by the Corporation (excluding
premiums already reimbursed to the Corporation by the Employee)
as of the date of the termination of the Agreement and (ii) the
cash value of the Policies (as may be enhanced by any cash value
enhancement rider in effect) as of the date of the termination of
the Agreement.
IX. NAMED FIDUCIARY.
The Corporation is hereby designated as the "Named
Fiduciary" under this Agreement. The Named Fiduciary shall have
authority to control and manage the operation and administration
of this Agreement, and it shall be responsible for establishing
and carrying out a funding policy and method consistent with the
objectives of this Agreement.
The Corporation shall, in its discretion, make all
determinations concerning rights to benefits under this
Agreement. Should the Employee or other beneficiary of the
Policies fail to receive benefits to which the Employee (or other
beneficiary) believes he is entitled, a claim may be filed. Any
claim for a benefit due in connection with this Agreement shall
be filed by the Employee or other beneficiary (the "Claimant") by
written communication made by the Claimant or the Claimant's
authorized representative to the Named Fiduciary. All such
claims and notices shall be made in the manner provided in
Article XIII of this Agreement.
If a claim for a benefit is wholly or partially denied, a
written notice of the decision shall be furnished to the Claimant
by the Named Fiduciary or its designee within a reasonable period
of time after receipt of the claim by the Named Fiduciary. The
notice shall include the following information:
a. The specific reason or reasons for the
denial;
b. Specific reference to the pertinent
provisions of this Agreement and/or the Policy
upon which the denial is based;
c. A description of any additional material
or information necessary for the Claimant to
perfect the claim and an explanation of why such
material or information is necessary; and
d. An explanation of all claim review
procedures available under this Agreement.
For purposes of the immediately preceding paragraph, a
period of time shall be deemed to be unreasonable if it exceeds
90 days after receipt of the claim by the Named Fiduciary, unless
special circumstances require an extension of time for processing
the claim. If such an extension of time for processing is
required, written notice of the extension shall be furnished to
the Claimant prior to the termination of the initial 90-day
period. In no event shall such extension exceed a period of 90
days from the end of such initial period. The extension notice
shall indicate the special circumstances requiring an extension
of time and the date by which the Named Fiduciary expects to
render the final decision.
In order that a Claimant may appeal a denial of claim, a
Claimant or his duly authorized representative may request a
review by written application to the Named Fiduciary or his
designee not later than 60 days after receipt by the Claimant of
written notification of denial of a claim and may submit issues
and comments in writing. A decision on review of a denied claim
shall be made not later than 60 days after the Named Fiduciary's
receipt of a request for review, unless special circumstances
require an extension of time for processing, in which case a
decision shall be rendered within a reasonable period of time,
but not later than 120 days after receipt of a request for
review. The decision on review shall be in writing and shall
include the specific reason(s) for the decision and the specific
reference(s) to the pertinent provisions of this Agreement and/or
the Policies on which the decision is based.
Notwithstanding anything contained in this Article IX to the
contrary, any claim for a death benefit under an insurance policy
listed on Schedule A attached hereto shall be filed with the
Insurer by the Claimant or his authorized representative on the
form or forms prescribed for such purpose by the Insurer. The
Insurer shall be responsible for determining whether a death
claim shall or shall not be paid, either in whole or in part, in
accordance with the terms of the insurance contract purchased on
the life of the Employee.
X. AMENDMENT AND ASSIGNMENT.
The Corporation may, in its sole discretion, alter, amend or
modify (including the addition of any extra Policy provisions)
this Agreement at any time by a written instrument authorized by
the Corporation, or its designee, and delivered to the Employee.
Either party may, subject to the limitations of Article IV,
assign its rights and obligations under this Agreement, provided,
however, that any assignment will be subject to the terms of this
Agreement.
XI. SEVERABILITY.
The invalidity of any provision of this Agreement shall not
affect the validity of any other provision of this Agreement.
XII. POSSESSION OF POLICIES.
The Corporation will maintain possession of the Policies
during the term of this Agreement.
XIII. NOTICE.
All notices, claims, requests and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed by certified or registered mail
to the Corporation as follows: Attention: Corporate Director,
Compensation and Benefits, Reynolds Metals Company, 6601 W. Broad
Street, P.O. Box 27003, Richmond, Virginia 23261-7003 or to
the Employee at his last known address or at such address as
either party shall designate to the other party in writing.
XIV. GOVERNING LAW.
This Agreement sets forth the entire agreement of the
parties hereto, and any and all prior agreements, to the extent
inconsistent herewith, are hereby superseded. This Agreement
will be governed by the laws of the Commonwealth of Virginia.
XV. INTERPRETATION.
Where appropriate in this Agreement, words used in the
singular will include the plural and words used in the masculine
will include the feminine.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
Reynolds Metals Company
By: _____________________________
Title:___________________________
_________________________________
_________________________, Employee
LIST OF SCHEDULES
A. Schedule of the Policies
LIST OF EXHIBITS
1. Copies of Insurance Policies
2. Assignments of Life Insurance Death Benefit as
Collateral
SCHEDULE A
The following life insurance policies are subject to that
certain Split Dollar Life Insurance Agreement dated as
of__________ __, 1995, among Reynolds Metals Company
and___________________.
Insurer: Northwestern Mutual Life Insurance Company
Insured:
Policy Number:
Face Amount:
Date of Issue:
Insurer: Northwestern Mutual Life Insurance Company
Insured:
Policy Number:
Face Amount:
Date of Issue:
0184942.07