EXHIBIT 10.37
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
[Third Party Owner, Third Party Pays Premiums]
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"); _____________, (the "Owner"); 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 Owner, whereby the Corporation will
assist the Owner 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 Owner
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 Owner's ownership of the Policies shall be subject to
the terms and conditions contained in this Agreement.
AGREEMENT
Now, therefore, the Corporation, the Owner and the Employee
agree as follows:
I. DEATH BENEFIT.
The Owner shall acquire, with the Corporation's assistance,
an insurance policy with a death benefit ("Owner'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 Owner's Death Benefit will be
adjusted annually to reflect any increase in the Employee's
Annual Earnings. The Owner's Death Benefit will increase if the
Employee's Annual Earnings increase. Except as otherwise
provided in this Agreement, the Owner's Death Benefit will not
decrease if the Employee's Annual Earnings decrease.
The Owner'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 Owner, and (ii) the total premiums advanced by the
Corporation with respect to the Released Policy.
When the Employee reaches age sixty-five, the Owner's Death
Benefit shall decrease by one percent (the "Reduction Amount") of
the Owner's Death Benefit in effect at that time. The Owner'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 Owner's Death Benefit is being
reduced by the Reduction Amount, if the Owner'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
Owner's Death Benefit due to the Released Policy, and the
denominator of the fraction shall equal the Owner's Death Benefit
prior to such reduction in the Owner's Death Benefit.
If the Employee retires prior to the Employee's sixty-fifth
birthday, the Owner's Death Benefit shall increase each year by
five percent of the previous year's Owner's Death Benefit. This
annual five percent increase shall continue until the Employee
reaches age sixty-five.
As the Owner's Death Benefit increases, temporary coverage
for such increase in the Owner'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
Owner's Death Benefit. If the Employee does not receive
satisfactory underwriting, any increases in the Owner's Death
Benefit will be provided for under the Corporation's Group Term
Life Insurance Plan for Salaried Employees.
Any part of the Owner'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 Owner is the owner of the Policies. The Policies are
subject to the terms of this Agreement. The Owner 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 Owner 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 Owner for the Owner's portion of the annual
premium. The Owner 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 Owner but
for such payment, or (ii) the entire annual premium due on the
Policies (the "Owner's Portion"). The amount of the economic
benefit to the Owner 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 Owner's Portion (the
"Corporation's Portion").
The Owner shall be required to reimburse the Corporation for
the Owner's Portion of the premium within thirty days of the
receipt of a statement from the Corporation or its delegate
requesting such payment. If the Owner does not reimburse the
Corporation within the thirty day period, the Corporation
(without notice to the Employee or Owner) may make monthly or
semi-monthly payroll deductions for any amounts then due and may
continue to make monthly or semi-monthly payroll deductions for
any future Owner's Portion of the premium from the Employee's
salary. The Employee hereby consents to the Corporation making
such monthly or semi-monthly payroll deductions from the
Employee's salary. In no case shall the Corporation be required
to advance the Owner, 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 Owner 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 Owner
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 Owner or Employee to pay on a timely
basis the Owner'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 Owner; or
G. Delivery to the Owner 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 to the following
persons in the following order: 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
Owner); 2) after the Corporation has received all of the premiums
it advanced as provided above, the Owner'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 Owner'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 Owner 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 Owner's Death Benefit will be reduced as provided in
Article I of this Agreement. Upon receipt of such payment from
the Owner, 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 Policyto the Owner.
If the Owner does not repay the Corporation the amount
calculated above within the prescribed time period, the Owner
shall be required to transfer ownership of the Released Policy to
the Corporation, and the Owner'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 Owner, and
otherwise 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 Owner 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
Owner) as of the date of the termination of the Agreement. Upon
receipt of such payment from the Owner, 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 Owner.
If the Owner does not repay the Corporation the amount
calculated above within the prescribed time period, the Owner
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
Owner) as of the date of the termination of the Agreement, the
Owner, and otherwise 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 Owner) 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 Owner and
Employee are 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 Owner) 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 Owner or other beneficiary of the Policies
fail to receive benefits to which the Owner (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 Owner 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 Owner and
Employee. The Corporation or the Owner 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
Owner and Employee at their last known addresses or at such
addresses as any party shall designate to the other parties 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:____________________________
__________________________________
_________________________, Owner
__________________________________
_________________________, 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,
________________, Owner 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:
0199558.01