Exhibit 10.1
[Alliant Techsystems Logo]
_____________________
SPLIT DOLLAR
LIFE INSURANCE PLAN
Administered by
Nevin Executive Benefits
4390 First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
May 1996
SPLIT DOLLAR LIFE INSURANCE PLAN
INTRODUCTION
Alliant Techsystems Inc. has implemented a Split Dollar Life Insurance Plan for
certain key executives. This plan replaces any executive life insurance
arrangement previously in effect, and limits the coverage of company provided
basic life insurance to $50,000.
While the company is pleased to offer you this benefit, doing so does not imply
or create a contract of employment. Also, your plan may be continued, changed,
or eliminated in the future at the company's option.
PLAN OVERVIEW
Under this plan, a life insurance policy is purchased for you by the company
which provides a substantial death benefit to your beneficiary(s) should you die
during employment with Alliant Techsystems Inc. In addition, the ownership and
cash surrender value of the policy may be transferred to you at retirement,
subject to your continued employment until retirement from Alliant Techsystems
Inc.
This is a split dollar life insurance plan, which simply means that the
costs and benefits are shared between you and the company. While actively
employed, the company, as owner of the policy, pays the premiums required for
your coverage and owns the policy. You designate a beneficiary(s) for the death
benefit; such beneficiary(s) is eligible to receive the stated death benefit
should you die while employed before reaching retirement. Because of the
complexities of estate planning, you should seek professional advice before
naming your beneficiaries.
The cost to you during your employment will be the tax on the imputed income
resulting from the company's payment of the annual premiums. This imputed income
is known as the PS58 cost, discussed in the tax section on the next page. The
company will provide you with an annual statement showing the amount of imputed
income and tax withholding.
At retirement, assuming terms mutually agreeable to you and the company, Alliant
Techsystems will give the life insurance policy to you, plus an additional cash
payment to cover the income tax resulting from the value of this gift. After
retirement, you will have the option to continue the coverage, convert the
policy's cash surrender value to an annuity, some combination of both, or
surrender the policy.
BENEFIT AMOUNT
For the face value of the life insurance purchased on your life, please see the
page entitled "Benefit Amount" accompanying this plan description. The payments
made by the company cover the premium for term insurance, plus an accumulating
cash surrender value which provides paid up life insurance after you retire.
According to the plan the company will make insurance premium payments while you
are employed, until you reach age 60. This plan is designed so that the coverage
amount remains in effect until age 70, then drops to 2/3 of the covered amount
from age 70 to approximately age 95, at which time coverage ends. However, the
actual coverage amount and age at which coverage ends may be altered by you at
any time following retirement. Any cost for increased coverage after retirement
is your obligation. Coverage may be maintained at the pre-retirement level and
end sooner, or may be reduced to lower levels and likely remain in force past
age 95. Contact Jeff Nevin at Nevin Executive Benefits (address follows) to
discuss details further. Nevin Executive Benefits is our agent coordinating this
benefit.
ELIGIBILITY FOR BENEFITS
To be considered for a post-retirement benefit under this plan, you must be at
least age 55 and have at least 5 years of credited service (as defined in the
Alliant Techsystems Inc. Retirement Plan). If your employment should be
terminated by you or the company for any reason after reaching age 55 with at
least 5 years of Credited Service, the contract states that there is no
requirement to deliver the cash surrender value; however the company may, at its
discretion, direct to you the accumulated cash surrender value. Finally, should
you retire from employment after age 55 and 5 or more years of credited Service
under terms agreeable to you and the company, the full cash surrender value
accrued at that time will be delivered to you in the form of paid up life
insurance.
TAX ISSUES
Although the company is paying the premiums for the insurance on your behalf,
you will be taxed on the policy's "economic benefit". The economic benefit is
the value of the term insurance, also known as the PS58 cost. The balance of the
company's payment is an accumulating cash surrender value which is owned by the
company pre-retirement.
The tax on this PS58 cost is your responsibility. Projected PS58 costs are in
the enclosed summary provided by Nevin Executive Benefits. These costs are based
on the insurer's (Northwestern Mutual Life) published rates. Annual payment of
the tax withholding on the PS58 cost needs to be collected from you via personal
check. At retirement, assuming terms mutually agreeable to you and the company,
the accumulated cash surrender value is given to you. This gift is taxable. To
assist you with this added tax burden, Alliant Techsystems will provide you a
one time cash payment gross-up to cover the taxes resulting from the gift of the
insurance policy. This benefit provides you with maximum flexibility in managing
your post-retirement insurance needs.
RETIREMENT OPTIONS
At retirement, assuming mutually agreeable terms, ownership of the life
insurance policy and its cash surrender value is transferred to you. It is
expected, but not guaranteed, that sufficient funds will then have accumulated
in the insurance policy to provide continued insurance (as displayed on insert
entitled "Benefit Amount"), with no further annual premiums required. Generally,
a retirement prior to age 60 will result in a reduced cash surrender value and
subsequent benefit duration. The amount and duration of the post-retirement
coverage will depend on your age, the actual amount of money in the policy, and
other factors that may change over time. Your options include:
1. Maintain insurance coverage at full face value to age 70; coverage drops to
2/3 of original value at age 70, and continues to approximately age 95;
2. Use the cash surrender value to supplement retirement income;
3. Keep the coverage at full value past age 70 by paying additional premiums
or allowing the policy to expire prior to age 95;
4. Increase coverage beyond the original face value by providing insurability
and paying additional premiums;
5. Any combination of the above.
ADMINISTRATION
Questions on this plan may be addressed to Alliant Techsystems Executive
Compensation department at (612) 931-5964, or may be directed to
Nevin Executive Benefits
4390 First Bank Place
601 Second Avenue South
Minneapolis, MN 55402
(612) 344-1888
INSURANCE CARRIER
This life insurance is underwritten by the Northwestern Mutual Life Insurance
Company. Northwestern Mutual is currently rated A++ (Excellent) by A. M. Best's
and has a Standard and Poor's Claims Paying Ability Rating of AAA (Superior)
SUMMARY
Alliant Techsystems Inc. is pleased to add this valuable benefit to your
Executive Compensation program. An official policy will be available in the
Executive Compensation department for your review. This summary brochure is
offered for your convenience only, and if it differs from the policy or
contracts, the policy or contracts prevail.
Contact:
Jeffrey R. Nevin
612/344-1888
Fax 612/344-1890
4390 First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
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