Life Insurance Split Dollar Agreement by kiq14691

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									            Split Dollar Life Insurance Agreement




Document 1562A                                                                   www.leaplaw.com

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       Note: This Split Dollar Life Insurance Agreement is drafted for a Director and spouse.



                          SPLIT DOLLAR LIFE INSURANCE AGREEMENT

      THIS SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the “Split Dollar
Agreement”) is entered into effective the ___ day of _____, 20__, by and between [COMPANY
NAME], a corporation organized under the laws of the State of [STATE] (hereinafter called
"Company"), and [OWNER] (hereinafter called "Owner").

       WHEREAS, one of the Settlors of the Owner, [NAME] (hereinafter called "Director"), is
a valued Director of the Company, and the Company wishes to retain him in its employ; and

       WHEREAS, as an inducement to Director's continued service to the Company as a
Director, and as an additional compensation to him, Company wishes to assist Director with [his
or her] personal life insurance program by entering into the within Split Dollar Insurance
Agreement with the Owner.

          NOW, THEREFORE, Company and Owner agree as follows:

1.     The life insurance policies with which this Agreement deal are Policy #________
(hereinafter collectively called the "Policy"), issued by [INSURANCE COMPANY] (hereinafter
called "Insurer") on the lives of Director and [his or her] spouse, [NAME] (the "Director's
Spouse"), each in the face amount of ____________________ dollars ($__________).

2.      Owner shall be the owner of the Policy, and may exercise all ownership rights granted to
the owner thereof by the terms of such Policy. Notwithstanding any other provision hereof or of
any form of assignment executed by Owner in connection herewith, it is the express intention of
the parties to reserve to Owner all rights in and to the Policy granted to the Owner by the terms
of the Policy, including, but not limited to, the right to borrow against the Policy, the right to
elect how dividends on the Policy shall be applied, the right to assign the Owner's interest in the
Policy, the right to change the beneficiary of the Policy, the right to exercise settlement options,
and the right to surrender or cancel the Policy (in whole or in part). The Company shall not have
or exercise any right in and to the Policy which could, in any way, endanger, defeat or impair
any of the rights of Owner in the Policy. The only rights in and to the Policy granted to the
Company herein shall be limited to its security interest in the cash value of the Policy, as defined
therein, and its right to receive a portion of the death benefit of the Policy, as hereinafter
provided. The Company shall not assign any of its rights in the Policy to anyone other than the
Owner (or the Owner's transferee, if the Owner has transferred its rights in the Policy).

3.        Premiums on the Policy shall be paid as follows:

      (a)     The Owner may elect to pay part or all of any premium by policy loan or other
borrowing or from [his or her] own assets, and shall deliver notice of such election to the
Company on or before the premium due date.

          (b)       The Company shall pay all premium amounts not paid by the Owner.
Split Dollar Life Insurance                       2                                  www.leaplaw.com
4.      Owner has, contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form of Collateral Assignment attached hereto as Exhibit A and made a part
hereof, which Assignment gives the Company the limited power to enforce its right to be repaid
its cumulative premiums paid, but not prepaid, by realizing on the cash value of such Policy, as
therein defined, and on a portion of the death benefit of such Policy. The interest of the
Company in and to the Policy shall be specifically limited to the following rights in and to the
cash value and to a portion of the death benefit:

        (a)    The right to be repaid its cumulative premiums paid or, if less, the net cash
surrender value of the Policy, in the event the Policy is totally surrendered or cancelled by
Owner, or the right to receive the surrender proceeds, to the extent of its cumulative premiums
paid, in the event the Policy is partially surrendered or cancelled by the Owner, as provided in
paragraph 5 below.

       (b)     The right to be repaid its cumulative premiums paid upon the later to occur of the
deaths of the Director and the Director's Spouse, as provided in paragraph 6 below.

       (c)     The right to be repaid its cumulative premiums paid or, if less, the net cash
surrender value of such Policy, or to receive ownership of such Policy, in the event of the
termination of this Agreement, as provided in paragraphs 8 and 9 below.

        (d)    The right to be repaid a portion of its cumulative premiums paid if a Policy loan
made by the Owner in any year causes the net cash surrender value of such Policy to be a sum
less than the Company's cumulative premiums paid. In such case, the Owner will use a portion
of any policy loan proceeds to reduce the cumulative premiums paid by the Company so as to
cause the net cash surrender value to be equal to or greater than the Company's cumulative
premiums paid. As used in this Agreement, the term "net cash surrender value" means the cash
surrender value of the Policy, less the amount of any then existing loans against such Policy
obtained by the Owner pursuant to this paragraph.

5.     The Owner shall have the sole and exclusive right to surrender or cancel the Policy (in
whole or in part), and the Company shall have no right to surrender or cancel the Policy (in
whole or in part). In the event of a total or partial surrender or cancellation by the Owner, the
Company shall be entitled to receive the then outstanding balance of its cumulative premiums
paid hereunder, or, if less, the net cash surrender value of the Policy.

6.      Upon the death of the later to die of the Director and the Director's Spouse, the Company
shall be entitled to receive a portion of the death benefit provided under the Policy equal to the
then outstanding balance of its cumulative premiums paid hereunder. The balance of the death
benefit provided under such Policy, if any, shall be paid directly to the beneficiary or
beneficiaries designated by the Owner, in the manner and in the amounts provided by the
beneficiary designation provision endorsed on such Policy.

Split Dollar Life Insurance                     3                                  www.leaplaw.com
7.      This Agreement may be terminated, subject to the provisions of Sections 8 and 9 below,
by either party, with or without consent of the other party, by giving notice in writing to the other
party.

8.      In the event of a termination of this Agreement as provided in Section 7 above, Owner
shall have the right to repay to the Company, within sixty (60) days of the date of termination,
the then outstanding balance of its cumulative premiums paid hereunder, or, if less, the net cash
surrender value of such Policy. Upon receipt of such amount, the Company shall execute an
appropriate release of its Collateral Assignment of such Policy.

9.      If the Owner fails to repay to the Company the amount specified in paragraph 8 above
with respect to the Policy within sixty (60) days of the date of termination of the Agreement,
Owner shall execute any and all instruments that may be required to vest ownership of such
Policy in the Company. Thereafter, Owner shall have no further interest in such Policy or in this
Agreement.

10.    The Owner shall have the sole right to borrow against the Policy, and the Company shall
have no right to obtain loans against the Policy, directly or indirectly, from the Insurer or any
other person, or to pledge or assign the Policy as security for any loan.

11.     In the event the Owner shall transfer all of the Owner's interest in the Policy to a
transferee, then all of the Owner's interest in the Policy and in this Agreement shall be vested in
the transferee, who shall be substituted as a party hereunder, and the Owner shall have no further
interest in the Policy or in this Agreement.

12.    The Insurer shall be bound only by the provisions of and endorsements on the Policy, and
any payments made or action taken by it in accordance therewith shall fully discharge it from all
claims, suits and demands of all persons whatsoever. It shall in no way be bound by, or be
deemed to have notice of, the provisions of this Agreement.

13.     Any dispute or controversy arising under, out of, in connection with or in relation to this
agreement shall be determined and settled by arbitration in [CITY, STATE], or such other
location as may be agreed to by the parties, pursuant to the Rules of the American Arbitration
Association for resolution of commercial disputes. Any award rendered therein shall be final
and binding on all parties hereto and judgment may be entered thereon in any court of
appropriate jurisdiction. All costs of such arbitration shall be borne equally by the parties.

14.     In the event that the Policy lapses because the Company fails to pay any premium
amounts to the Insurer as provided in subparagraph b of the preceding paragraph 3, the Company
agrees to indemnify the Owner (or the Owner's transferee, if the Owner has transferred its rights
in the Policy) for the full face amount of the lapsed insurance.



Split Dollar Life Insurance                      4                                    www.leaplaw.com
15.    This Split Dollar Agreement contains the entire understanding and agreement between
the parties with respect to the subject matter hereof and shall not be amended, altered or
modified, except by a written instrument signed by each of the parties.

16.     Any notice, consent or demand required or permitted to be given under the provisions of
this Split Dollar Agreement by one party to another shall be in writing, shall be signed by the
party giving or making the same, and may be given either by delivering the same to such other
party personally, or by mailing the same, by United States Certified mail, postage prepaid, to
such party, addressed to his, her, their or its last known address as shown on the records of the
Company. The date of mailing shall be deemed the date of such mailed notice, consent or
demand.

17.    This Agreement shall bind Company, Owner, Owner's successors and transferees, and
any Policy beneficiary.

18.    This plan is intended to qualify as a life insurance benefit plan as described in Revenue
Ruling 64-328, 1964-2 C.B. 11.

19.    This Split Dollar Agreement, and the rights of the parties hereunder, shall be governed by
and construed according to the laws of the [STATE].



            [The remainder of this page has been intentionally left blank. Signature page follows.]




Split Dollar Life Insurance                        5                                  www.leaplaw.com
       IN WITNESS WHEREOF, the parties have executed this Agreement effective the day
and year first above written.


                                        [COMPANY NAME]


                                        By:
                                        Its:


                                        __________________________________________
                                        [Owner]




Split Dollar Life Insurance                6                               www.leaplaw.com

								
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