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SPLIT DOLLAR INSURANCE AGREEMENT
THIS SPLIT DOLLAR INSURANCE AGREEMENT (the "Agreement") is entered into the
_________ day of ____________________, 2000, by Kimball International, Inc., an
Indiana corporation (the "Company") and _________________________, Trustee of
the _____________________ __________________________________________ Irrevocable
Trust dated ________________ (the "Trust").
Recitals
A. The Trust has acquired a policy of life insurance in the face amount of
________________ (the "Policy"), issued by the _________________________ (the
"Insurer"), insuring the lives of ______________________________, an employee of
the Company, and __________________________________ (the "Insureds"), which
Policy is described in Exhibit A attached hereto and make a part hereof.
B. The Trust is the Trustee of an irrevocable trust for the benefit of
certain family members of the Insureds. The Trust desires to maintain life
insurance on the lives of the Insureds for the beneficiaries of such trust and
desires that such life insurance have an equity or cash value feature. In
connection with the Company's payment of the life insurance premiums the insured
employee of the Company will be assessed for tax reporting purposes with an
amount equal to the annual cost of current life insurance protection on the
lives of the Insureds as measured by the lowest amount of imputed income
attributable to the payment of the death benefit under the Policy by the then
applicable federal income tax law, regulations or rulings applicable to split
dollar arrangements. The Company, in the interest of _________________________
as a valuable employee of the Company and his family, and as an investment of
Company assets, desires to pay the annual premium. The only interest of the
Company with respect to the Policy is the Company's investment in the Policy as
hereinafter described.
C. The Trust is the owner of the Policy and possesses all incidents of
ownership in and to the Policy.
D. In order to secure the recovery of the investment by the Company in the
Policy in the event of the termination of this Agreement, the Company wishes to
have the Policy collaterally assigned to it by the Trust.
E. The parties intend that by such collateral assignment the Company shall
have only the right to receive recovery of the investment by the Company under
this Agreement, with the Trust retaining all other ownership rights in the
Policy, as specified in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:
1. Ownership. The Trust shall be the sole and absolute owner of the
Policy and shall have the right to designate beneficiaries and settlement
options, subject to the terms of this Agreement. All other ownership rights
Exhibit 10(e)
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granted by the terms of the Policy, including, but not limited to, the rights to
select dividend options, borrow on the security of the Policy and to surrender
or cancel the Policy may be exercised by the Trust only with the prior written
consent of the Company. With respect to the exercise of the right to borrow on
the security of the Policy, the Trust agrees that the Trust will not borrow on
the security of the Policy in any manner so as to impair the security of the
Company under any collateral assignment executed in favor of the Company
pursuant to the terms of this Agreement to secure the recovery of the Company
Investment under paragraph 6 and other applicable provisions of this Agreement.
If requested by the Company, the Trust will produce information verified by the
Insurer showing the amount of indebtedness on the Policy at the time of such
request.
2. Trust's Premium Payment Obligation. Under the terms of this Agreement
the Trust's share of the premium shall be that amount of the premiums due on the
Policy equal to the lowest amount of imputed income attributable to the payment
of the death benefit under the Policy by the then applicable federal income tax
law, regulations or rulings applicable to split dollar arrangements. Until the
termination of this Split Dollar Agreement, the Company shall pay the Trust's
share of the premium and shall charge such amount as income to the Insured
employee of the Company.
3. Company's Payment Premiums as Investment. The Company for its own
account and as an investment of general Company assets shall pay all Policy
premium amounts not paid by the Trust pursuant to paragraph 2 of this Agreement
until such time as the Company, at its discretion, cancels this Split Dollar
Agreement and discontinues the payment of any premium amount with respect to the
Policy. Such payments shall be referred to as the "Company Investment."
4. Premium Payment Period. The Company agrees that subject to its rights to
cancel this Agreement and discontinue the payment of any premium amount with
respect to the Policy, the premium payment period for purposes of this Agreement
shall be based upon the fifteen (15) year period as projected by the parties to
this Agreement and such premium payment period shall continue notwithstanding
the death of _______________________________ prior to the expiration of such
projected premium payment period with __________________________ surviving.
5. Manner of Payment. On or before the due date of each Policy premium,
or within the grace period provided therein, the Company shall pay the premium
to the Insurer and shall promptly furnish the Trust with evidence of timely
payment. The Trust, in its sole discretion, may elect to pay the Trust's
portion of the premium payment by notifying the Company of its intention to do
so and providing the amount of the Trust's share to the Company for payment to
the Insurer prior to the due date for the payment of such premium.
6. Recovery of Company Interest. For the purposes of this Agreement, the
Company Interest to be recovered shall be defined and determined as follows:
(a) Death of Survivor of Insureds. Upon the death of the survivor of
the Insureds, the Company Interest shall be and the Company shall have the right
to receive an amount of the death benefit payable under the Policy equal to the
Company Investment. The Company and the Trust shall take all action necessary
Exhibit 10(e)
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to obtain the death benefit provided under the Policy.
(b) Other Termination. Upon any other termination of this Agreement,
the Company Interest shall be and the Company shall have the right to receive
from the Trust or the assignee of the Trust an amount equal to the Company
Investment.
7. Collateral Assignment. To secure the recovery by the Company of the
Company Interest the Trust shall assign the Policy to the Company as collateral
(the "Collateral Assignment").
8. Company Rights as Assignee. The Company, during the lifetime of the
Insureds and prior to the termination of this Agreement, may exercise any of its
rights as Assignee of the Policy without the consent of the Trust. If a policy
loan is taken by the Company, it shall be responsible for the interest thereon
and shall pay such interest as it becomes due.
The Trust agrees not to withdraw, surrender, borrow against, or pledge as
security for a loan any portion of the Policy cash value while this agreement is
in effect.
9. Payment of Benefits. The Insurer may pay benefits under the Policy
either by separate checks to the parties or agent assignees entitled thereto, or
by a joint check. If the Insurer pays by joint check, the Trust and the Company
shall divide the benefit as provided herein.
10. Obligations of Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy death benefit to the
beneficiary or beneficiaries named in the Policy, subject to the terms and
conditions of the Policy. In no event shall the Insurer be considered a part of
this Agreement, or any modification or amendment to this Agreement. No
provision of this Agreement, nor of any modification or amendment hereof, shall
in any way be construed as enlarging, changing, varying, or in any way affecting
the obligations of the Insurer as expressly 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.
11. Appointment of Fiduciary. The Company is hereby designated as the
named fiduciary under this Agreement. The fiduciary shall have authority to
control and manage the operation and administration of this Agreement.
12. 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 terminated except as provided
herein.
13. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company and the Trust and their respective
successors, assigns, heirs, executors, administrators and beneficiaries.
14. Notices. All notices consents or demands required or permitted to be
given under the provisions of this Agreement shall be sent by certified mail to:
Exhibit 10(e)
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Trust: ________________________________ Trustee
________________________________ Irrevocable Trust
dated __________________________
________________________________
________________________________
Company: Kimball International, Inc.
1600 Royal Street
Jasper, Indiana 47549
Notice shall be effective when received by the recipient.
15. Termination of Agreement. This Agreement shall terminate if any of
the following takes place:
(a) upon the election of the Company after resolution passed by the Board
of Directors;
(b) the bankruptcy of the Company;
(c) the failure of the Company to pay the premium under Section 2 of this
Agreement;
(d) payment to the Company by the Trust of the aggregate amount of the
advances made by the Company pursuant to this agreement; or
(e) the death of the survivor of Insureds, after payment of the
Company Investment.
In the event of the termination of this Agreement, the aggregate of the advances
made by the Company pursuant to this Agreement less any outstanding Policy loans
received by the Company prior to such termination shall become due and payable
to the Company. Upon payment of such amount, whether from the Policy, the
Trust, or whatever other source, the Company shall execute a release of the
Collateral Assignment Agreement and deliver such release and the Policy to the
Trust.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF the parties have signed this Agreement effective this
_________ day of ____________________________, 2000.
KIMBALL INTERNATIONAL, INC.
By Gary P. Critser
COMPANY
Exhibit 10(e)
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____________________________ Trustee
____________________________ Irrevocable Trust
dated ______________________
by _________________________
____________________________
Exhibit 10(e)
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The following life insurance policy is subject to the attached Split-Dollar
Insurance Agreement:
Trust: ____________________________________ Trustee
____________________________________ Irrevocable Trust
dated ______________________________
Insurer: ___________________________________
Insureds: ____________________________________
Policy Number: _______________________________
Face Amount: _________________________________
Date of Issue: _______________________________
The following exhibit has been omitted from this filing.
EXHIBIT A - Policy of Life Insurance
Exhibit 10(e)
