EXHIBIT 10.1
TWIN DISC, INCORPORATED
ENDORSEMENT SPLIT-DOLLAR LIFE
INSURANCE PROGRAM
(ENDORSEMENT OF DEATH BENEFIT
EXCEEDING PREMIUMS PAID)
This document
specifies the terms under which Twin Disc, Incorporated, a
Wisconsin corporation, (the “Employer”), sponsors
various endorsement split-dollar policies with certain of its
executives designated by the Employer as eligible to participate in
this Plan (each an “Employee”).
BACKGROUND INFORMATION
A.
The Employees are valued employees of Employer and Employer wants
to retain them in its employ.
B.
The Employer, as an inducement to such continued employment, wants
to assist Employees with personal life insurance protection.
C.
The Employer is the owner of various life insurance policies (the
“Policies”) issued by The Northwestern Mutual Life
Insurance Company (the “Insurer”) naming the Employees
as insured parties. It is intended that the Policies will
allow the insured party to designate the beneficiary for life
insurance proceeds that exceed cumulative premiums paid by the
Employer with respect to the Policies should the insured party die
prior to a Rollout Event.
D.
The Employer wishes to specify the rights of the Employees with
respect to the Policies.
The terms of the split-dollar Plan with
respect to the Policies are as follows:
1.
Definitions .
(a)
“Employer Premiums” means the cumulative sum of
all premiums paid by the Employer on a Policy covering an
Employee.
(b) “
Forfeiture Event ” means a Termination of Employment
for any reason other than death or Retirement, regardless of
whether such Termination of Employment is voluntary or
involuntary.
(c)
“Plan” means the Twin Disc, Incorporated
Endorsement Split-Dollar Life Insurance Program, as set forth
herein.
(d) “
Retirement ” means an Employee’s Termination of
Employment on or after the date that the Employee:
(1) Has attained age 65
with at least 5 Years of Service;
(2) Has attained age 60
with at least 10 Years of Service;
(3) Has accumulated a
combination of age and Years of Service equaling or exceeding 85;
or
(4) Has accumulated at
least 30 Years of Service.
(e)
“Rollout Event” means, with respect to each
Policy separately, the latest to occur of the following: (i) the
fifteenth anniversary of the Employee’s commencement of
coverage under the Policy ; or (ii) the Employee’s
Retirement.
(f)
“Termination for Cause” means an
Employee’s Termination of Employment for any of the following
reasons: (i) the willful and continued failure of by the Employee
to substantially perform his or her duties with the Employer; (ii)
the willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the Employer; (iii) the
Employee’s conviction of a felony or conviction of a
misdemeanor which materially impairs the ability of the Employee to
substantially performs his or her duties with the Employer; or (iv)
the commission by the Employee of an act of fraud or material
dishonesty involving the Employer.
(g) “
Termination of Employment ” means a “separation
from service” with the Employer and all affiliates, within
the meaning of Code section 409A(a)(2)(A) and the default rules set
forth in Treasury Regulation section 1.409A-1(h).
(h) “
Year of Service ” means a calendar year in which an
Employee is credited with at least 1,000 hours of service.
For this purpose, hours of service shall be determined in
accordance with Department of Labor Regulations 2530.200b-2(b) and
(c).
2.
Ownership of Policies. Employer shall be the sole Owner
of each of the Policies. Unless otherwise provided by this
Plan, Employees or their beneficiaries shall have no legal,
equitable or beneficial right, title or interest in or to the
Policies or the proceeds payable under the Policies.
3.
Policy Endorsement. With respect to each Policy naming an
Employee as the insured, the Employer shall execute one or more
endorsements (as appropriate) (the “Policy
Endorsements”) documenting the right of the Employee to
designate the direct and contingent beneficiaries of the aggregate
death benefit proceeds of such Policy that exceed the Employer
Premiums with respect to the Policy.
Notwithstanding the foregoing provisions of this Section 3:
(a) if
the Employer has obtained any indebtedness secured by a Policy
covering an Employee, the amount payable to the Employer will be
reduced by the amount of the indebtedness that remains outstanding;
and
(b) if
the amount payable to the Employer is not sufficient to satisfy
such indebtedness, the entire amount payable to the Employer shall
be used to satisfy such indebtedness, and the amount payable to the
Employee shall be reduced by an amount sufficient to satisfy any
remaining indebtedness.
4.
Premium Payments Before and After Retirement. Prior to
an Employee’s Retirement, the Employer shall pay the entire
premium on each Policy covering the Employee as it becomes
due. Upon the Employee’s Retirement:
(a) the
Employer’s obligation to pay premiums under this Section 4
shall cease; and
(b) the
death benefit under the Policy shall be adjusted, in accordance
with the Insurer’s standard practices, based on the cash
value of the Policy and future Policy dividends that are used to
pay premiums in accordance with Section 5.
5.
Dividends. Prior to an Employee’s Retirem
